American Bar Association issues new guidance on remote working and ethical use of technology

The American Bar Association Standing Committee on Ethics and Professional Responsibility has released a formal opinion cataloguing the relevant model rules and technological considerations that lawyers should be aware of when practising virtually. The opinion (Formal Opinion 498) identifies some of the minimum requirements for virtual practice under the ABA Model Rules of Professional Conduct as well as suggesting several best practices to meet ethical obligations in a virtual setting.

The opinion states that “When practising virtually, lawyers must particularly consider ethical duties regarding competence, diligence, and communication, especially when using technology,” the opinion said. “In compliance with the duty of confidentiality, lawyers must make reasonable efforts to prevent inadvertent or unauthorized disclosures of information relating to the representation and take reasonable precautions when transmitting such information.” Noting that the “duty of supervision” requires lawyers who supervise others to “make reasonable efforts to ensure” that their direct reports comply with the model rules, particularly if these colleagues are still working virtually.

The best practices cover hardware devices and software systems; accessing client files and data; using virtual meeting platforms and videoconferencing; and virtual document and data exchange platforms, among others.

Read the full opinion here.

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UK Competition and Markets Authority review of legal services market

The UK Competition and Markets Authority has released an updated report based on its initial findings on the legal services market published in 2016. The report recognises the improvements that have been made in increasing the transparency of the price, service and quality of legal services, but said there was more to do to increase “the intensity of competition between providers”, calling for reforms particularly in the currently unregulated sector of the market.

The unregulated sector has grown significantly over the past few years, largely due to the rising use of legal technology products. The report raises concerns over the current regulatory framework and the focus on professional titles and reserved activities, as opposed to the risk profile of activities. Which it suggests could restrict competition, create unnecessary costs and leave a regulatory gap.

The CMA has recommended three actions within the existing regime which would help “deliver reform in stages”.

  • First was creating a mandatory public register of unauthorised providers for certain legal services and mandating that they offer redress options to consumers.
  • Second was that the Legal Services Board (LSB) should carry out a review of the reserved activities.
  • Third was the independence of regulation from professional representation. The CMA noted that “significant improvements” have been made as a result of revised internal governance rules imposed on bodies like the Law Society and Bar Council by the LSB.

Andrea Coscelli, the CMA’s chief executive, said: “This is an incredibly important sector that people often turn to at a time of great need, which is why the CMA made recommendations to improve consumer outcomes, including through increasing transparency, as well as to address concerns about the way in which the sector is regulated. It is positive to see changes that have already been made, but more progress is needed. We encourage the Ministry of Justice, the Legal Services Board and other legal services regulators to continue to work towards reform and to make sure the sector works well for consumers long into the future.”

Read the full review here or the LSB’s response here.

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Legal Tech and EU Consumer Law

Abstract

Legal Tech (LT) products and services automate certain tasks that lawyers usually perform. The use of these tools in business-to-consumer (B2C) markets create many opportunities for consumers and the justice system in general, but also raises concerns in terms of access to justice, choice and information, quality, fairness, redress and representation. This paper deals with the question of whether the current legal framework in the EU is fit to meet the challenge LT poses in consumer markets, focusing especially on (national) legal services regulation, EU consumer law and EU data protection law. It concludes that applying the current legal norms to LT creates both the risk of under-regulation and over-regulation, and discusses possible regulatory options that should be taken into account at national and EU level to achieve the right balance between innovation and protection.

Ebers, Martin, Legal Tech and EU Consumer Law (July 15, 2020). Martin Ebers, Chapter 12: Legal Tech and EU Consumer Law, in: Michel Canarsa/Mateja Durovic/Francisco de Elizalde/Larry di Matteo/André Janssen/Pietro Ortolani (eds.), Lawyering in the Digital Age, Cambridge: Cambridge University Press, 2021.,

Read the full paper at SSRN. 

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Models of Law and Regulation for AI

Abstract

This paper discusses models of law and regulation of Artificial Intelligence (“AI”). The discussion focuses on four models: the black letter model, the emergent model, the ethical model, and the risk regulation model. All four models currently inform, individually or jointly, integrally or partially, consciously or unconsciously, law and regulatory reform towards AI. We describe each model’s strengths and weaknesses, discuss whether technological evolution deserves to be accompanied by existing or new laws, and propose a fifth model based on externalities with a moral twist.

Petit, Nicolas and De Cooman, Jerome, Models of Law and Regulation for AI (October 2020). Robert Schuman Centre for Advanced Studies Research Paper No. RSCAS 2020/63.

Read the full paper at SSRN.

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Conference: AI and the Rule of Law – Regulation and Ethics

 Friday 20th November 2020
 IALS, London

A call for papers  is announced for the Information Law and Policy Centre’s Annual Conference, this year supported by Bloomsbury’s Communications Law journal.

Abstracts of between 250-300 words and some brief biographical information should be sent to Eliza Boudier, Fellowships and Administrative Officer, IALS: eliza.boudier@sas.ac.uk

Further details at: https://www.ials.sas.ac.uk/events/event/22471.

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SRA legal access challenge, reports and next steps

Following the conclusion of the SRA and Nesta Legal Access Challenge, joint reports from both the SRA and Nesta have been released which highlight the lessons learned and the future next steps that will be taken to support the development of innovation. The SRA report focuses on how the lessons learned from the challenge are influencing regulation, and how this can be used to support the development and responsible adoption of legal tech. Whilst the Nesta report gives an overview of the challenge, looking at what innovations were supported, and what was learned about the wider innovation environment in the UK.

The Legal Access Challenge was a £500,000 Challenge Prize, split across early stage digital technology solutions that could directly help individuals and small medium enterprises (SMEs) better understand and resolve their legal problems. The Challenge was made possible by a grant to the SRA from the £10m Regulators’ Pioneer Fund launched by The Department for Business, Energy and Industrial Strategy and administered by Innovate UK. The fund aimed to help UK regulators to develop innovation-enabling approaches to emerging technologies. The two final winners were announced in April. The winning teams were RCJ Advice for its collection of digital tools that enable survivors of domestic abuse to get legal support, and Mencap and Access Social Care for their virtual assistant which helps people to understand and exercise their social care rights.

The 18-month challenge has been seen as successful by both the SRA and Nesta, with both seeing potential for legal technology to improve legal access. The reports conclude that the SRA’s regulation is not a barrier to innovation, but that many find it difficult navigating overlapping regulatory regimes across, for example, legal services, financial services and information management. The Challenge also showed that innovation in public-facing legal technology is mainly coming from unregulated organisations.

The scale and diversity of interest in the Challenge – with 117 applications – resulted in the Regulators Pioneer Fund providing an additional £250,000 of funding.

Feedback on the Challenge from the eight finalists showed:

  • seven had seen the development of their solution accelerated
  • seven had been introduced to new and useful contacts, with five building new partnerships
  • six had support that they otherwise would not have been able to access.

The SRA report sets out its next steps, including producing guidance to help innovators understand its rules, the requirements of overlapping regimes and how they can design products that enable regulated law firms to interact with them. It will also continue to work closely with other regulators and build networks. This includes being part of recently announced Lawtech Sandbox developed by Tech Nation.

Anna Bradley, SRA Chair and Chair of the Challenge judging panel said:
“Too many individuals and small businesses struggle to access expert help when they need it. This can be the difference between someone losing their job, home or family; or a business succeeding or failing.”

I believe tech will be a game-changer for access to legal support. Covid-19 has brought into even sharper focus the importance of digital solutions. However, it’s clear that the adoption of technology has been slow when it comes to public facing legal services.

The Challenge showed the range of ideas out there, and the potential for it to help people in vulnerable situations. I was pleased that our own regulation is not seen as a barrier to the development of tech in the legal sector but we want to do more to support innovators to navigate what can be complex and overlapping regulation.”

See the SRA’s full report on the challenge.

See Nesta’s full report on the challenge. 

 

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Mayson Report: Final report published

The highly anticipated denouement of the Independent Review of Legal Services, which was first launched in October 2018, was published on the 11th June. The 340-page report which has been informed by a number of working papers, as well as an interim report, which has been fed into by a variety of actors in the legal sector is entitled Reforming legal services: Regulation beyond the echo chambers.

Professor Mayson has suggested in the report that all providers of legal services, should be registered and regulated by a single regulator, whether they are legally qualified or not. He suggested that regulation should move from the regulation of lawyers to the regulation of legal services, with different levels of regulation being applied depending on the public risk inherent in the work. By extension, this would mean that traditional legal qualifications would no longer be the sole entry point into the profession.

The report has been submitted to the Lord Chancellor, however, the Ministry of Justice in the UK has suggested that they currently do not plan to review the Legal Services Act 2007. Professor Mayson has therefore suggested shorter-term measures that can be introduced, as he feels that action must come sooner rather than later.

Professor Mayson suggested that especially as demand has moved online, the public are increasingly unaware of their rights in relation to regulated professionals, whilst lawyers are operating under a system where only a small percentage of their work is covered under the regulatory regimes they are supposed to work under. “The conclusion of this review is that the regulatory framework should better reflect the legitimate needs and expectations of the more than 90% of the population for whom it is not currently designed,” he wrote. The new framework would also allow for new provides such as lawtech providers to act within a regulated sector. 

Professor Mayson also described the current arrangement of 10 front-line regulators plus an oversight regulator as “cumbersome”, and recommended replacing it with a single, independent regulator – the Legal Services Regulation Authority (LSRA). “The requirement for flexibility, consistency, coherence and coordination across regulation within the legal services sector necessarily leads to a single regulator,” the report said.

Download a full copy of the report (PDF).

The response from regulators has been mixed with CILEx (read the CILEx response) and the Association of Costs Lawyers (read the Association of Costs Lawyers response) backing professor Mayson’s report, and the LSB (read the LSB response) saying that they will carefully consider his recommendations in relation to their ongoing work in reforming legal regulation. Whilst the Law Society (read the Law Society response) has suggested that given the ongoing COVID-19 crisis, now is not the time to discuss reforms.

Also see the article at Legal Futures for a further breakdown of the regulatory responses.

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LSB podcast on how education might adapt to technology

In its latest episode of the ‘Talking Tech’ podcast, the LSB interviews Dr Adam Wyner, Associate Professor of Law and Computer Science at Swansea University. The podcast focuses on how education and regulation might change to ensure legal professionals are better equipped to deal with and meet the challenges posed by a new tech-focused environment, as well as how these individuals can start to drive technological innovation.

Listen to the LSB podcast (42 minutes long)  and download the accompanying paper as a PDF.

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AI Regulation in Europe

Abstract

With the regulation of Artificial Intelligence (AI), the European Commission is addressing one of the central issues of our time. However, a number of core legal questions are still unresolved. Against this background, the article in a first step lays regulatory foundations by examining the possible scope of a future AI regulation, and by discussing legal strategies for implementing a risk-based approach.

In this respect, I suggest an adaptation of the Lamfalussy procedure, known from capital markets law, which would combine horizontal and vertical elements of regulation at several levels. This should include, at Level 1, principles for AI development and application, as well as sector-specific regulation, safe harbors and guidelines at Levels 2-4. In this way, legal flexibility for covering novel technological developments can be effectively combined with a sufficient amount of legal certainty for companies and AI developers.

In a second step, the article implements this framework by addressing key specific issues of AI regulation at the EU level, such as: documentation and access requirements; a regulatory framework for training data; a revision of product liability and safety law; strengthened enforcement; and a right to a data-free option.

Citation
Hacker, Philipp, AI Regulation in Europe (May 7, 2020). 

Download the full paper from the SSRN

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The Sandbox Paradox: Balancing the Need to Facilitate Innovation with the Risk of Regulatory Privilege

Abstract

In recent years, “regulatory sandboxes” have gained a great deal of attention from policymakers, regulators, and regulatory scholars. Regulatory sandboxes are closed testing environments in which specific firms are able to experiment with new and innovative business models or products with reduced regulatory burden or expedited regulatory decisions. Sandbox advocates support or defend regulatory sandboxes as a way to promote entrepreneurialism and innovation within the financial sector while still maintaining mechanisms for consumer protection and regulatory oversight. Opponents of sandboxes tend to focus on the potential risk to the consumers who use the services being tested in the sandbox. However, there is a third group affected by regulatory sandboxes: the competitors of firms in the sandbox. By definition, regulatory sandboxes grant certain advantages to specific firms without extending those same privileges to other firms. The goal of this paper is to examine the potential regulatory advantages sandboxes offer, consider the possible risks and costs associated with those advantages—including the potential to distort the market and incentivize cronyism—and propose best practices that policymakers could use to mitigate those costs.

Citation
Knight, Brian and Mitchell, Trace, The Sandbox Paradox: Balancing the Need to Facilitate Innovation with the Risk of Regulatory Privilege (March 26, 2020). South Carolina Law Review, Forthcoming; Mercatus Research Paper, 2020; C. Boyden Gray Center for the Study of the Administrative State Research Paper No. 19-36.

Available from the SSRN site.

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