Auckland High Court consultation on reform of civil dispute resolution

The New Zealand Law Society has called on its members to respond to the Rules Committee’s ongoing consultation into reform in the civil dispute resolution system. The consultation is in response to new proposals put forward following concerns raised about an initial consultation paper in 2020. With concerned bodies including the Law Society.

Responders shared the Committee’s concern at what the Law Society termed in its submission the “justice gap” that has been “slow-burning” for at least a generation.  A number of causes for that ever-widening gap were identified by submitters.  One of these, particularly relevant to the Committee’s remit, is the high cost of lawyers and the significant costs associated with complying with procedural requirements.

The Committee’s draft proposals look to combat both of these barriers to civil justice, improving access to justice and public welfare.  Overall, the proposals are aimed at creating a range of fora for the resolution of civil disputes. With the goal of reducing the expense associated with complying with the procedural requirements, and bringing them into line with the value of the dispute being heard.

Within each forum, the Committee’s goal is for the particular procedures adopted in each individual case to match the importance to the parties of that dispute, in both theory and practice.  The more valuable and important the dispute, the more onerous the procedures that will apply, so as to avoid error and ensure “justice” is done. The Committee’s detailed proposals seeking to give effect to this vision are detailed in the consultation paper.

An overview of the proposals includes:

  • Recommending that the government enact legislation increasing the jurisdiction of the Disputes Tribunal and enhancing the Tribunal’s role in the civil justice system, positioning it as New Zealand’s primary civil trial court for disputes of up to at-least $50,000 in value.
  • Reforming the District Court to improve its structural ability to deal with civil claims, including by appointing part-time Judges, so as to allow that Court to make effective use of the existing potential for flexibility and tailored procedure found within its current rules.
  • Streamlining the presumptive model of procedure in the High Court. The existing extensive procedural rules will only apply to more complex cases, which truly warrant them. In other cases the new, less elaborate, approach will apply.  This will include replacing discovery with disclosure obligations, an early issues conference featuring substantive engagement by Judges, interlocutories dealt with on the papers, and a streamlined trial process placing much greater weight on the documentary record. Parties will have to justify the need for adopting more onerous obligations in a given case.

Read more about the proposals and consultation here, or view the Law Society’s first response here.

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Legal Services Board calls for consumers to be put at the heart of regulation

On the 29th of March the Legal Services Board (LSB) launched a consumer-focused strategy for legal services in England and Wales, which included a call for all regulators in England and Wales to collaborate to reshape legal services to better meet society’s needs. It called for action from all regulators from its position as the oversight regulator, having been formed by the Legal Services Act 2007.

The ten-year strategy reflects that there are a number of challenges facing the legal services sector, and that many of these require a coordinated effort by different people and organisations in the sector, pursuing a common agenda. The strategy has identified nine challenges within the sector. These include closing gaps in consumer protection, empowering consumer choice and achieving fairer outcomes.

The LSB has also identified other priorities in the strategy, such as a statutory review of the reserved legal activities, a review of professional indemnity insurance, and work on simple legal products, but it has deferred these until resources permit.

Dr Helen Phillips, Chair of the Legal Services Board, said:

“While there have been many achievements over the last ten years of independent regulation, there continue to be significant levels unmet legal need. We must seize this moment to drive forward a strategy that promotes the public interest, supports competition and growth, and encourages diversity and inclusion. The LSB cannot do this alone – everyone in the sector must work together to pursue our shared interests. We are greatly encouraged by the commitment to collaboration that characterised so many responses to our consultation. Only by working together can the sector emerge strongly from the Covid-19 pandemic and successfully tackle the challenges it faces.If we all work together, we will improve diversity, and the sector will look more like the society it serves. The system will better support innovation and be equipped to respond to the changing market. Consumers will be able to shop around and reward firms that offer high-quality, transparent, and affordable services. The strategy is necessarily ambitious, and if we all play our part, we can achieve our vision. Through collaboration, we will reshape services to create a strong and resilient sector that better meets society’s needs.”

Read the full strategy here, or more from the LSB here.

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Law Society of Ontario approves new regulatory sandbox

On April 22, 2021, the Convocation of the Law Society of Ontario approved the Technology Task Force’s “Regulatory Sandbox for Innovative Technological Legal Services” Report.  As a result, a five-year pilot project will be launched in Q4 of 2021. In the pilot approved participants will be granted express permission by the Law Society to serve consumers using innovative technological legal services (ITLS). The participants will be required to comply with specialised requirements for risk-based monitoring and reporting.

The Technology Task Force is composed of lawyer, paralegal and publicly-appointed lay benchers, and has the mandate to consider the role of technology in the delivery of legal services, as well as to examine the role of the Law Society as a regulator in a changing, tech-enabled environment, and explore how the Law Society can encourage innovation.

The sandbox project has been designed to help fulfil these responsibilities by:

  • Facilitating access to justice: eliminating regulatory uncertainty around ITLS, and removing barriers to the development of ITLS, allowing products to be developed that can address unmet legal need.
  • Protecting the public: The pilot project provides a mechanism to ensure ITLS consumers receive competent and ethical services and have access to recourse, as well as the information to make informed choices about the providers of the services.
  • Informing future regulatory development: The pilot project will provide evidence to inform longer-term decision-making about ITLS regulation.

Read the full report about the pilot here, or read more on the Law Society’s website.

 

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First Alternative Business Structures approved in USA

The first two fully licenced alternative business structures (ABSs) have been approved by the state of Arizona. On the 17th March 2021, two businesses, Trajan Estate LLC and Gilbert and Payne Huebsch PLC received their ABS license after the State Supreme Court approved their bids. Trajan Estate is a legal service provider focused on estate planning while Payne Huebsch provides transactional legal services paired with tax and accounting advice.

Last year Arizona became the first state to fully allow alternative business structures and non-lawyer ownership in law firms,  revoking state professional conduct rule 5.4 which barred nonlawyers from fee-sharing and holding an interest in law firms. The change came into effect in January 2021, allowing business to begin the approval process.

The licenses follow the approval of the first non-lawyer owned law firm in Utah, as part of the state’s two-year regulatory sandbox. Law on Call opened at the beginning of March 2021, allowing consumers unlimited over the phone access to lawyers, in a business entirely owned by non-lawyers. The business will however be subject to license reviews, as per the conditions of the sandbox.

Read more about the Arizona licences here, or the Utah licences here.

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Law Society of Scotland publishes a new strategy to improve regulatory process and enhance competition in the legal sector

The Law Society of Scotland’s Regulatory Committee has revealed a new two-year strategy, which is focused on improving regulatory processes, enhancing competition in Scotland’s legal sector and ensuring robust consumer protections. The Regulatory Committee is independent from the Law Society’s Council (the governing body of the Society), and is responsible for overseeing a number of sub-committees, as well as setting its own strategy, with the remit of regulating practice. The committee is made up of an equal numbers of solicitor and non-solicitor members and is led by a non-solicitor convener.

The new strategy sets out five overarching objectives. The first,  ‘protect’, is focused on protecting consumer and public interest, and protecting the rule of law. The second, ‘scrutinise’, is focused on examining the work of the subcommittee and other delegates of the committee to ensure their value and productivity. The remaining three are ‘enhance’, ‘align’, and ‘develop’. ‘Enhance’ is focused on raising public awareness of the society’s work, as well as developing a proportionate and principals focused regulatory structure that will enhance the competitiveness of the Scottish legal sector. ‘Align’ is focused on making sure that the regulatory committee’s work aligns with other groups in the society, whilst ‘develop’ is a process of internal self-reflection and development.

Craig Cathcart, Convener of the Law Society of Scotland Regulatory Committee said: “The legal profession has a key role in our society. Solicitors help people at pivotal points in their lives whether they are buying a new home, planning for the future of their family, building a successful business or upholding their rights in court. Anyone who seeks the advice of a solicitor must feel confident that they are in good hands. Having a robust and fair regulatory system which sets high standards for entry to Scotland’s solicitor profession and throughout a solicitor’s years in practice, along with clear consumer protections, provides that assurance.”

Read the full strategy here. 

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Judges and the Deregulation of the Lawyer’s Monopoly

Abstract

In a revolutionary moment for the legal profession, the deregulation of legal services is taking hold in many parts of the country. Utah and Arizona, for instance, are experimenting with new regulations that permit nonlawyer advocates to play an active role in assisting citizens who may not otherwise have access to legal services. In addition, amendments to the Rules of Professional Conduct in both states, as well as those being contemplated in California, now allow nonlawyers to have a partnership stake in law firms, which may dramatically change the way capital for the delivery of legal services is raised as well as how technology and artificial intelligence may be leveraged in adjudicating disputes.

While overt regulatory changes remain enormously controversial, scholars and policymakers have missed a critical part of the landscape: the role state court judges are playing in the de facto deregulation of the legal profession at the civil trial level. Across the nation, the rise of pro se parties has forced judges to rethink their roles. In the new reality of pro se courts, judges in debt collection, eviction, and family matters—which, together, occupy roughly ninety percent of all civil court dockets—must make critical decisions about how to balance the duty of impartiality with the need to achieve a measure of justice and ensure fair adjudication of disputes.

Drawing on original data, including interviews and hundreds of hours of court observations, from a multi-site investigation of the civil justice landscape, this Article shows how some judges—mired in the pro se crisis—are relying on a shadow network of nonlawyer professionals to substitute for the role counsel has traditionally played. Focusing on domestic violence courts as the primary illustration, we find that even in jurisdictions not currently contemplating regulatory reform, judges are relying on organized nonlawyer actors to prepare pleadings, offer substantive and procedural information to litigants, and provide counseling services. These nonlawyer advocates play a significant role in shaping the facts and arguments presented to the judge which we believe, in turn, influences processes and outcomes.

In addition to demonstrating this novel phenomenon, the Article raises three important implications of trial judges’ role in diluting the lawyer’s monopoly. First, the collaboration between judges and nonlawyer advocates is hidden behind the scenes. The quiet partnership assists judges in maintaining the perception of impartiality in the courtroom, which is critical to public trust in the courts, while enabling pro se parties to properly raise claims and seek remedies from the justice system. Second, an opportunity to develop norms around the role of nonlawyers is being squandered. Trial court judges, who are typically excluded from formal regulatory processes, could be leaders in deregulating the lawyer’s monopoly in ways that ensure the integrity of the legal profession, fill a justice gap for pro se litigants, and help to open up pathways for public and formal recognition of a new class of legal professionals. And finally, due process demands that the role of nonlawyers be made public. Our research reveals that only one party to the dispute—the petitioner for a protective order—receives nonlawyer assistance, while the respondent typically receives little to no assistance at all. Domestic violence advocates have been effective in organizing wrap-around services for survivors, including help with preparing court papers, but those accused of domestic violence and subject to protective order proceedings benefit from no such organizing effort. Bringing nonlawyer assistance out of the shadows would make plain that more needs to be done to level the playing field for both parties.

Steinberg, Jessica and Carpenter, Anna E. and Shanahan, Colleen F. and Mark, Alyx, Judges and the Deregulation of the Lawyer’s Monopoly (March 8, 2021). Fordham Law Review, Vol. 89, 2021, University of Utah College of Law Research Paper No. 423.

Read the full article on SSRN.

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Legal Services Board releases options on ongoing competence

The Legal Services Board (LSB) has published anew report on ongoing competence in the legal services sector. Confirming that it plans to develop this thinking further and consult on how competence can be assured over the course of a lawyer’s career. In the report the LSB points out that whilst legal regulators have comprehensive measures on entry into the profession, however there are few checks to ensure that competence is maintained.

The report was produced following the call for evidence that was carried out in 2020. It has been compiled using extensive discussions with stakeholders across and outside the legal services sector. It also considers approaches taken in other sectors such as financial services, aviation, healthcare, engineering and teaching, which generally have more systematic ongoing competence checks.

From its research, the LSB has concluded that most consumers mistakenly assume that lawyers are subject to regular formal checks. It has suggested that this leads to a misalignment between the current practice and what the public expects. This is why the decision has been made that ensuring legal professionals’ ongoing competence is vital to ensuring consumers’ trust and confidence in the sector. The LSB’s view is that this would also help consumers avoid harm from poor quality legal services.

In its role as the oversight regulator, the LSB has a statutory duty to assist in developing regulatory standards in the legal sector. In the report, the LSB explains that it will proceed to develop and consult on new expectations for regulators, noting that these proposals are likely to encompass high-level expectations that legal regulators should:

  • set out the standards of competence that legal professionals should meet at the point of entry and throughout their careers; and
  • have mechanisms in place to:
    • identify legal professionals who are failing to meet those standards;
    • identify areas of increased risk to consumers;
    • respond when legal professionals fall short of the standards of competence;
    • provide appropriate protection when there is an increased risk of harm to consumers.

Helen Phillips, Chair of the Legal Services Sector, said:

‘Public trust and confidence are integral to the credibility of the legal services sector, and consumers need to know that their lawyers have the necessary, up-to-date skills, knowledge and attributes to help them with their legal problems. Many people assume that legal professionals are subject to ongoing formal reviews of their competence, but there are, in fact, very few routine checks once a lawyer has qualified. Legal regulators typically do not have systems or processes in place to identify or respond to concerns about competence. This is unusual and out of step with other professions which routinely adopt tools to ensure ongoing competence to promote public trust and confidence, and protect consumers from harm. We need to reshape legal services to better meet the needs of society, which includes ensuring lawyers remain competent throughout their careers. This will help increase trust in legal services, raise standards and improve access to justice.’

Read the full report here, or the LSBs comments 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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Netherlands and Denmark both considering changes to non-lawyer ownership rules

Both the Netherlands and Denmark have made announcements signalling a move towards implementing non-lawyer ownership.

The Netherlands Bar Association (NOvA) has announced a 5-year experiment, which would allow lawyers in the non-lawyer run SRK legal aid organisation to deliver non-legal services. NOvA has said that the move is coming as part of a broader investigation into a possible ‘new system of regulations regarding permitted corporate structures for lawyers’. The sandbox-style experiment is capped at 5 years per organisation, with NOvA saying that other organisations are welcome to apply.

The move does not come out of the blue. The Dutch competition authority (ACM) had been putting pressure on NOvA to amend rules in order to improve market conditions.

In related news the Danish Competition Council has released a report analyzing competition in the legal profession. The report has found that the industry had a turnover of NOK 14.7 billion in 2018 and just over 1,800 firms. It also discovered that almost 70% of the turnover in the industry was generated by corporate clients, with only 11% being consumer work.

Based on this the Competition Council has presented 16 recommendations that can strengthen competition in legal services, providing improved access to justice. Amongst these recommendations is the inclusion of new business models, in the legal sector.

Read more about the Dutch changes here, or the Danish changes here. 

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California Closing the Justice Gap Working Group holds first public meeting

A California State Bar working group established to study access to justice innovations held its first public meeting on the 14th January 2021. The State Bar’s Closing the Justice Gap Working Group, created by the Board of Trustees to carry on with important recommendations from the State Bar’s Task Force on Access Through Innovation of Legal Services (ATILS), has been established with the objective of:

  • Investigating the development of a regulatory sandbox to foster experimentation with innovative systems for delivery of legal services
  • Exploring amendments to the Rules of Professional Conduct regarding the ability of lawyers to share fees with nonlawyers
  • Examining the addition of rule 5.7 to the Rules of Professional Conduct addressing the delivery of nonlegal services by lawyers and businesses owned or affiliated with lawyers
  • Considering amendments to the Certified Lawyer Referral Service statutes and Rules of the State Bar to enhance efforts to expand access to legal services.

The task force chair Justice Alison M. Tucher, Associate Justice of the California Court of Appeal, First Appellate District, Division 4, in San Francisco has said “The immense challenges of the past year have only heightened the needs that this group’s work is intended to address. Fortunately, meeting virtually enables us to bring together a truly remarkable working group, all of whom are volunteering their expertise to help California move forward. We are honored and excited to get started.”

The working group is made up of 20 state, national, and international experts an is expected to submit recommendations to the Board of Trustees no later than September 2022. Each recommendation is expected to balance the dual goals of public protection and increased access to justice.

Read more about the meeting here. 

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