Increased Ancillary Business Regulation:
The Future of the Profession?
by Charles F. Robinson
Law Offices of Charles F. Robinson
Clearwater, Florida
Email: cfr@charlierobinsonfuturist.com
Copyright © 1999 Charles F. Robinson
 

The 1999 Florida All Bar Conference will be held in Tampa on February 19. The single subject of the conference will be Ancillary Business. Florida Bar President Howard Coker has taken a strong stand against law firms engaging in ancillary businesses in his President's Column in the November 1998 Florida Bar Journal.

Then Florida Bar president John Frost appointed a committee two years ago, chaired by Martin Garcia of Tampa, to study the ancillary business issues. The committee presented a half-day seminar at the 1998 Florida Bar Convention and took testimony from interested bar members the same afternoon. I testified before the committee. As the resident RPPTL/Elder Law gadfly, I ended up as a member of the Ancillary Business Committee.

The American Bar Association adopted the first version of Model Rule 5.7, proposed by the Litigation Section, by a narrow margin in 1991. The rule prohibited ancillary services unless the ancillary services related to the provision of legal services to existing law firm clients. The rule was divisive to the point of nearly fracturing the ABA into barrister and solicitor organizations. The rule was defeated in 1992. No jurisdiction adopted the rule in its one-year life.

The ancillary business issue reappeared in 1994 with passage of the current Model Rule 5.7. The rule now reads as follows: 5.7 Responsibilities Regarding Law-Related Services (a) A lawyer shall be subject to the Rules of Professional Conduct with respect to the provision of law-related services, as defined in paragraph (b), if the law-related services are provided: (1) by the lawyer in circumstances that are not distinct from the lawyer's provision of legal services to clients; or (2) by a separate entity controlled by the lawyer individually or with others if the lawyer fails to take reasonable measures to assure that a person obtaining the law-related services knows that the services of the separate entity are not legal services and that the protections of the client-lawyer relationship do not exist. (b) The term "law-related services" denotes services that might reasonably be performed in conjunction with and in substance are related to the provision of legal services, that are not prohibited as unauthorized practice of law when provided by a nonlawyer.

The ancillary business issues are "déjà vu all over again." Florida has not adopted the ABA Model Rule adding regulations to lawyers or law firms engaging in "law-related" services. As a matter of fact, only the Virgin Islands has adopted the Model Rule verbatim. Pennsylvania has a version of the rule and another version is under consideration in Tennessee. The rest of the states, including Florida, seem to be satisfied that we already have enough regulation.

I have been struggling with the dispute over whether, and if so, to what extent should lawyers engage in "Ancillary Businesses or Services?" The more I learn the less I know about this subject, however.

What are legal services as opposed to law-related services (Model Rule 5.7 term) as opposed to non-legal services (Pennsylvania Rule 5.7)?

Model Rule 5.7 Comment [9] lists "providing title insurance, financial planning, accounting, trust services, real estate counseling, legislative lobbying, economic analysis, social work, psychological counseling, tax return preparation, and patent, medical or environmental consulting" as examples of law-related services. Pennsylvania doesn't define non-legal services but uses the same examples in its Comment as the Model rule.

I am an elder law attorney, certified as an elder law specialist by the Florida Bar. I help families in crisis with issues surrounding chronic illness, asset protection, life planning choices and estate planning. All of the services I provide (except for direct legal advice and an occasional trip to probate court) are law-related services. Scary thought.

Transactional lawyers are in direct competition with non-lawyer providers. This is the age of "disintermediation," a five-dollar word that means, "cut out the middle person." Corporate America has dealt with disintermediation for the last several years where it often means downsizing through reduction or elimination of middle management. Real estate lawyers have competition from disintermediators looking to "one stop shop" the real estate transaction. Realtors, lenders, and Internet shopping services all compete to be the point of sale and all want control of the transaction. Nearly all services would be considered law-related if a lawyer is part of the picture and none of the services are protected by Unlicensed Practice of Law (UPL).

CPAs and financial planners want to control the estate planning process with their law-related services. The lawyer estate planner has the exclusive opportunity to draft the documents. Document drafting in complex estate planning situations requires a high level of expertise but has the lowest perceived value of the whole process from the client's perspective. Clients tend to believe that lawyers buy "magical" forms that jump out of the word processing system on command with little lawyer effort. The planning part of the planning effort is where the perceived value can be found, not in the drafting. UPL cases have protected the drafting part of the process as law practice. As estate planning attorneys, we paint ourselves into a tiny corner if documentation is the only role we are fighting for.

How much exclusivity do litigators have in the dispute resolution process? At this time, only lawyers go to court representing third parties. However, litigation has become expensive beyond the means of all but the wealthy (even the wealthy got that way because they didn't spend money they didn't have to spend). Alternative Dispute Resolution (ADR) places more emphasis on factual resolution and minimizes the requirement of knowing and understanding the law. The lawyer plays a major role in ADR but not an exclusive role.

Mortgage foreclosure practice has been impacted by efforts to "delawyer" the practice.

Pro se appearances are growing at an astounding rate. The Florida Supreme Court is committed to provide public access to the court system (see In re: Amendments to the Florida Family Law Rules of Procedure (Self-Help, 23 Fla. L. Weekly S612a). The majority of family law cases now are pro se on at least one side in the Sixth Circuit. The court offers checklists and forms for pro se dissolution of marriage and other family law court proceedings. The checklists and forms are more complete and helpful than those used in many law offices.

In the traditional litigation practice, law-related services such as legal research, investigation, graphical representation, and jury profiling make up the vast majority of the time that goes into a case. Only direct client advice, settlement and other direct negotiation, and court appearance require a lawyer license. In an effort to maintain exclusivity, is the trial bar really in favor of limiting ancillary services?

Our bar must decide whether we should expend our energy defending the old ways by defending the past or we should look to the future and together create the twenty-first century practice for all areas of practice for the good of the public and the profession. We are competing with law-related service providers whether we like it or not. The other service providers are not constrained by the ethical rules governing lawyers.

I believe the Florida Bar must examine ethical rules with a prejudice toward reducing regulation rather than increasing regulation. Lawyers we look up to will always act with personal integrity. Perhaps personal integrity should be the standard for practice in the 21st century rather than attempting to regulate conduct when that regulation is not truly protecting the public. The 1999 All Bar Conference may be a watershed event for the future of the practice.

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