Introduction

The Mission, Process and Report of the Special Committee

In June 1999 the American Bar Association Commission on Multidisciplinary Practice recommended numerous changes to the law governing lawyers, one of which would have permitted lawyers to participate with nonlawyers in the creation of business entities owned or controlled by nonlawyers to engage in multidisciplinary practice.

On June 26, 1999, the New York State Bar Association’s House of Delegates adopted a resolution

(1) opposing any changes in existing regulations prohibiting attorneys from practicing law in MDPs in the absence of a sufficient demonstration that such changes are in the best interest of clients and society and do not undermine or dilute the integrity of the delivery of legal services by the legal profession; and

(2) urging further studies of the matter.

1. The Mission of the Committee

Pursuant to the NYSBA House of Delegates resolution, President Thomas O. Rice, on July 28, 1999, created this Special Committee on the Law Governing Firm Structure and Operation, charging it to consider the present law and its effectiveness, whether there is a need for any changes in the law, the evidence in support of such changes, and whether potential advantages from such changes outweigh potential detrimental effects.

On August 10, 1999 the ABA House of Delegates adopted the following resolution by a vote of 304 in favor to 98 opposed:

RESOLVED, that the American Bar Association make no change, addition or amendment to the Model Rules of Professional Conduct which permits a lawyer to offer legal services through a multidisciplinary practice unless and until additional study demonstrates that such changes will further the public interest without sacrificing or compromising lawyer independence and the legal profession’s tradition of loyalty to clients.

2. The Committee’s Process

At its organizational meeting on September 8, 1999, this committee identified six subject areas for concentrated study and established working groups of committee members to whom initial responsibility for carrying forward each project was assigned. Over the ensuing six months, the Committee examined in depth each of the following subject areas:

A. the changes since World War II in the American legal profession;

B. the articulation and enforcement of professional values;

C. the work of lawyers with other professionals;

D. nonlawyer involvement in the practice of law;

E. developments abroad in relation to multidisciplinary practice; and

F. factors that look toward change in the existing law governing lawyers.

In the first two parts of this three part report, the Committee sets forth the results of its six study projects.

3. The Committee’s Report

Part One, comprised of six chapters, provides an appraisal of the American legal profession in the Year 2000, summarizing the product of study projects A, B and C.

Part Two, comprised of four chapters, examines the challenges to maintaining a single public profession of law that arise from the developments chronicled in study projects D, E and F.

Part Three of the Report analyzes, against the background of Parts One and Two, the principal issues raised with respect to the law governing lawyers and law firms in the debate over MDP. Against this analysis the Committee’s recommendations are set forth as to:

PART ONE

APPRAISAL OF THE AMERICAN LEGAL PROFESSION IN THE YEAR 2000

Chapter 1

The Salient Changes in the Demography

1. Explosion in Numbers and in Use of Legal Services

2. Change in the Profession’s Gender Make-up

3. Opening the Profession to Minorities

1. Explosion in Numbers and in Use of Legal Services

The phenomenal growth in the number of lawyers since World War II has been accompanied by an unprecedented increase in demand for legal work, both from business clients and on behalf of previously unrepresented individuals.

The growth has affected the manner in which law is practiced, how law firms are structured, and how lawyers organize their work. It has permitted greater specialization in law practice and an increased division of labor among lawyers.

The explosive growth in the number of lawyers began in the law schools. By 1963-64 enrollments matched the post-World War II bulge and there began a yearly increase in the number of law school enrollments that fueled the profession’s remarkable expansion between 1965 and 1991.[n1] The number of ABA-approved schools grew from 112 in 1948 to 176 in 1991. The following table shows for selected academic years the number of law schools, total J.D. enrollments (first, second and third years) and first admissions to the bar:[n2]

The great growth in the number of lawyers has been matched by the growth in demand for all kinds of legal services, particularly from the business community. New areas of law and regulation, largely designed by lawyers, have created whole new fields for legal services: the environment, occupational health and safety, nuclear energy, discrimination and individual rights, health and mental health care, biotechnology, computers and the Internet. At the same time, economic activity vastly expanded, new business enterprises multiplied and the number of transactions in every segment of the economy proliferated.

Significantly, individuals who had never before sought legal assistance began seeking help from lawyers, while the courts pronounced the rights of persons charged with serious crime to have counsel and of classes of people collectively to seek legal redress in the courts.

In sum, while the total number of lawyers increased from 221,605 in 1950 to 857,931 in 1995, the practice of law grew from a service activity estimated at $4.2 billion-a-year in 1965 to an estimated $148 billion-a-year in 1999.[n4]

2. Change in the Profession’s Gender Make-up

Perhaps the most significant change during the last three decades, first among law students and thereafter in the legal profession as a whole, was the growth in the number of women choosing the law as a career vocation. The number of women applicants and students in ABA-approved law schools increased from 4 percent in the mid-1960s to more than 46 percent in the late 1990s:[n5]

With this rising tide of women admittees, the percentage of all lawyers who are women has risen sharply in the past two decades as the following table reflects:

Since the rate of growth of the number of women in the profession substantially exceeded that of men, by 1995 women lawyers were, as a group, substantially younger than men, with a median age of 37, contrasted to a median age for men lawyers of 45.

In what segments of the profession has this growing number of women lawyers found employment? A slightly smaller percentage of women lawyers (70.9%) than of men (74.9%) are in private practice. On the other hand, a higher percentage of women than men have legal employment in government, in private associations,[n7] and in legal aid and public defender offices. Women lawyers in 1995, while comprising only 22.6 percent of the lawyers in private practice, were estimated to comprise 32.2 percent of federal government lawyers, 21.1 percent of state and local government lawyers, 39.7 percent of private association lawyers and 41.9 percent of the lawyers working in legal aid offices and as public defenders.[n8]

The statistics for the Classes of 1997 and 1998 indicate that the legal employment patterns of women and men graduates are now tending to converge, but that in judicial clerkships, government and public interest positions, the percentages of women consistently exceed those of men, while the percentage of men entering law firms exceeds that of women.[n9]

Despite the problems women lawyers continue to encounter, their presence and growing role in the profession have placed on the agenda, matters of particular concern to women which previously were ignored and have provoked serious reexamination of the legal workplace. These include matters relating to pregnancy; rape; sexual harassment in the workplace; judicial treatment of domestic violence; sexual relations between attorney and client; sexual stereotyping and other forms of bias and discrimination in both the courts and the other practice settings which are part of a lawyer’s professional life.[n10]

The expressed concerns of women lawyers have also raised consciousness on a broad range of issues pertaining to the established structure of the practice of law: the work/family conflict, the rigidity of the established practice-model, pregnancy and parenting leaves, day-care, flexible work schedules, including working part-time, temporary hiring of lawyers and alternative tracks for career advancement.

Legal scholars debate the issues as to women’s "different voice" and the "sameness" and "difference" between women and men. At the center of this discourse lies the practical imperative of how the legal profession will adapt to the gender change. Equal opportunity for women and freedom from gender bias are goals toward which the profession as a whole continues to struggle.

3. Opening the Profession to Minorities

Another significant change in the legal profession during the decades of the 1970s, ‘80s and ‘90s has been its gradual and belated opening to minority lawyers. It was not until 1950 that the first African-American lawyer was knowingly admitted to the American Bar Association.

Legal education was equally exclusionary. Although Howard University Law School in Washington, D.C., received its charter from the Federal Government as early as 1869, it remained the only substantial source of legal education for black Americans in the entire country from 1877 to 1939. In 1939, North Carolina Central University Law School was established and, in 1947, two other predominately black law schools were founded, Texas Southern University Law School in Houston and Southern University Law School in Baton Rouge. As late as 1983, Howard and these three other predominately black law schools had trained the majority of black lawyers in the nation.[n11]

Beginning in the middle 1930s black American advocates brought suit to gain admission for African Americans to all-white law schools.[n12] Nevertheless, not until the Supreme Court’s decision in Brown v. Board of Education[n13] overruling the "separate but equal" doctrine, and the later passage of civil rights legislation in the early 1960s, did the academic legal community begin to give serious attention to the problem of the exclusion of African-Americans and other racial minorities.

It was not until 1964 that the Association of American Law Schools’ Committee on Racial Discrimination could state for the first time that no member school reported denying admission to any applicant on grounds of race or color.[n14] Notwithstanding this AALS report, there were only 433 African-American students of the more than 50,000 law students enrolled during the 1964-65 academic year in the nation’s predominately white law schools.[n15]

Ultimately, with the coordinated efforts and support of the law schools and the organized bar, the federal Office of Economic Opportunity initiated programs of increased financial aid and remedial study in the late 1960s which soon began to show results. The number of black American law students in accredited law schools rose from 700, or approximately one percent, in 1965; to 4,423, or 4.3%, in 1972; and to 8,149, or 6.3% of JD enrollments in 1991-92. The Black American JD enrollments in 1998-99 totaled 9,271.[n16]

For racial minorities other than African Americans, there is little historical data. However, since the early 1970s, the office of the ABA Consultant on Legal Education has published a survey of minority group students enrolled in JD programs in approved law schools. In addition to "Black American Enrollment," the groups included have been "Mexican American," "Puerto Rican," "Other Hispanic American," "American Indian or Alaska Native," and "Asian or Pacific Islander." Over that period, the total minority enrollment grew from 5,568 in 1971-72 to 25,266 in 1998-99.

These figures confirm that significant progress has been made since the 1970s in enrolling increased numbers of minority law students, but there remains substantial under-representation of minority groups in the legal profession when compared with total minority populations.

Today, a growing number of minority lawyers are engaged in virtually every field of legal endeavor -- in private practice in a variety of specialties; as attorneys in corporations and government offices; as prosecutors and defense attorneys; in the judiciary, as federal, state and local judges; in law schools as teachers, administrators and deans, and as leaders of the organized bar.

Chapter 2

The Profound Effects of Specialization, Information Technology, Advertising and Law Practice Management

1. The Spread of Specialization

2. Information Technology in the Law

3. Advertising and Marketing Legal Services

4. Managing the Business of Lawyering

Paralleling in significance the change in the demography of the profession has been the change in how legal services are provided and offered to the public: specialists abound in all segments of practice; the technology of cybernetics has become an integral part of virtually every law office; advertising and marketing of legal services are found in every medium; and the new discipline of law office management increasingly guides the business of lawyering in all practice settings.

1. The Spread of Specialization

Told that the law was "a seamless web,"[n1] lawyers traditionally regarded themselves as generalists, prepared to deal with whatever problems prospective clients brought to their offices. However, as the general body of law grew in complexity and the law relating to commerce and industry vastly expanded, an increasing premium was put on specialization to maintain competence and to keep abreast of subject matter.

The lawyers in larger law firms serving predominantly business clients developed competence in particular areas of regulatory law better to serve their corporate clientele, while the great majority of sole and small-firm practitioners, serving predominantly individual clients, increasingly identified themselves as specializing by legal topic, lawyering skill or type of client.

The growth of specialization presented the legal profession with a dilemma. The profession’s ethical rules forbade lawyers to hold themselves out as specialists except in patent, trademark or admiralty law. Yet it became increasingly clear that every lawyer was obliged, as a practical matter, to limit the subjects in which he or she would keep abreast and develop particular competence. Consumer surveys confirmed that the public felt the need to look for lawyers with specific competencies and wanted more information on lawyers’ qualifications and the special services that particular lawyers provided.

Yet, self-selection by a lawyer of an announced speciality is no assurance of any special competence in the chosen area of law or type of work. Some choices of specialty are not so much a conscious division of labor as they are an identification of the clientele whom the lawyer seeks to serve.[n2]

Proposals to regulate specialization have generally been opposed by sole and small-firm practitioners who look upon regulation of specialties as just more red tape, increasing the costs of practice, further deprecating the "general practitioner" and erecting another hurdle for the beginning lawyer. Lawyers in larger firms that have essentially been built upon the efficiencies and cost-effectiveness of de facto specialization generally see nothing to be gained by having specialization regulated.

On the other hand, proponents of regulation of specialization argue that it provides greater access by the public to appropriate legal services, that it helps identify and improve the quality and competence of legal services, and that it leads to the rendering of appropriate services at a reasonable cost. They argue that the public’s lack of knowledge and sophistication about legal services magnifies the harm of inherently or potentially misleading advertising and that regulation of specialization establishes a uniform definition of what is a speciality and who is a specialist. They further urge that the "certifying" of specialists educates the public on the qualifications and competence level they should seek and that enforcement agencies have a standard against which to judge advertisements and a standard of care against which to judge performance.[n3]

The ABA Standing Committee on Specialization has promulgated Model Standards for Specialization in some 24 specialties (in stunning contrast to the 2 or 3 specialties that the profession traditionally sanctioned -- patents, trademarks and admiralty).[n4]

As of 1998, 12 states sponsored certification plans for specialists in specific practice areas, and the ABA accredited 11 private certification programs. The ABA has accredited the following certifying organizations: the American Board of Professional Liability Attorneys, the American Bankruptcy Board of Certification, the Commercial Law League of America, the National Elder Law Foundation, the National Association of Estate Planners & Counsels, the Estate Law Specialists Board, Inc., and the National Board of Trial Advocacy.[n5] Today, the national total of certified specialists is less than 3% of the lawyer population, although the number continues to grow modestly each year, but only in a small minority of the states.[n6]

While the New York State Bar Association’s House of Delegates in the past 20 years had twice defeated proposed specialization certification plans, it recently approved an amendment to DR 2-105 that permits lawyers to identify themselves as specialists provided they have been certified by an organization accredited by the ABA and employ a specified disclaimer. In 1999, the New York Courts approved this amendment of the Disciplinary Rules.[n7]

2. Information Technology in the Law

Any appraisal of the legal profession today must take account of the profound effects of the explosion of information technology upon the practice of law. Similarly, any evaluation of the utility of permitting MDPs must factor in the role of cybernetics in the law in 1999 and in the future. In 1978, there were only 5,000 desk-top computers in the United States; by 1982, four years later, there were five million.[n8]

Writing in 1983, Michael Crichton predicted a future where there would be "a radical transformation in the professions, in which the exclusivity of information is denied," but in which "the professional person’s therapeutic role continues unchanged." Explaining his prediction, Crichton asked, "Why do we consult a doctor or a lawyer?" He answered, "Because the professional person possesses specialized knowledge we need," but since computers can easily store and manipulate formal information, professional knowledge will be "extremely vulnerable to computers."[n9] He concluded that the future consumers of legal services, then having access to the professional’s fund of information, would "gravitate for further advice toward those professionals who treat [them] as human beings and not merely as problems or sources of income."[n10]

Much of what Michael Crichton foresaw has transpired. More and more of the lawyers’ "professional fund of information" is now in the public domain, available on line to those seeking legal counsel. The part of a lawyer’s practice based on exclusive control of formal professional knowledge has been circumscribed and the therapeutic or problem-solving role of the practitioner has grown.

On the other hand, computers are indispensable today to lawyers to command that limitless professional fund of knowledge that permits them to remain expert in their individual fields and to summon such material promptly when needed. Indeed, the legal profession over the last 30 years has been a leader in putting information technology to work for those engaged in providing professional services.

It was less than 30 years ago, in 1971, that the New York State Bar Association entered into an agreement with Mead Data Central, Inc. for the development of computerized legal information retrieval services for lawyers in the State of New York. Mead thereafter vastly expanded its services under the trade names "Lexis" and "Nexis," and was joined in the mid-1970s by West Publishing’s "Westlaw," spreading across the country and around the world, and in later years with the aid of the Internet.

Recent technology surveys conducted by the ABA Legal Technology Resource Center document the extension throughout the profession of all manner of technology.[n11] In 1988, the vast majority of large firms provided computers for lawyers to use when away from the office as well as remote access to computers in firm offices. Approximately 78% of the firms surveyed reported use of computers in depositions and the courtroom; and more than 85% in client meetings. In the courtroom, computers were used for litigation support, presentation of charts, graphs and text, e-mail contact with the firm office, legal research on-line as well as computer animation. All of the law firms surveyed reported the use of word-processing software and virtually all reported use for accounting, time and billing, external e-mail, spreadsheets, databases and the WorldWideWeb.

Since the advent of the computerization of legal materials early in the 1970s, bar associations have played a central role in ensuring that the state of the art in technology is available to lawyers by providing training in its use. The American Bar Association’s Standing Committee on Technology and Information Systems has led this effort for many years and continues today with the support of the Legal Technology Resource Center in Chicago that cooperates with State and local bar organizations throughout the country.

3. Advertising and Marketing Legal Services

During the past three decades the provision of legal services has changed from a client "walk-in" service to a lawyer "seek-out" service; from clients coming to lawyers whom they knew or heard of for help with problems, to lawyers reaching out for clients by publicizing the need for legal services and offering to fill that need. In a sense, it has been a return to how lawyers conducted themselves a century ago.

In the 19th Century, lawyer advertising and solicitation of business were common and generally lawful. Frequently, attorneys wrote letters soliciting legal business from business clients.[n12]

When the ABA adopted the Canons of Professional Ethics in 1908, however, Canon 27 banned lawyer advertising and solicitation. Although directory listings and very limited advertising became acceptable over time, the bans generally continued for nearly 70 years until the Supreme Court in Bates[n13] ruled that it was unconstitutional to impose bans on advertising, applying the First Amendment-based doctrine of commercial free speech to lawyers. At the same time, the Court acknowledged that the states had the right to impose certain regulation to protect consumers.

Within six weeks of the Bates decision, the ABA adopted a set of regulations and amended the Model Code of Professional Responsibility. The initial Code provisions precluded television advertising, all targeted mail solicitation and any advertising not done in a dignified manner.[n14] None of these limitations continue today in national standards, but the ABA has retained the ban on in-person solicitation that the Supreme Court, the year after Bates, found to be an appropriate constitutional limit on commercial speech, observing in its written opinion[n15] that lawyers are trained in the art of persuasion and that clients in need of legal services may be vulnerable to such persuasion.

The ABA replaced the Code of Professional Responsibility in 1983 with the Model Rules of Professional Conduct at a time when the states were still in the process of reformulating their rules to govern lawyer advertising. The result has been that there is to this date substantial diversity among the states in the rules governing lawyer advertising[n16] and only a few states have adopted verbatim the Model Rules that govern lawyer advertising and solicitation.[n17]

In these circumstances, advertising by lawyers grew at first, not only hesitantly but amid a patchwork of state regulation that more often than not, when challenged, failed to pass constitutional muster. Most lawyers chose not to advertise in the first few years after 1977, holding a residual sense that advertising was unethical.[n18] Some lawyers, particularly those who began to advertise later, were waiting for the states to modify their ethical regulations.[n19]

Thereafter, participation in advertising grew slowly but steadily. By 1981, 10 percent of lawyers had advertised at some point. In 1987, nearly a third of all lawyers had advertised at some point, and a quarter were advertising actively at that time.[n20]

By 1987, 86 percent of the lawyers who had advertised had done so through the Yellow Pages Directory, which were used mainly by solo practitioners and small firms.[n21] The second most-used medium was the newspaper, employed by only 12 percent. Electronic media were used by three percent, while direct mail and billboards were used by only one percent.[n22]

Since 1987, advertising legal services on television increased steadily, and in 1993 $125.9 million was spent to air television commercials for legal services, ranking 16th among categories for local spot television advertising. However, the amount spent for advertising on television was less than a third of that spent by lawyers on Yellow Pages Directory advertising -- more than any other profession or business.[n23]

The expenditures for lawyer advertising appear to vary substantially from venue to venue. One survey of usage of Yellow Pages Directories in six metropolitan areas reported that only 5.8 percent of Boston’s practitioners were in law firms that had a paid Yellow Pages and, while 36.6 percent of Milwaukee’s practitioners were in such firms.[n24] Polls of lawyers have shown similar jurisdictional variations: 22 percent of Oregon’s lawyers had advertised in 1983, compared with less than one percent of Birmingham, Alabama’s, and only three percent of Jackson, Mississippi’s.[n25]

Responding to an increasingly competitive marketplace for legal services to businesses, law firms are marketing in a variety of ways, employing solicitation and advertising techniques. Marketing techniques commonly used by corporate firms today, which would not have been permissible prior to the Bates decision, include law firm brochures, client newsletters and other direct mail, client services and presentations, sponsorships of benevolent activities, press releases and even press conferences.[n26]

The ABA has reconstituted its Commission on Advertising as the Commission on Responsibility in Client Development, and it has begun to address the unique aspects of information technology when used for client development. Hundreds of thousands of lawyers have a presence on the Internet today through listings in directories, some with cross-listings of fields of practice.[n27]

The ethical rules that govern client development support the notion that the practice of law is a professional endeavor, serving to separate the legal profession from all other businesses. However, regulating the business-getting activities of lawyers in a way that recognizes the practice of law as a business, as the Supreme Court has directed, argues against the legal profession as a distinctive public service unless such regulation can be shown to be consonant with consumer protection and not limiting of an individual’s access to legal services.

4. Managing the Business of Lawyering

During and following the decade of the 1970s, the combined impact of specialization in law practice, developments in information technology, and lawyers’ advertising and marketing of their services put a new focus upon the business of lawyering and the increasing institutionalization of the provision of legal services.

Since the first legal aid society was formed in New York City in 1876, the principal means for providing legal assistance to the poor has been through corporate structures, generally with the blessing of the courts. Around the turn of the 20th century, student-run legal clinics and legal aid bureaus that were associated with law schools were organized and permitted by many courts to represent clients before them.[n28]

At the opposite end of the legal services spectrum, beginning in the late 19th century, a small number of large corporations, having found the law so pervasive to their operations, began to hire lawyers to work full time in the management of their businesses and called them "general counsel." As additional lawyers joined them on the corporate payrolls, they became legal departments for their corporations. Meanwhile, early in the 20th century a revolution in the structure and operation of law firms serving the business community took place in New York City. The system of firm operation adopted by these firms included a requirement that the lawyers work only for the firm. They were paid a salary and were provided training.[n29]

By the time of the great surge in the numbers of lawyers entering the profession in the 1970s, the institutionalization of law practice was in full flower.

Fueling the greater orientation of lawyering to the manner in which business is conducted were several decisions by the U.S. Supreme Court exposing law practice to the rules of commerce. The Court first ordered the elimination of mandatory minimum fee schedules in Goldfarb[n30] and later lifted the restraints on lawyer advertising in Bates.[n31]

Responding to the new focus upon the business of lawyering, the ABA in 1975 established a Section on the Economics of Law Practice to provide information on how to build and maintain a law practice of any size. The Section immediately became the fastest growing section of the Association. The name of the Section was subsequently changed to "Law Practice Management" and took as its mission to address such matters as "how to grow and maintain a healthy law practice;" "how to use the Internet and other technological advances within a law firm;" "compensation packages to motivate lawyers;" "traditional and alternative billing methods;" and "survival skills for solo and small firm practitioners."

Taking note of the changes in the profession, late in the 1970s a new legal press began publication with the National Law Journal and Legal Times of Washington first appearing in 1978 and The American Lawyer in 1979. "Heavy Hitters" were touted purportedly for their business-getting, regardless of their prowess at serving the legal needs of clients. Service to clients and the inherently client-centered nature of professional activity became obscured in a preoccupation with the size of law firms, their financial success and the so-called bottom line.

In this environment it was not surprising in 1984 to find the U.S. Department of Commerce adding to its industrial categories Standard Industrial Classification 81, "the legal services industry".

In 1987, the Department’s annual U.S. Industrial Outlook predicted the long-term prospect for Standard Industrial Classification 81 in this way:

The legal services industry will expand steadily through the 1990s and will be marked by varying methods of delivering legal services. Increased productivity through the growing use of new technology, legal assistants and promotional techniques will continue to affect the legal services industry. The prices charged for the least complicated legal services will remain stable (or possibly fall), while the price of more complex assistance will rise at or above the rate of the general price level. The effect will be an expanded market for legal services, since marginal users of basic legal services will be more able to afford the advice of a lawyer and users of more complex services have few, if any, alternatives.

The Commerce Department concluded:

Assuming continued growth in the economy, group legal service plans will continue to flourish as employers, labor unions, and other organizations seek to negotiate plans that provide greater benefits. Other types of low-cost legal services firms will also continue to grow as they attract low and middle-income consumers who have not used lawyers in the past. Consequently, the total market will grow, although the traditional law firm will remain the backbone of the legal services industry.

Looking at the legal profession alone and solely from a market and economic perspective, this appraisal of the future in 1987 generally accords with what in fact took place.

However, the very financial success of some segments of the practicing bar stimulated the entrepreneurial urge in other segments of the profession and invited those on the outside who used and paid for professional services to question the costs of legal services, while those who provided other kinds of professional service coveted and sought entry to the legal services market.

Chapter 3

The Differentiation in Practice Settings

1. The Variety of Practice Setting

2. The Core Sector of Traditional Practitioners

3. The Development of Legal Service Organizations

4. The Burgeoning of Entrepreneurial Practice

5. The Newly Pivotal In-house Counsel

6. Lawyers for Government

1. The Variety of Practice Setting

The great variety of practice settings and the highly differentiated work in which lawyers engage present today the greatest challenge to the profession in maintaining the unitary concept of being a lawyer. Historically the lawyer in America was an independent professional who was neither employed by another nor dependent on others to help the lawyer provide legal services. The vast majority of lawyers were solo practitioners, either as a full-time or a part-time occupation. Many supplemented their income and filled out their time in other activities -- real estate, banking or political office -- but employment of lawyers by private organizations or by public agencies was virtually non-existent until the late 19th century.

In urban centers, some lawyers shared office space or entered into loose partnership, arrangements, but this was not common. A study found that as late as 1872, only 14 law firms in the entire country had even four lawyers; three had as many as five lawyers; and only one had six.[n1] The gradual emergence of the law firm as the common mode of private practice began in the final decades of the 19th century to provide the legal services that were required by those leading the great expansion of industry, commerce and finance.

The makeup of the legal profession at the end of World War II was summarized in a U.S. Department of Commerce Survey of Current Business in this way: three-fourths of the lawyers in the United States were in private law practice and the remaining one-quarter were employed on a salaried basis by industrial firms, banks, labor organizations and other private agencies, and government. The latter quarter was disproportionately concentrated in the larger population centers.[n2]

The 1947 Commerce Department survey estimated that about 74% of those in private practice were solo practitioners and more than 98% either were in solo practice or were in firms of fewer than nine lawyers. Lawyers in firms of nine or more practitioners were less than 2% of those in private practice.[n3]

The major growth in the size of law firms did not come until the 1970s. Since 1970 there has been a steady movement of law firms of all sizes from smaller practice units into larger. Private practice has become a spectrum of different practice units, differentiated not only by size but by kind of client, by the kinds of legal work performed, by specialties, by the number of salaried associates and other support staff, and by the degree that the practice is institutionalized and bureaucratized.

In general, firm size and practice setting have had a direct relationship to the kind of client served, the type of law practiced and the financial rewards of practice. Community-oriented solo and small firm practitioners of the traditional model worked predominately for individuals.[n4] Lawyers in larger firms in urban centers worked predominately for business clients.[n5]

The financial rewards of legal work for individuals (except for personal injury claims or class-action suits) have in general been less than the rewards for representing business. Various studies of law practice in the past have shown a direct relationship between the size of a firm and the source of its income: as firm size increased the percentage of fees from business clients rose and the percentage of fees from individuals dropped. The larger the firm, the greater was the concentration of its work for business clients and the larger the average income of a firm’s lawyers.[n6] During the 1980s and 1990s, the incomes of partners and associates in major firms increased greatly, while the earnings of solo practitioners and lawyers in small firms declined.[n7]

The accompanying table tracks the movement in firm size from smaller practice units to larger in the customary manner. It shows at first the drop in the percentage of lawyers who were sole practitioners and then its rise as more women entered the profession, as well as the growth during the 1980s and 1990s in the size of the largest law firms:[n8]

The table reflects the steady movement toward larger and larger law firms in which a greater percentage of lawyers’ time is devoted to business clients and less to the representation of individual clients.

At the same time, new forms of organization have been developed for providing legal services to individuals of modest means and new methods for financing such services. A sector of "new providers" of legal services for individual clients and client groups emerged with further differentiation in practice settings. Increasing numbers of solo and small-firm practitioners are participating in these new delivery systems which together have been estimated to provide potential access to legal services for more than 105 million middle-income Americans.[n9] In addition, substantial new provision has been made for services to the poor.

There are, in addition, two other substantial segments of law practice outside the traditional setting of private practice. One is comprised of those providing in-house legal services to corporations and other private organizations, the other is comprised of the lawyers employed by government in all of its functions. The private bar historically provided legal services both to corporate clients and to governments, but since the late 19th century there has been a steady trend toward bringing law work "in-house," both for corporations and for governmental departments and agencies, and toward employing salaried lawyers to handle their clients’ legal matters instead of retaining individual lawyers and law firms on a fee basis.[n10]

The Lawyer Statistical Reports of the American Bar Foundation for 1988 and 1995 (based upon the Martindale-Hubbell data-bank) provided the following distribution of lawyer population by generic divisions of practice settings:

Possibly, obscured within the category of lawyers working in "Private industry and association" are a growing number of lawyers whose practice status is unclear, who may no longer be serving as in-house counsel to their employers, but who are part of a workforce that provides consulting or advisory services to their employers’ customers. So long as the name of an individual lawyer is listed in the Martindale-Hubbell directory it will be counted in the category ("private industry and association") regardless of whether or not the individual lawyer holds her- or himself out to third parties to be a lawyer or maintains active membership in the bar of any jurisdiction. The appropriate regulation and application of the law governing lawyers to this segment of lawyers who may or may not be practicing law is a critical issue for the profession to consider in connection with the discussion of multidisciplinary practice.

The next immediate sections of this report detail significant changes within the two hemispheres of private practice earlier identified by empirical scholars,[n11] as well as the changes in the various settings outside of private practice in which lawyers work today.

2. The Core Sector of Traditional Practitioners

The most numerous segment of the legal profession continues to be the solo and small-firm practitioners for whom the traditional community-based, general practitioner was the prototype. Such lawyers generally served a large number of individual clients for whom they handled a variety of discrete matters.[n12] The work of the community-oriented lawyer commonly included real estate transactions, intergenerational transfers of property (wills and trusts), personal injuries, matrimonial and family matters, some corporate and commercial law for small businesses, as well as occasional criminal cases.[n13] They have been traditionally the true general practitioners representing both plaintiffs and defendants, borrowers and lenders, buyers and sellers, public agencies and private parties.

While there has been a long-term decline in the proportion of lawyers in solo and small-firm practice, the latest statistical report confirmed that more than half of the nation’s lawyers are in solo-to-ten-lawyer units in private practice.[n14] Moreover, following a decline during the 1960s in the total number of sole practitioners (from 131,840 to 124,800), the record growth of the profession during the 1970s, 1980s and 1990s included a significant increase in the number of solo practitioners (from 124,800 to 297,724).[n15] Nationwide in 1995, of the lawyers in private practice 46.9% were in solo practice; and more than one out of every three of the approximately 858,000 lawyers in the United States was a solo practitioner.[n16]

The ABF’s survey of the profession in 1995 reported that 439,949 lawyers were engaged in private practice with 10 or fewer colleagues, and were distributed among practice settings as follows:[n17]

This segment accounted for 69 percent of the 634,475 lawyers in private practice, and 51 percent of the national lawyer population of 857,931 in 1995.[n18]

Solo and small-firm practitioners are found in virtually every practice setting: rural counties, small cities, seaports, river ports, border towns, state capitals, suburban shopping malls, inner-city storefronts and center-city high-rises, with a diversity of clientele and legal problems to match. Many adhere to the modern day version of the general practitioner, deeply involved in their local communities and serving as friendly counselors and advisers to a variety of persons and organizations in their locales.[n19] However, the opportunities for traditional community-oriented solo and small-firm practitioners have diminished.

The increasing anonymity of urbanization and the enormous sprawl in recent decades of suburbanization mean that legal transactions and services are often with strangers.

Without established relationship to a local community or ethnic circle, some solo and small-firm practitioners seeking to develop new clients have enrolled as members of lawyer panels sponsored by the recently developed prepaid and group legal services plans.

Solo practice today takes many forms. It includes a growing number of those who work at home as well as those who share office space with one or more other lawyers. Solo practitioners include neophyte lawyers who have not yet found the association that they seek with a law firm, as well as veteran lawyers who have established clienteles and networks of linkage within the profession and who prize the independence of practicing alone. For the former, it may be the practice of last resort or the only way that they can accommodate the demands of a professional life with those of one’s personal life; for the latter, it can be the fulfillment of a professional life’s ambition.[n20]

Small firms of 2 to 10 lawyers have typically been formed by several lawyers, after some initial experience in practice, who have decided to pool their efforts and resources and have brought with them into the firm different practice skills and areas of concentration which permit the firm to provide a broader range of legal services for a larger clientele. Firms that remain small have no regular recruitment program and no continuing link to law school placement offices, but simply add a lawyer as their practice warrants. Nevertheless, about one of every 3 or 4 law graduates who have entered private practice in the last two years have found employment in a small firm of 2 to 10 lawyers.[n21]

Despite the continued vitality of the solo-small firm sector of private practice, the changes in law practice since the 1970s have impacted, perhaps most heavily, upon lawyers in this sector. Carroll Seron, in The Business of Practicing Law - The Work Lives of Solo and Small-Firm Attorneys, provides a penetrating account of the quite different ways in which lawyers in this segment of the profession have responded to the lawyer’s imperatives of "getting work," "organizing the work" and "serving clients."[n22] Attorneys in this setting are not organization men and women. They place an unusually high premium on feeling that they are in control of their workplace. Individually, they can and they do choose how they will conduct their practices.[n23]

However, many solo and small-firm lawyers no longer feel financially secure based on their professional status and community standing. Confronted by evermore competition, both from within and from outside the profession, they have been forced on an individual basis to draw a personally compatible boundary between the new commercialism and the old professionalism.[n24]

Changing law and new complexities have put an increasing premium on specialization to maintain competence and to keep abreast of subject matter. When asked, the great majority of lawyers now describe themselves as specializing by legal doctrine, lawyering skill or type of client.[n25] A 1991 survey of the State Bar of California found that three-quarters of the lawyers have spent at least 50 percent of their time in one area of concentration, and more than half the lawyers limited their practice to three or fewer areas of law.[n26]

A 1990 national survey conducted by the ABA Young Lawyers Division reached similar conclusions, finding that 55 percent of the sole practitioners who responded spent 50 percent or more of their time in one substantive area. For solos who spent three-fourths of their time in one area of practice, the most common specialties were real estate, probate and trust, family law, torts and insurance, patent/trademark/copyright, criminal law, and taxation.[n27] A 1989 study made for the Commission on the Legal Profession and the Economy of New England reported a similar pattern of the most frequently identified specialities by small firms in New England.[n28]

In the age of cybernetics, there have been increasing encroachments by non-lawyers on each of the traditional areas of practice common among solo and small-firm practitioners. The NYSBA’s Ostertag Committee reported developments in this way:[n29]

Nonlawyers now routinely represent clients in housing courts, in real estate tax certiorari cases, and in other administrative agency proceedings in New York, and before the United States Tax Court and various federal agencies including the Internal Revenue Service and the Social Security Administration.

Nonlawyer employees of title companies routinely provide services, as an adjunct to their traditional function.

Independent paralegal groups are forming throughout the country for the purposes, among others, of selling legal forms and assisting "clients" in completing them, of handling routine residential real estate closings and of drafting wills.

Computer programs and self-help books and forms are being marketed, and even touted, as a means by which the public may avoid having to call upon lawyers at all.

Indeed, an increasing number of potential clients are choosing to represent themselves in important legal matters in an effort to eliminate lawyers and the cost of legal services. This trend is supported by various initiatives such as "do-it-yourself" divorce kits now provided even by [New York] State’s own court system and other programs implemented by the courts and private organizations aimed at facilitating pro se litigation.

Recent press accounts describe the continuing conflict in the Metropolitan New York area over the preparation of residential real estate contracts by real estate agents. Four county bar associations are poised to press claims of the unlicenced practice of law to prevent the practice.[n30]

A principal function of most solo and small-firm practitioners has been to handle the resolution of disputes. Family disputes are a principal source of such work. More than a third of all civil cases in New York State courts are domestic relations cases.[n31] These "one-shot client" cases have bred a specialty bar[n32] that is now faced with the growing movement to transfer family matters to a less adversarial forum,[n33] as well as with "do-it-yourself" divorce kits and paralegal divorce firms.[n34]

The many challenges faced today by the majority of solo and small-firm practitioners who cling to tradition creates in them a sense of being besieged, both from within and without the profession. In the circumstances, it is not surprising that from this most numerous segment of the profession rises the insistent call not to sacrifice or compromise the traditional values of the profession to accommodate those who seek to promote multidisciplinary practice.[n35]

However, the challenges from within and without the profession have fostered the development of a significant subgroup of entrepreneurial practitioners among solo and small-firm attorneys.

Professor Seron describes the entrepreneurial subgroup in this way:[n36]

They stake out a commercial niche and create specialized businesses premised on the opportunities of a wider, service-based economy. Building on the ideological tension between commercialism and professionalism, they take the next logical step by incorporating ever more modern business techniques into the delivery of legal services.

The entrepreneurial practitioner proceeds on the premise that clients are more interested in price than quality and that matters involving personal plight are routine, standard and predictable. They seek to organize services for consumers rather than to counsel and advise individual clients. At the same time, the entrepreneurial attorney is service-oriented, but the concern with service emphasizes efficiency and cost rather than process and quality. Borrowing the language and symbols of the consumer movement, they rely on clients looking for cost, speed and lawyer-selection based on product-identity through advertising and thereby build large scale standardized practices.[n37]

Meanwhile, modern technology and improved practice management are making small practice units more cost effective than in the past. "Legal boutique" has been added to the lawyers’ lexicon and the referral practice developed by such speciality firms has actively grown alongside the larger law firms.

On the other hand, some see the role of the general practitioner in an age of specialization as evolving into that of the diagnostician who identifies and defines the client’s problem and then refers the client to the appropriate specialist. No doubt such referrals will increase with further specialization and many general advisers will play an important role in seeing that their clients get the legal services appropriate to their needs.

One growing technique for leveraging the practice of small firms is to join in formal and informal networks of firms in different parts of the country engaged in the same lines of practice. Some arrangements provide for no more than mutual referrals of clients who seek representation in another jurisdiction, while others seek some of the advantages of large firms by agreeing to share clients, training facilities, management know-how, practice-development strategies, support services and even experts for litigation.[n38]

A salient example of ad hoc networking through the use of modern information technology was the recent cooperative prosecution in New Jersey by some 30 plaintiffs’ lawyers around the country of a product liability case relating to diet pills. The Wall Street Journal reported that the absent lawyers every evening received updates of the day’s proceedings via electronic mail and, in turn, fired back comments and advice.[n39]

3. The Development of Legal Service Organizations

During the past 40 years traditional private practice serving individuals has been significantly supplemented by new organizations and methods for providing legal services to the poor and to persons of modest means and facilitating the public’s access to legal services. These organizations and methods have increased both the demand for and the supply of legal services.

The new organizations and methods include greatly expanded legal services to the poor, including publicly-funded civil legal assistance identified with the emergence of a new field of poverty law, and greatly expanded legal assistance in criminal proceedings furnished by legal aid, public defenders and programs of court-appointed defense counsel; bar-sponsored and privately operated lawyer referral and information services; law clinics or what have been referred to as "advertised" law offices; group legal service plans, free plans, prepaid plans, employee assistance plans and individual enrollment plans; as well as local, state and nationally organized programs of pro bono services by lawyer volunteers.

Public access to lawyers and the ready availability of legal services to all who need them have concerned thoughtful members of the profession for more than a century. It is a "basic tenet of the professional responsibility of lawyers . . . that every person in our society should have ready access to the independent professional services of a lawyer of integrity and competence."[n40]

The first organized effort to provide legal assistance to the poor was the formation in 1876 in New York City of what became The Legal Aid Society, created by an organization of German-American immigrants. By 1917, thirty-seven cities had a total of forty-one functioning legal aid organizations. Reginald Heber Smith, in his study for the Carnegie Foundation, reported that these organizations handled in one year a total of 117,201 cases. However, Smith found this in no way commensurate with the need and wrote a scathing indictment of the American legal system for its inaccessibility to the poor.[n41]

Following the model of the New York Legal Aid Society, the early focus of the legal aid organizations was predominantly upon civil legal services. Criminal defendants for many years received scant organized assistance other than from groups of private attorney volunteers.[n42]

The public defender movement, seeking to have government provide counsel to indigent defendants, was initiated in 1893 by Clara Shortridge Foltz, the first woman to be admitted to practice in California. There were five public defender offices in 1917 and only 28 by 1949.[n43] Significant implementation awaited the Supreme Court’s grant of the constitutional right to counsel to criminal defendants in federal courts in 1938,[n44] its extension to felony defendants in state courts in 1963[n45] and to all those at risk of imprisonment in 1972.[n46]

During the 1920s and 1930s, the twin problems confronted by many members of the public, of knowing when to seek legal assistance and of finding a lawyer competent to assist them, grew with the anonymity of urbanization and the pervasiveness of law in everyday life. It was not until the 1960s, however, that neighborhood law offices were opened with a new mission of providing legal services to the poor, funded first by private foundations as social experiments and later funded by the federal Office of Economic Opportunity as part of the War on Poverty.[n47]

Another initiative to make lawyers more accessible to the ordinary citizen was the establishment in 1937 of the first lawyer referral service by the Los Angeles County Bar Association. This marked the beginning of what became in the post-war period a nationwide program of bar-sponsored referral services to inform potential individual consumers of legal services about lawyers in their local communities.

Legal services of a different character are needed, and frequently not available from the private bar, when individuals find themselves in situations where they share with others substantially the same legal interest against some third person or the government, and they seek as a group to invoke their legal rights. Advocacy to advance and enforce "group legal rights" has been a part of the American scene for many years, but it has been commonly looked upon by the law with suspicion and restraint by rules such as those regulating class actions and standing to sue.

From the early decades of the 20th century, organizations were formed by lawyers and political activists such as those advocating women’s suffrage, the American Civil Liberties Union and the NAACP Legal Defense and Education Fund,[n48] but the development of a special segment of the legal profession, engaged in what came to be called "public interest" law, did not materialize until the activist decade of the 1960s.

The 1960s was a seminal period with respect to legal services for the poor. It was the time that important court decisions and legislative enactments made way for the great expansion in the delivery systems for civil and criminal legal services.

In the following subdivisions of this section, while recognizing the serious problem of unmet legal needs that continues, we look at today’s expanded practice settings for lawyers in non-traditional delivery systems which now provide legal services for the poor, legal services for those of modest means and advocacy for group legal rights in the "public interest."

a. Lawyers for the poor

(1) Civil legal assistance. By the 1960s, civil legal assistance, financed privately by community chests, bar associations, individual lawyers and special fund-raising campaigns, provided such organized legal assistance to the poor as was available.[n49] The earliest canons of ethics had recognized the professional obligation of individual lawyers to assist the poor,[n50] and in traditional practice settings lawyers in their local communities had always handled many legal matters for which they were not paid. Any organized programs were almost exclusively in large urban areas.

However, in the decade of the 1960s there was increasing public scrutiny of the legal profession and the adequacy of its performance in distributing legal services, including legal services to those unable to afford a lawyer.[n51] This was at a time when national policy was focused on the poor who were unable to break the cycle of poverty. It was urged that legal advocacy for the poor should be an integral part of any comprehensive "War on Poverty."[n52]

Thus in 1965, the Office of Legal Services was established within the federal Office of Economic Opportunity and the federal funding of local legal services programs began.[n53] It marked the beginning of the emergence of poverty advocacy and of the development of what is today known as poverty law, greatly supplementing and broadening the mission of legal assistance for the poor as previously provided by traditional, privately financed legal aid.

During the years 1965 to 1973, the federal Legal Services Program, with the strong support of the organized bar, created a presence of lawyers in poor urban neighborhoods and began the representation of organized groups of the poor. By 1973, the program comprised 250 community-based agencies staffed by more than 2,600 full-time lawyers manning 900 separate law offices. Program lawyers by 1973 had served over five million low-income clients and had argued a hundred appeals in the United States Supreme Court.[n54]

Following the establishment of the Legal Services Corporation ("LSC") in 1975, with the organized bar again playing a leading role, federal funding for civil legal services rose rapidly to its peak in 1981 with a budget of $321 million, which supported programs employing some 6,000 staff lawyers.[n55] The following year, the budget was cut by 25% and throughout the 1980s the challenge for proponents of publicly-supported legal services, including the American Bar Association, was to maintain at least the 1982 level of funding.[n56]

The National Legal Aid and Defender Association’s 1998/99 Directory lists a total of 2,506 main and branch offices in the United States and Territories which today provide civil legal assistance to persons unable to retain private counsel. This listing includes programs funded wholly or in part by the Legal Services Corporation as well as those funded by other sources.[n57] The offices range in size from offices with one or two staff attorneys to offices of a hundred or more attorneys, paralegals and investigators. The Legal Services Corporation reported that programs for civil legal services to the poor that it supported during 1997 employed 3,494 full-time staff attorneys and 1,439 paralegals working in local legal aid and legal services offices as well as in the Corporation’s state supported and regional training centers and its computer assisted legal research programs.[n58]

In recent years, the work of staff attorneys in legal services offices has been supplemented by the work of more than 100,000 private attorneys, working with staff attorneys and accepting referrals on a pro bono or reduced fee basis.

(2) Criminal defense. Thirty years elapsed between the Scottsboro case in 1932 and the sounding of Gideon’s Trumpet in 1963.[n59] During that period, modest advances were made in providing representation for indigent defendants, but it was only in the wake of Gideon and the passage of the Criminal Justice Act of 1964, with its provision for the compensation of defense counsel, that legal assistance for persons accused of crime became a publicly-acknowledged responsibility.

Thereafter, the traditional role of ad hoc court-assigned defense counsel greatly diminished and most jurisdictions created government-supported public defender offices staffed by salaried employees to satisfy the new constitutional requirements. In 1967, state governments spent $17 million, and the federal government $3 million, to provide legal representation for indigents charged with felonies.[n60] By 1977, the combined total reached $403 million,[n61] and by 1988, expenditures for criminal defense services reached $1.4 billion.[n62]

Public defender programs grew from 28 in 1949 to 163 in 1973, by which time state-subsidized counsel under programs for indigent defendants were representing 65% of all felony defendants (leading one commentator, with a measure of hyperbole, to characterize private defense counsel as a "dying breed").[n63] The 1998/99 Directory of Legal Aid and Defender Offices in the United States and Territories now lists a total of 1,566 main and branch offices providing criminal representation to persons unable to retain private counsel operated by public defender programs and by legal services programs which contain a public defender component.[n64] The largest publicly-supported program is the Criminal Defense Division of the New York City Legal Aid Society with an average complement of 451 supervising and staff attorneys who handled 194,000 cases in the 1998-99 fiscal year.[n65] In addition, special programs in a number of urban centers, both publicly and privately funded, now provide lawyers for juveniles in both criminal and family court proceedings, as well as for prisoners and other institutionalized persons.[n66]

Although state-subsidized public defenders predominate in the representation of felony defendants today, private practitioners in every jurisdiction continue to play a significant role in representing defendants on both a retainer and publicly-subsidized basis.[n67] Substantial representation continues to be on a pro bono basis, both court-appointed and volunteer (including post-conviction death-penalty representation).

Today the criminal justice system is confronted with record numbers of prosecutions. Providers of indigent defense services have in some jurisdictions been overwhelmed by the ravages of the drug epidemic and the federal "war on drugs." The National Center for State Courts in 1991 reported that 70-90% of defendants charged with drug and drug-related offenses were indigent and required appointed counsel. Many public defender offices are today overburdened and underpaid, with high turnover, and unprepared to handle their massive caseloads.[n68]

b. Services for persons of moderate means

Following World War II it became increasingly apparent that supply and demand in the legal services marketplace as traditionally structured operated no more effectively to provide equal access to legal assistance for persons of moderate means than for the poor.

In 1951, the ABA Standing Committee on Lawyer Referral Services prophetically reported that:

the requirements of the public for legal services at moderate fees are greatly in excess of its requirements for free legal aid.[n69]

Experience in later years confirmed the magnitude of this potential demand after the Supreme Court had lifted the ban on advertising[n70] and had struck down minimum fee schedules,[n71] and legal services came to be more or less freely marketed to middle income persons.

As the consumer movement gained momentum during the late 1950s, the need of middle-income consumers for improved access to legal representation received increasing attention. Some consumer groups, primarily those associated with organized labor, concluded that a way should be found to surmount the obstacles faced by the rank and file in accessing the justice system.

Some approaches were initiated by individual lawyers and were entrepreneurial in nature; others were sponsored by the organized bar and conceived as a means for fulfilling the bar’s responsibilities to the public; while still others, inspired by experience in delivering legal services to the poor, were developed in furtherance of public policy objectives and adapted to the needs of particular groups of consumers.

Basically, each of the mechanisms was aimed at the same three things:

helping people to know when to seek legal assistance;

letting them know that lawyers were available; and

making legal services affordable for persons of moderate income.[n72]

(1) Advertised legal services and clinics. The approach of enterprising individual lawyers, taking their cue from the medical profession, was to organize "legal clinics." A "legal clinic" has been defined as "a law firm that offers legal assistance at below-market rates for relatively routine types of...legal services [to individuals rather than to business] and that uses advertising, fixed-amount fees and standardized operating procedures and forms to increase volume and reduce costs."[n73]

Lawyers who organized their practice on the clinic model, following the Supreme Court’s decision in the Bates case, sought to reduce the cost of providing legal services by reducing the amount of lawyer time involved in rendering individualized legal assistance.[n74] This required high volume to justify setting up standard procedures. Standardization was more readily accomplished in highly specialized offices such as those for conveyancing, personal bankruptcies or workers’ compensation. It also required intensive use of paraprofessionals, under a lawyer’s direction, as interviewers, investigators and technical assistants. It called for word processors and computer software to generate standard forms and checklists, and to maintain practice controls and accounts, so that fees could be lower than those charged by traditional law firms.

A 1970 national survey of legal clinics indicated some difficulty in identifying true clinics, which by then had become a diverse group, not generally high-volume or streamlined in operations, but all advertising, at least in the Yellow Pages, and providing routine legal services for set fees.[n75] In 1980, it was estimated that there were between 475 and 583 private clinics across the country, mainly in metropolitan areas, run predominately by solo practitioners.[n76]

While it appears that the name "clinic" may be disappearing as connoting "poor people only" to many prospective clients, large numbers of firms are in fact using a "clinic" approach. A 1988 study reported that there were at least 15,000 to 16,000 lawyers nationally in law offices that had adopted the techniques of the clinic, advertised civil legal services for individuals on a basis other than contingent fees, and addressed their marketing primarily to middle income consumers.[n77]

(2) Franchised legal services. The experience of both Hyatt Legal Services and the Law Offices of Jacoby & Meyers may suggest limits upon the effectiveness of national organizations operating local law offices that use the "clinic" approach. Both Jacoby & Meyers and Hyatt grew into interstate chains of small law offices supported by heavy television advertising. They generally avoided head-to-head competition with each other by locating their offices primarily in different media markets.[n78] However, the subsequent history of both organizations illustrates the difficulty in maintaining such a multistate chain.

Hyatt Legal Services was established in 1977. It popularized the concept of providing inexpensive, flat-fee legal services. In the mid-1980s it had almost 200 offices nationwide. Since then, Joel Hyatt who was the co-founder, sold off the offices to lawyers employed in the individual offices and the company charter was canceled in September 1999.[n79] Meanwhile, Hyatt had established Hyatt Legal Plans that offered legal services at a flat-rate to consumers through their employers as part of benefits plans. In 1997, Hyatt and his partners sold Hyatt Legal Plans to MetLife. He is now a professor of entrepreneurship at Stanford University Graduate School of Business.[n80]

As of November, 1999, Jacoby & Meyers had 17 remaining offices in various metropolitan areas of New York, New Jersey, Pennsylvania, California and Arizona. Gail J. Koff, a New York lawyer, is the remaining founding partner and sole owner of the firm.[n81] In November, 1999, this firm launched Instant Interview, an interactive legal web site designed to sign up clients who log on and answer a page of questions to see if they have a case worth pursuing. In the same month, the firm announced that it would encourage all of its attorneys to use Cybersettle.com, an online claim resolution system.[n82]

No multi-state chains of law offices comparable to Hyatt Legal Services or Jacoby & Meyers have since emerged. However, various small firms around the country have established local chains and, while frequently not describing themselves as legal clinics, have targeted their practices toward persons of moderate means.[n83]

From the perspective of the individual lawyers engaged in these new methods of delivering legal service, there are marked differences between working in a local chain of storefront offices and in a local unit of an interstate firm, such as Jacoby & Meyers. In the small, entrepreneurial setting of the locally advertised, clinic-like operation, many of the aspects of traditional solo and small-firm practice survive, but are altered by the advertising which frequently draws a different clientele of single-matter drop-ins for whom the lawyer performs a standardized service at a fixed-fee with little opportunity for developing a client base.

As for the attorney working in a large multistate chain, the lawyer must adapt to working in a large organization that emphasizes managing the work of its lawyers and their fitting into the management scheme focused on the efficient, productive and cost-effective delivery of service. Within an otherwise structured context, Professor Seron found in her study that staff attorneys were expected to give special attention to self-promotion and the development of social skills among attorneys and staff alike. Moreover, quality service was equated with how consumers rated their treatment by an attorney on criteria deemed important by consumers: tidiness, returning telephone calls and politeness. However, the managers and the individual attorneys agreed that each attorney retained control over his or her own cases and clients, and that the relationships were private and personal between attorney and client without interference from management.[n84]

Professor Seron found a consensus as to what is required to be a successful attorney in a franchised legal service firm: One must be able to carry a high-volume practice of individual-client cases -- wills, bankruptcies, divorces -- while acting in an entrepreneurial fashion, bringing in new business, complying with a managed reporting system, working very long hours and building on the advertising provided by headquarters.[n85]

(3) Lawyer referral and information services. Bar-sponsored lawyer referral services are operated by state and local bar associations providing coverage for virtually every county in the United States; however, the services they provide vary considerably. In a basic system, a caller is simply given the name of the next lawyer on a rotating list who handles the kind of matter involved; an appointment is made, and the caller can then go to the lawyer’s office and receive a half-hour consultation at a fixed fee of $20 or $25.

However, among the more than 300 lawyer referral programs nationwide, a great variety of additional services are offered.[n86] Many programs are directed by staff attorneys with in-house staff available to furnish basic legal advice as well as suggestions as to where prospective clients may obtain help. Some programs conduct consumer education regarding lawyers and the law, and publish "legal check-up" materials and lists of community resources. A small number charge no fee for initial consultation.

Many referral services operate in conjunction with legal aid offices or have "no-fee" pro bono panels of lawyers. Bilingual staffs are common and a few accept credit cards for legal service.

To help ensure the competency of members of referral panels, a number of the services have screening procedures for would-be panelists or have CLE requirements or peer review as a condition of continued membership on panels. In some jurisdictions panels of specialists are available, for which qualifying education and experience are a prerequisite to membership.

It has been estimated that five to six million requests are handled each year by lawyer referral services nationwide.

Membership on a referral panel is seldom, if ever, the principal source of a lawyer’s practice, but tens of thousands of solo and small-firm practitioners are today members of bar-sponsored panels, which provide a useful channel of introduction to prospective clients, while helping members of the public locate lawyers who can serve their needs.

Recently, privately sponsored lawyer referral services have sprung up. These are operated and funded primarily by groups of law firms specializing in handling personal injury and professional and product liability claims on a contingent fee basis. These services are frequently more visible than bar-sponsored services because of the television and other advertising that they employ.[n87]

(4) Prepaid and group legal service plans. If legal clinics can be seen as arising from the entrepreneurial efforts of individual lawyers, and lawyer referral services as the bar’s program for increasing public access to legal services, then prepaid and group legal service plans may be looked upon, at least initially, as a consumer group-response to the problem of legal assistance for persons of moderate means.

Following a series of Supreme Court decisions between 1963 and 1971 holding that private associations may advise members on legal claims, and recognizing the right of people to associate to obtain legal assistance, legal service plans of a variety of types proliferated.[n88] Some of these arrangements were very simple: an agreement between a group of consumers and a law firm under which members of the group could receive certain free advice and receive fee discounts on routine legal services. Information about the arrangement would be provided by the group to its members. The endorsement of the firm by the group’s leadership seemed to provide a ready answer to the common question: "Where can I find a good lawyer?"

This type of legal service arrangement exists today between literally thousands of groups of consumers and individual lawyers and law firms. The largest and most elaborate of these plans is the Union Privilege Legal Services Plan sponsored by the AFL-CIO. Theoretically, some 17 million union members are eligible to receive free and discounted service under this plan from a nationwide panel of attorneys selected by the plan’s administrators. The panel members are primarily drawn from among solo practitioners and 23 three-lawyer firms. AARP now has a variation on this plan. Members of AARP can obtain limited access services through lawyers identified in the Yellow Pages as AARP participating attorneys.

Such "group discount" plans address consumer concerns as to the availability and price of legal services, by extending the existing framework for financing and delivering legal services. The group member is still on his or her own to determine whether a legal problem is present and is substantial enough to warrant getting a lawyer and coming up with the money to pay the fee.

In the early 1970s consumer groups and the organized bar, with the cooperation of the insurance industry, jointly developed the prepaid legal service plan. In one sense, a prepaid legal service plan is simply a way of financing the cost of legal services. In Europe, legal expense insurance, as it is called, has been performing this financing function for over 80 years.

One of the most popular prepaid legal service plan systems is a direct derivative of the "group discount" plan of the kind sponsored by consumers groups such as the AFL-CIO, the AARP and the National Education Association. Under such an access plan, the basic service is unlimited legal advice and consultation by telephone during normal business hours. Under the pure access plan, benefits are limited to this service only. In addition, service may include brief in-office consultations, the preparation and review of simple legal documents, such as wills, and short letters to be written or phone calls to be made to adverse parties. If more complex legal work is necessary, the plan member is referred to an attorney who has agreed in advance to furnish such service at a discount. The fees for these additional services are paid by the group member.

This type of prepaid legal service plan has been marketed directly to millions of American households by major credit card issuers at a cost of between $7 and $12 per month. Recently, the publicly-held Prepaid Legal Services, Inc., has offered a more comprehensive coverage package, through its sales network to individuals for about $25 per month; it claims to have some 600,000 subscribers.

The established comprehensive form of prepaid legal service is typically arranged in connection with employment. Either a labor union has negotiated a legal service benefit plan for all employees as an employer-paid fringe benefit, or an employer offers such a benefit to employees on a voluntary basis as part of a flexible benefits plan.

Comprehensive prepaid legal service plans are commonly designed to cover 80-90% of the average person’s legal needs in a given year. Benefits of the plan may include direct telephone access to services, as under an access plan, but, in addition, coverage for both in-office and court work in most areas of the law. Such plans cover the types of problems most often brought by individuals to lawyers: wills and estates, consumer problems, landlord-tenant, real estate transactions, domestic relations, bankruptcy, representation before administrative agencies, civil disputes, and certain limited types of criminal matters.

Hyatt Legal Plans, Inc. ("HLP"), now a subsidiary of the Metropolitan Life Insurance Company, serves more than 50 corporate and union sponsors with a variety of benefit packages. Plan participants call the HLP service center toll-free, it directs the callers to the nearest legal service providers. To support these plans, HLP maintains a network of private law firms.

The largest employer-funded prepaid legal service plan in the country is the UAW Legal Service Plan, which covers all hourly workers of Ford, Chrysler and GM and provides access to a comprehensive list of legal services to over 2 million people, counting employees and family members.[n89] The New York City Municipal Employees Legal Services plan, covering some 130,000 public employees of the city, is based on a pilot project funded in the 1970s by the Ford Foundation for District Council 37 of the American Federation of State, County & Municipal Employees (AFSCME) to learn how social workers and lawyers might work together, in a multidisciplinary setting, in the delivery of legal services.[n90]

Many plans have developed today into full-fledged legal service delivery systems with computerized referral systems, complaint mechanisms, quality control protocols, nationwide attorney networks, client information newsletters and cost-conscious administrative controls. Administration of plans by insurance companies and other service organizations has added the element of mass marketing designed to get consumers to enroll.

The type of arrangements entered into with lawyers under these plans has also evolved. Today, there are plans where staff attorneys service all members; others have a network of law firms under contract; while still others have a loose panel of general practitioners who have agreed with the plan’s administrator to accept cases under the plan. The network supporting some plans number as many as 12,000 lawyers, predominately solo and small-firm practitioners. Solo practitioners continue to serve as exclusive plan attorneys for small groups, as well as participating in many of the other arrangements.

From the perspective of solo and small-firm practitioners, the spread of legal service plans has presented new business opportunities for lawyers, most typically as legal service providers for plan members.[n91]

In 1989, an American Bar Foundation study indicated that 18% of U.S. households, representing some 43 million people, reported at least one person as a member of a prepaid or group legal service plan.[n92] The National Resource Center for Consumers of Legal Services in February, 1998, estimated that there were 105 million people eligible to use at least one legal service plan (including the armed services’ legal assistance plans), or 39% of the population.[n93]

Since legal service plans involve elements of insurance, marketing and employee benefits, their emergence has brought new forms of regulation into the legal-service-delivery equation. Initially, provisions of state codes of professional responsibility severely limited the extent to which lawyers could participate in prepaid legal service plans. The decade of the 1970s saw serious debates between the bar and sponsors of legal service plans regarding ethical rules prohibiting plans which limited the choice of lawyers that could be used by plan members. During the 1980s ethical restraints were eliminated and most states during the 1980s revised their professional codes to accord with the optional provisions in this respect of the ABA Model Rule of Professional Conduct.[n94]

The insurance codes of many states were amended to allow insurance companies and other commercial firms to market, underwrite and administer legal insurance plans. Both the Taft-Hartley Act and the Employee Retirement Income Security Act of 1974 (ERISA) were modified to contain provisions recognizing legal services as a legitimate employee benefit. Finally, the Internal Revenue Code was amended in 1976 to exempt the value of employer payments to legal service plans from employee taxable income, but this exemption expired in 1992 and attempts to have it reenacted have been unsuccessful.

There is evidence that all of these mechanisms, together with the spread of lawyer advertising and increased public awareness of the need for and availability of legal services, have significantly stimulated the use of legal services. The American Bar Foundation survey in 1989 found that the percentage of adults who have ever used legal services increased from 64% to 72% between 1974 and 1989. The proportion of adults having used legal services within three years of the 1989 survey was 39%, up from 27% during the same period prior to the 1974 survey. While the use of legal services increased for all income groups, it grew at the highest rate among the moderate income segment of the population.[n95]

c. Advocates for group legal rights

Private lawyers are frequently retained by groups of individual citizens who have a similar legal interest. Taxpayers, members of a profession, residents of a community, consumers of a particular product or service, members of a labor organization and stockholders of a corporation routinely employ private counsel to press their group legal rights.[n96] For the disadvantaged members of the community, their access to redress has been more problematic, but following the Supreme Court’s decision in NAACP Legal Defense Fund, Inc. v. Button[n97] in 1963, litigation to vindicate group legal rights became a favored avenue by which "public interest" advocates sought to redress what were perceived to be social and economic injustices.

While the public interest bar established its separate identity and enjoyed its broadest support during the 10 years, 1965-1975, it remains today an active and significant segment of the practicing profession working in three interrelated practice settings. The first setting is the so-called public interest law firm, a private entity funded by individuals, frequently by foundations, and sometimes by attorneys’ fees awarded in litigation. In 1988, there were reported to be 200 such firms employing 1000 lawyers and financed to the extent of $130 million a year.[n98]

Some public interest law firms are identified by the client group they represent: children, the disabled, industrial workers, women, the elderly, gays and lesbians, minorities or the poverty stricken.[n99] Other firms are known by the causes they advocate: the environment, natural resources, civil liberties, human rights or issues pertaining to the communication media. Still other firms take the names of organizations which support them: Pacific Legal Foundation, National Legal Center for the Public Interest, Mountain States Legal Foundation, Washington Legal Foundation or Moral Majority Legal Defense Fund. Public interest firms which comply with IRS regulations enjoy tax exempt status and today span the ideological spectrum from liberal to conservative.[n100]

The work of the public interest law firms is significantly augmented by a large number of private public-interest lawyers and law firms who devote a substantial segment of their practices to representing community groups, environmentalists and civil rights plaintiffs.

A further practice setting for public interest lawyers is in government. The agencies in which they work are frequently the product of prior successes by public interest advocates and have been established to serve disadvantaged groups.

The late Justice Thurgood Marshall summarized the contribution of public interest law in these words:

Public interest law seeks to fill some of the gaps in our legal system. Today’s public interest lawyers have built upon the earlier successes of civil rights, civil liberties, and legal aid lawyers, but have moved into new areas. Before courts, administrative agencies and legislatures, they provide representation for a broad range of relatively powerless minorities...

They also represent neglected interests that are widely shared by most of us as consumers, as workers, and as individuals in need of privacy and a healthy environment. These lawyers have, I believe, made an important contribution. They do not (nor should they) always prevail, but they have won many important victories for their clients. More fundamentally, perhaps, they have made our legal process work better. They have broadened the flow of information to decision makers. They have made it possible for administrators, legislators, and judges to assess the impact of their decisions in terms of all affected interests. And, by helping open doors to our legal system, they have moved us a little closer to the ideal of equal justice for all.[n101]