On Gut Punches And Optimism

The Chairperson of the American Bar Association Center for Innovation, Dan Rodriguez, resigned his position suddenly in February of this year, more than a year before the planned end of his term. The move was a surprise, and coincidental with the controversial conclusion of the Center for Innovation’s efforts to have the larger ABA adopt policy statements in favour of experimentation in regulatory reform.

Official statements suggest that the departure was not a result of the vote, specifically. But it seems likely Rodriguez’ departure was related to the larger political machinations.

Among legal technologists it is generally accepted that there are a number of features of legal regulation that impinge on the opportunity to experiment with new methods of delivering legal services that might enhance access to justice.

The restriction on who can own a law firm makes it difficult to get professionals other than lawyers involved, or external financing, because equity cannot be offered. The partnership model makes it difficult to motivate partners to invest, because there is no market for shares in law firms that reflects the future value of present day investments. Rules that prevent fee sharing make it difficult to share financial risk with entities outside the firm.

Legal technologists have long been calling for changes in these areas, and in certain US jurisdictions, those calls have been heeded. Utah, for example, is in the midst of a “regulatory sandbox” experiment. California’s Access Through Innovation in Legal Services (ATILS) task force, which was looking into similar proposals, and had several prominent legal technologists among its voting members, reported to the Trustees of the California State Bar on March 12, 2020.

So for people in the legal innovation and legal technology spaces it was unsurprising when the Center proposed a resolution in favour of regulatory experimentation for the consideration of the ABA.

It was also unsurprising that this proposal would see opposition.

According to blog posts from Bob Ambrogi, the motion originally saw resistance from, among others, the New York State Bar. The objections resulted in two significant changes. First, a statement was added to the motion which re-iterated that the Model Code of Conduct had not been changed. Second, the Center for Innovation’s report was revised. Mentions of specific possible changes like regulatory sandboxes were deleted.

I can guess what the argument of the NYSB and others might have been:

We, the ABA, have a model code of conduct, and we encourage states to adopt it. If we also encourage states to ignore it, we are speaking out of both sides of our mouth. If the ABA wants to modify the code of conduct to allow for experiments like these, there is a process for that, and this isn’t it. Let’s experiment inside the rules.

I can’t accept that quality and ethical protections that benefit only the 20% of the population outweigh the access problems for the other 80%. So I don’t buy the argument. I also think it’s motivated by protectionism.

But if you buy the argument, it does logically supports amending the resolution and reminding people the rules haven’t changed. In the alternative, it would be a good reason to vote against the resolution entirely.

But how does it justify asking the Center for Innovation to change its report after it has been published? That’s the part I can’t wrap my head around.

Forcing the report to agree with the amended resolution injures the credibility of the Center for Innovation as an organization that can speak truth to protectionists. The Center for Innovation’s mandate is access to justice. Of course it’s going to occasionally disagree with the establishment represented in the governing bodies of the ABA. Why pretend otherwise?

Evidently some people inside the ABA felt that doing something, and doing it in a unified way was more important than intellectual honesty. Diplomatic efforts that have been described to me as “masterful” were made to find something on which everyone could agree. Those efforts succeeded. The motion was amended and adopted with wide support. The report was revised, and the new version of the report was signed by the Chair.

But not the same chair.

In the interim, Rodriguez had unexpectedly and suddenly resigned. The revised report was signed by his replacement.

With the watering-down of the resolution and the report, and with the dark cloud of Rodriguez’ departure, the outcome was received by many as a disappointment.

Unity, as it now seems, was not actually on the table. The options were disunity among the governors, or between the ABA and the Center for Innovation. They picked the latter, and tried to hide it.

Just weeks later, on March 12, the Trustees of the California State Bar were asked to vote on a motion drafted by the ATLIS task force to set up a working group to explore regulatory sandboxes. This is exactly the sort of experimentation that was called for in the Center for Innovation’s original report, and is already underway in Utah.

According to Dan Rubins of LegalRobot, a member of the ATLIS task force that proposed the resolution, the recommendation came from an exercise in consultation that involved more than 100 hours of hearings, and nearly 3000 public comments. Notably, a majority of the task force’s voting members were not practicing lawyers. But more notably, the task force was unanimous in its recommendation.

The resolution, to the surprise of many, was not adopted. According to Andrew Arruda, CEO of Ross Intelligence and another of the task force members, the reasons cited for not adopting the resolution were concerns about “headwinds” against the task force and a need for wider consultation.

Recall that this was not a decision to set up a regulatory sandbox of the sort Utah is currently operating. This was a decision on whether or not to appoint a committee to investigate the possibility of setting up a regulatory sandbox.

The issue will be revisited by the California State Bar in May. But for now, one task force member described the failure to adopt the proposal as a “punch in the gut.”

Is there a reason for optimism with regard to reform of legal regulation? Yes. Much is happening. Check out this post by Jordan Furlong for a persuasive recent chronology, including recent events in Manitoba, British Columbia, and Saskatchewan.

But we can also look at these painful examples of the ABA and the California State Bar for reasons to be optimistic.

It is said that movements go through phases: First they ignore you, then they laugh at you, then they fight you, and then you win.

In some places, like Utah, the fight is going well. In other places, like the ABA and California, it is going less well. But remember: both the ABA and California are fighting against access to justice proposals that they asked for. Ignorance and ridicule are far in the rear-view mirror. All we have now is the fight. And there’s only one step after that.

Yes, people like Dan Rodriguez and the members of the ATILS task force are taking gut punches in 2020.

But last year, there were no reports to revise. No proposals to amend or reject. Last year, the fight hadn’t started yet. That’s progress.

Comments are closed.