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California Bar Exploring Opportunities To Deploy AI

The agency is examining how artificial intelligence could help it review misconduct complaints and administer the bar exam.


The State Bar of California has started wading into the artificial intelligence waters.

The agency is exploring ways AI could help bolster the efficiency of its attorney discipline system and assist with administering the bar exam.

The bar recently entered into a contract with the MITRE Corporation to help it develop and evaluate algorithmic processes for identifying whether aattorney misconduct complaint could be closed without investigation.

State Bar Executive Director Leah T. Wilson said if an AI tool can be crafted to help the bar more speedily review whether to close or investigate complaints, it would reduce the administrative burden on staff. That in turn would allow the bar to shift its “human resources to other parts of the case processing continuum,” Wilson said.

Freeing up staff to assist with serious allegations of lawyer misconduct could be beneficial in light of the state auditor’s recent recommendation that the State Bar not hire as many new employees for its discipline unit as desired.

Wilson said an AI tool could also assist in ensuring a level of consistency and standardization in the bar’s review of the roughly 16,000 attorney misconduct complaints it receives annuallyThe technology could be especially helpful amid a nearly 60 percent increase in complaints made to the bar in recent months, a bump that has come amid the agency starting to accept online complaints.  

It was the transition last fall to permitting online complaints that allowed the bar to even contemplate an AI tool for reviewing such filings, according to Wilson.

She stressed that the MITRE project is in the early stages, and the bar will closely examine the effectiveness of the tool developed.

“If it’s not reliable to a very high degree of statistical significance, we couldn’t implement it,” Wilson said.

The bar’s $90,000 contract with MITRE, which was signed last month, calls for the company to complete its work on the project by mid-October.

Meanwhile, the State Bar is planning to use AI to help it administer the First-Year Law Students’ Examination, known as the “Baby Bar.” Law students completing their first year of law study at an unaccredited law school or through the Law Office Study Program are among those who must take the test.

At two of the sites where the Baby Bar will be given next month, the bar will be piloting the use of AI proctors for the essay portion of the exam that is taken on computers, Wilson said.

Live proctors will be there as well to ensure things go smoothly and to respond if the AI software alerts them to any patterns of eye movement or gestures out of the norm for test takers.

“If all goes well, it is our intention to deploy AI proctoring for the July bar exam,” Wilson said.

The bar began exploring AI proctoring because it struggled last year to attract enough proctors to administer the exams it gives to prospective lawyers.

Wilson said there will still need to be some human proctors present at future exams for security purposes and to help with any issues that arise, according to Wilson. But she said a successful pilot of AI proctoring would reduce the overall need for human proctors moving forward. 

On both the bar exam and attorney discipline fronts, Wilson said the bar is seeking to strike the right balance between being forward-leaning while protecting against the risks that arise with the deployment of new technologies.

I think it is the responsibility of good government everywhere to figure out how we can take advantage of technology to improve the services that we provide to the public,” she said.

Separate from the initiatives mentioned above, a bar task force is actively working to identify regulatory changes that would provide members of the public with greater access to legal services through technology, such as AI. The next meeting of the Task Force on Access Through Innovation of Legal Services is Monday, May 13.


*This article first appeared on Evolve the Law. 

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California Bar Task Force Weighs in on Utility of Legal Tech Tools

There are more than 320 digital legal tools designed for use by non-lawyers in the U.S., but access to justice expert Rebecca Sandefur says the potential for the technologies to assist Americans with their civil justice problems has largely gone unrealized.

“Most of the tools that exist right now are neither efficiently scalable nor legally empowering, but there’s no reason it has to stay that way,” Sandefur said this week.

The associate professor at the University of Illinois at Urbana-Champaign was speaking during a Monday meeting of the State Bar of California’s Task Force on Access Through Innovation of Legal Services.

The 23-member panel is charged with “identifying possible regulatory changes to enhance the delivery of, and access to, legal services through the use of technology, including artificial intelligence and online legal service delivery models.”

Sandefur told the group that one promising digital legal is JustFix, a free app that allows tenants in New York to notify their landlord of issues needing repair.

The app has a tenant go through a room-by-room checklist and upload photos, as well as other information, to document habitability problems. The tool then uses a lawyer-approved template to send a certified letter to the tenant’s landlord outlining the concerns that need to be addressed to comply with housing codes.

“There are very few things like this, but obviously there is a lot of potential here to work on specific problems in a focused way,” Sandefur said.

She said one reason there are not many effective tools was developers’ fears of facing unauthorized practice of law allegations.

“Right now, the reason most of these tools are terrible is because there are deep concerns in the community of developers that you are going to go after them if they create a tool like JustFix that does something useful because it’s nudging up against the edge of giving legal advice,” Sandefur said.

She said those fears were being driven by one of two things: either the developer community does not have a proper understanding of what constitutes legal advice, or the restrictions on unauthorized practice of law are too stringent.

If the bar task force determines California’s unauthorized practice of law regulations are too restrictive, Sandefur encouraged the panel to carefully consider ways to relax them so that tools helping consumers with their civil justice problems “can be useful, as well as used.”

Task force member Lori Gonzalez said she certainly would like to see the bar make it easier for non-attorneys to innovate in the legal tech space.

Gonzalez noted that lawyers “by personality are abnormally adverse to risk, which is the opposite of what you need to be an entrepreneur or to push innovation.”

The task force is charged with reviewing the consumer protection purposes of the prohibitions against unauthorized practice of law (UPL) and “the impact of those prohibitions on access to legal services with the goal of identifying potential changes that might increase access while also protecting the public.”

The panel is also examining alternative business structures, multidisciplinary practice models, lawyer advertising, and fee splitting. The task force is slated to submit its final recommendations to State Bar’s Board of Trustees by the end of 2019.

Sandefur said the discussion at the task force meeting left her encouraged about the group’s efforts, and she told the panel they had a terrific opportunity to make a nationwide impact in this arena.

“If California does something good, it helps a whole lot of people,” Sandefur said. “But it’s also a great model for the rest of the country, so I’m delighted that you are starting to work on this.”


*This article first appeared on Evolve the Law

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How can Blockchain and other Consensus Driven Cryptographic Technology be Regulated?

Some participants in the crypto/blockchain/DLT industry actively invite regulatory oversight but policy considerations and the usual patterns of legal and regulatory development can mean that wanting to be regulated is not always the same as being able to be regulated.

In the Hong Kong Lawyer, Syren Johnstone examines aspects of the technology that make it difficult to regulate the primary and secondary market, while at the same time allowing industry development without it being affected by fraud and abuse, or being used to service money laundering and other criminal purposes. It concludes by suggesting the policy approach that regulators should take to this new technology.

*This article first appeared in the Hong Kong Lawyer


The technology is the starting point

In 1988 Tim May famously stated “Computer technology is on the verge of providing the ability for individuals and groups to communicate and interact with each other in a totally anonymous manner. Two persons may exchange messages, conduct business, and negotiate electronic contracts without ever knowing the True Name, or legal identity, of the other.” Today, that has become a reality in a developing digital ecosystem that is being built on cryptographically secure consensus technology (“CCTech”) that forms the basis of blockchain and distributed ledger technology applications.

CCTech enables qualitatively different boundaries of commercial activity than was previously possible. It holds the promise of enabling new ways of undertaking existing commerce that provide efficiency gains, as well as generating new types of commercial activity. The first peer-to-peer version of electronic cash created on 3 January 2009 (Bitcoin), has been followed by other cryptocurrencies, digital tokens that provide access to some service or utility or operate as a security (see Hong Kong Lawyer, March 2018 “ICO Utility Tokens and the Relevance of Securities Law”), and smart contracts (collectively, ”cryptos”).

Industry growth has involved developers tapping into the highly regulated public capital market in ever-larger offerings. A secondary market facilitated by crypto exchanges has emerged. This is creating significant challenges to regulatory agencies to define how existing laws and regulations might apply.

Establishing a sustainable regulatory approach is complicated by features of CCTech still undergoing transformational evolution that pose novel challenges to regulatory policy making and raise fundamental questions about what regulatory oversight might look like, and to what it should attach.

The prospect of regulation

On the prospect of oversight by regulatory agencies, the crypto-industry continues to express its voice in a partisanly manner. There are those who see independence from oversight as a necessary expression of political freedom, or advocate that the industry should not be subjected to any oversight other than by the community participating in cryptos. Other participants in the industry wish to take advantage of the current situation by moving to the lowest commercially viable legal standard or jurisdiction.

There are also those who actively seek to be regulated as a means of being accepted into mainstream commercial activities and validated as a legitimate activity, and to foster the industry by directing it to applications benefitting society. Some see regulation as a competitive advantage over others who are ill-equipped, or inadequately funded, to cope with the anticipated burden of regulatory oversight. However, policy considerations and the usual patterns of legal and regulatory development can mean that wanting to be regulated is not always the same as being able to be regulated.

Regulatory agencies have to date primarily applied existing regulatory standards to the industry where they can. There is a general sense that this will not be enough to facilitate industry development while also dealing with the risk of fraud and consumer abuse. There are also real concerns that the anonymity provided by CCTech could be used by bad actors to further criminal purposes.

The primary hurdle for regulatory clarity is sometimes said to be the legacy system of laws, regulations and financial and commercial practices that have been established in a pre-CCTech era. Industry requests for regulators to specify the features that would determine which regulatory silo a crypto belongs to (money, security, futures contract, commodity, or other) oversimplifies the new context presented by CCTech and underestimate the related policy considerations.

Primary market activity thus remains governed by a singular question: is the crypto a security? This leaves CCTech developers cum promoters to resolve questions that lawyers and regulatory agencies cannot currently clearly define other than by reference to broad functional concepts, or narrow established categories, raising the danger of ex post regulation.

The development of taxonomies that seek to map cryptos onto existing securities laws as a means of assisting regulatory clarity has become a mini-industry. However, these often “solve” the problem without changing the underlying assumptions about how existing laws securities laws apply. As such they are essentially recursive and achieve very little. It is of course somewhat paradoxical to address something new by treating it as though it were something old.

In contrast to the situation in the primary market for securities, regulators in the UK and the U.S. have permitted a futures market to evolve around cryptocurrencies (Bitcoin, and recently Ether). The court in CFTC v. McDonnell, et al. (18-CV-361, 2018) has confirmed the oversight powers of the U.S. Commodity Futures Trading Commission (“CFTC”) in this regard. Although many in the industry perceive regulatory oversight as abhorrent to the essence of CCTech, regulatory oversight of the futures market has enabled the development of financial products within an established regulated infrastructure that has facilitated the perception of cryptocurrencies as a valid asset class to gain exposure to. Importantly, it means that investors are brought within a context subject to safeguards imposed on regulated intermediaries.

Building blocks

Regulation of the financial services industry in the modern era is based around three primary choke points concerning products, venues and acts. These assume some form of intermediation via markets, brokers and advisers. Regulation has already had to adapt in response to technology that displaces human involvement, such as algorithmic trading and robo-advising, where sentience ceases to form part of the regulated act but rather is embedded in the coding that enables the act to be undertaken.

CCTech presents additional difficulties. There is a venue, but it may be only exist in a code supported on a network of participants. There is an act, but that may take place without intermediation other than the non-sentient operation of a code operated over a network in which the creator no longer has a role. There is a product, but there is a recognised lack of clarity as to how to characterise a crypto for the purposes of regulatory silos. CCTech enables venue, act and product to be collapsed into the operation of code via distributed networks, decentralised and dis-intermediated arrangements, and smart contracts.

The possibility of undertaking commercial activity on a decentralised, peer-to-peer basis represents a qualitatively different kind of issue for regulatory agencies. At some point, adaptability may be challenged to the extent that existing regulatory tools which have developed around centralised, intermediary-based systems may to some extent be rendered obsolete, raising questions as to the continued viability of existing legal silos and traditional choke points, and giving rise to policy concerns.

Even if basic problems were solved about which or whether a law applies to a crypto, or at what choke point to apply it, there remain problematic areas. Regulation proceeds on the basis that regulation is possible but CCTech does not, at the present point in time, provide some of the usual building blocks that enable the meaningful implementation of regulatory objectives.

This includes an assortment of investor protection and market integrity considerations, such as: integrity of ownership and integrity of transactions, issues related to account management including proof of ownership to public audit standards, custody and segregation, how record keeping is to be undertaken, how exchange regulation might work, the ability to assert market transparency and market abuse protections, how money laundering risks are to be addressed.

To this can be added technical issues that the industry is actively trying to solve, many of which potentially give rise to legal issues and have implications for investor protection and market integrity. These often require an appreciation of how the science and technology operate and their weak points such as how they might be gamed by bad actors. They include: the management of keys and wallets, the risk of consensus hijack, denial of service attacks, double spending, scalability, code governance controls and cyber security challenges.

Disclosure is another building block. Key disclosures might address: does the underlying code do what it is expected or promised to do, is the governance of the code appropriate (such as agreeing on roll-backs), has it been properly written so that it is free of bugs that might facilitate hacks or other problems, has the security protocols been properly implemented, is the crypto scalable to benefit from network effects. Not all codes are the same in this regard and coding errors have caused significant problems in the past, yet there are no established standards for audits of code writing.

Not all problems are adequately managed by merely releasing information. Positive action is sometimes required. This can take the form of an industry regulating itself via standards and best practices, but the industry is in its nascent stages in this regard. An area of development to watch is the standards being developed by the International Organisation for Standardisation in their ISO/TC 307 programme. Nine new projects concerned with blockchain and DLT are currently in their proposal or preparatory stages.

Resolving some of the above building blocks is therefore a precursor for effective, granular regulation to develop. Solutions are likely to come from the technology itself as it develops in response to regulatory expectations. This may serve to facilitate the development of regulatory technology, which presents opportunities for creating avenues within the underlying CCTech code for interactions between the actors involved in any crypto generation or exchange, any buyer of a crypto, and regulatory agencies.

One of the inherent difficulties of addressing the regulation question is the reality that the industry is in its early stages of maturation. Core concepts are still subject to significant debate, the potential technological implementations of the science remains in a discovery and development phase, and the prospects for commercial use cases of CCTech is still evolving. This makes the policy formation that leads to regulatory implementation difficult as these conditions increase the risk that regulations are made only to see the industry change under it, or regulations are made that capture the wrong family of acts – in either case the policy objectives are missed.

The dynamics that animate regulatory change are subject to two related overarching considerations: to what extent is meaningful regulation possible and, if it is, how and when should regulatory oversight be imposed? Regulatory intervention that is too early, too heavy, or misses the target runs the risk of slowing the growth of the industry and damaging the beneficial prospects it offers to commercial activity and society more generally.

The technology is also the end point

The present state of regulatory uncertainty creates risks to the industry itself. It increases the cost of industry development because raising capital in an uncertain legal environment gives rise to increased liability risk. To this can be added the risks (including attendant industry costs) already observed in traditional capital markets (primary and secondary) that include fraud, money laundering, theft, mis-disclosure, manipulative practices, internal control failures, misfeasance, and adequate custody and handling of money, or securities or other assets belonging to another.

Whatever regulatory controls might be put in place, the reality is that the nature of CCTech presents a fundamental obstacle to oversight control because of the possibility – and consequences – of an alternative means of undertaking commerce on Internet-based networks that does not require the involvement of a regulated financial institution that intermediates transactions.

The intractable problem created by CCTech is how to bring cryptos within an appropriate oversight mechanism given its particular technological capability to subvert – unmeasured oversight control runs the risk of achieving the opposite effect of driving activity further out of sight. The proposal by the United States Treasury’s Office of Foreign Assets Control (“OFAC”) that it may add digital wallet addresses to its SDN List was criticised for just that. This reflects the anarchic potential of CCTech that is crucial for regulators to fully grasp if regulation is to be successfully developed. Regulatory agencies may need to look for ways of bringing oversight to the industry by using strategies different to those previously employed.

Actors in the industry seeking to be regulated are doing so for a number of commercial reasons including validation and legitimacy, the usual assurances provided to the market by regulatory oversight, industry risk reduction, and access to a larger pool of capital. It is proposed that these reasons can be engaged to make regulation a desirable option.

In short, the best way to establish regulation may be to make it attractive. That may not be a regulatory end-point but a point from which regulators can begin to better work with the industry. For that dynamic to work, it is essential that oversight controls do not undermine the opportunities that cryptos offer to new ways of engaging in commercial activity. Regulations must be based on outcomes that are independent of specific technologies and activities, such as fair disclosure, industry standards, and accountability for wrongdoing. Care must be taken that oversight controls do not to operate as anti-competitive tools.

The range of relations that CCTech can possibly create, and the behaviours in the market once they are created, are at once simulacra of human commerce and a potential further development of it. It remains to be seen whether the current trajectory of regulatory thought and action is working toward supporting the efficient allocation of risk and industry development, wherein capital finds projects that offer, and have a reasonable prospect of delivering, economic and social improvement.


Interested in the impact of new technologies on regulation? Get involved at this year’s annual conference. Contact Jim McKay (jamesmckay@lawscot.org.uk) to become involved as a speaker or session moderator. 

Colorado Lawyer Self-Assessment Program yields analytical insights

Colorado Supreme Court Office of Attorney Regulation Counsel started developing its lawyer self-assessment program more than two years ago, immediately after a seminal workshop on proactive, risk-based regulation at the 41st ABA National Conference of Professional Responsibility in May 2015. The new resource is a leading facet of a larger shift toward proactive management-based regulation, which aims to help lawyers practice ethically and soundly in the first place, rather than just reactively imposing discipline after lawyers make mistakes.

The new system provides the regulatory team with real time stats on lawyer engagement and self-assessed professional performance. It highlights the professional objectives scoring the highest and lowest across all respondents, providing the team with evidence to support further educational program development. The platform also has the ability to create customized lists of continuing legal education (CLE) resources based on each respondent’s own personal benchmarks and areas of need. These lists make yearly CLE planning fast and easy for lawyers, and keeps them focused on the most effective resources for their needs.

Jon White, staff attorney at the regulator, writes “The practice of law will always be challenging. The “ounce of prevention is worth a pound of cure” approach of the proactive practice program seeks to reduce some of that stress. The self-assessments give lawyers the blueprint to build an ethical infrastructure. Lawyers, in turn, benefit from enhanced peace of mind. Clients benefit from exceptional service. It is a win-win for all.” The insights generated by the program’s data is informing the regulator where practitioners need more assistance, and where there may be weaker points in the sector as a whole. Staying ahead of this issues protects the public and strengthens the jurisdiction as a whole.

Read more about Colorado’s Lawyer Self-Assessment Program Here

 

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Sending the Message: Using Technology to Support Judicial Reporting of Lawyer Misconduct to State Disciplinary Agencies

Despite the strong public interest in effectively regulating lawyers, neither state nor federal courts have developed adequate policies and practices to ensure that lawyers’ misconduct during litigation proceedings is consistently reported to state disciplinary agencies. The reasons for this inconsistency—and the extent to which it should be considered an actual inadequacy and a problem calling for a rule-based solution—have been the subject of active scholarly discussion and debate. In practical terms, however, one contributing factor may be the inherent inefficiencies involved with the current reporting system. These inefficiencies in the judicial reporting process can be substantially mitigated—and regular reporting thereby supported—through the effective use of electronic database technology. For many years now, courts throughout the United States have been using computer and electronic technology, with its continually accelerating capabilities, to improve their processes for receiving, storing and transmitting judicial filings and records. This so-far successful experience with electronic filing and records creates an opportunity for courts to extend these technological breakthroughs to provide logistical support to a much improved system for judicial reporting of lawyermisconduct.

To accomplish this objective, this Article proposes that state and federal court systems create electronic databases, accompanied and supported by uniform court procedural rules and policies, to receive and store judicial reports of litigation-related lawyer misconduct. These databases should be accessible to and searchable by state disciplinary agencies using universal licensing numbers assigned to individual lawyers. To set the stage for this proposal, Part I will examine the history and scope of the ethical code of conduct obligations of state and federal judges to report lawyer misconduct to an appropriate disciplinary authority, as well as reporting pursuant to procedural rules governing civil litigation. Part II will critique the adequacy of the judicial response to these existing reporting provisions, and consider the adverse potential consequences that underreporting may pose to the public interest and to the traditional judicial prerogatives in regulating the practice of law.

Turning to the specifics of the proposed reforms, Part III will recommend how state and federal electronic databases accessible to and searchable by state disciplinary agencies should be organized and structured, and explain the criteria courts should use in deciding when a report is appropriate and how it should be categorized within the databases. Finally, Part IV will offer responses to several procedural questions relating to the implementation of these new reporting systems and databases.

Read the Full Article Here

Michael S. McGinniss, University of North Dakota School of Law

 

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An Australian Study on Lawyer Vulnerability & Legal Misconduct

Vulnerability to Legal Misconduct: Qualitative Study of Regulatory Decisions Involving Problem Lawyers and Their Clients

An emerging body of scholarship discusses ‘vulnerability’ as an antecedent of legal misconduct. One conceptualization of vulnerability indicates that an individual has greater susceptibility to risk of harm, and safeguards may protect against that risk of harm. This empirical study adds to the normative research with a qualitative analysis of 72 lawyers with multiple complaints and at least one hearing, paid financial misconduct claim, or striking from the roll (“problem lawyers”) in Victoria, Australia, between 2005 and 2015 through 311 regulatory decisions. We found that problem lawyers were disproportionately likely to be male, over age 45, and work in a sole or small practice. A quarter of these lawyers suffered from health impairments and among the clients harmed, half had cognitive impairments, were older age, or non-native English speakers. These findings underscore the need to better understand vulnerabilities to promote lawyer well-being, protect exposed clients, and reduce lapses in professionalism.

Access Full Report Here

Authors: 

  • Tara Sklar, University of Arizona – James E. Rogers College of Law
  • Jennifer Schulz Moore, University of New South Wales (UNSW) – Faculty of Law
  • Yamna Taouk, Melbourne School of Population and Global Health
  • Marie M Bismark, University of Melbourne
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California continues to debate division of regulation and representation functions

The California State Bar has been investigating the potential division of regulation and representation functions over the past five years. The Governance in the Public Interest Task Force concluded in 2017, launching a five-year strategic plan to “successfully transition to the ‘new State Bar’ — an agency focused exclusively on public protection through regulating the legal profession and promoting access to justice”.

Under the new system, the California State Bar will be a purely regulatory body. All representative functions will be transferred from the Bar to the  California Lawyers Association, a new professional entity.

Proponents and critics of the new system alike question how this new transition will impact the already uncertain financial footing of the Bar. However, the new strategy will strive to “Improve the fiscal and operational management of the State Bar, emphasizing integrity, transparency, accountability, and excellence.”

Read California’s new Five Year Strategy