Feature

A Second Look

Future trends in the legal profession

There have been volumes written in recent years regarding doing business in the 'new economy,' yet I have seen relatively little written about how recent changes in the global economy may affect the legal profession. As we are still getting started in this first decade of the new century, it is probably a good time to pause to think about where we may be headed.

In researching this article, I spoke with several lawyers who practiced as far back as the 1950s and one who began his practice in the 1940s. Fifty years ago, no one had thought of billing 2,000 hours a year. Our profession was still transitioning from project billing to hourly billing. In 1950, many attorneys still billed solely by the project for such legal work as trials, negotiations and organizing a new business.

The legal community was much smaller then too; it was not unusual to go to the annual convention and to know everyone who was there. In 1960, Oregon's largest law firm (the firm that is now Stoel Rives) had just over 30 lawyers. It now has more than 300. Litigation was procedurally less complex, and it was easier to try cases. The one subject that all of the lawyers I spoke with agreed on, was that the practice of law was more enjoyable in the 1950s and early '60s than it is today.

Oregon's economy has seen great changes since 1950 as well. The 1950s and '60s saw a great deal of post-war industrialization. By 1960, manufacturing and construction workers made up almost 40 percent of our non-agricultural workforce while the service trades accounted for only 10 percent of the workforce.1

In the 1980s and '90s, Oregon saw the growth of new high-tech industries and a general movement away from manufacturing as the basis of our workforce. This coincided with the shift to the global economy during this period. A great deal of wealth has come in to Oregon during the past two decades, bringing winners and losers. In general, those in high-tech industries have benefited from the new economy, and those in the manufacturing and lumber industries have fared less well. Workers, however, have been the big losers. Workers who assumed that they would always be employed in full-time, relatively high-paying wood-products or manufacturing jobs now find that their options are often limited to relatively low paying jobs in the service sector with no benefits and little job security. Manufacturing and construction jobs now account for only 20 percent of our workforce.2 Eighty percent of all new jobs in Oregon are in the service sector.

What does all of this mean for our profession? This is a question that is of course impossible to answer with any certainty. One can do little better than look at general economic trends and courses taken by other professions and make educated guesses. I will look at three possible paths that may lie ahead for us.

THE ROAD AHEAD
Scenario I: The Sky is Not Falling
The first and most obvious path available to the legal profession is that no major changes will occur in the near future. Virtually all markets for legal services are local. The pressures of international competition that have led to corporate downsizing and so many changes in the business community therefore cannot and will not affect Oregon's legal community significantly. There is also no widespread use of effective legal insurance, so capitation and managed care are also no threat to our profession. The legal profession is simply not headed for any sudden or major changes.

Scenario II: MDPs
One of the biggest topics today in the field of law office management is the subject of multidisciplinary practice, or 'MDPs.' This term refers to law firms that are owned in whole or in part by non-lawyers. The ethical cannons in every U.S. jurisdiction currently prohibit this practice. See, e.g., ABA Model Rules of Professional Conduct, Rule 54.

In many foreign countries there are no proscriptions on this practice, however. The Big Five accounting firms have been quick to capitalize on the opportunity to move into the legal services business in these countries. It has been Arthur Andersen's goal since the early 1990s to be one of the largest providers of legal services in the world.3 They have already made great strides toward this goal. As one legal observer noted: '[B]y crisscrossing the globe, adding firms that were geographically separated, Andersen drew little attention at the international level.'4 David Hiller, managing partner of Andersen Legal Services, has said: 'We crept in, city by city, country by country . . . we deliberately dotted it around. It was like a complex game of Risk.'5

These multinational accounting firms have learned that they can earn far more when they maintain control of all of their client's financial and legal needs. 'The large accounting firms want to offer one-stop shopping for their large clients.6 Some commentators note that the Big Five have encroached into the legal field in the United States as far as possible by 'repackaging' the services provided by their lawyers. Instead of practicing law, their tax attorneys are said to be 'providing tax advice,' or may be 'practicing dispute resolution.'7 Questions are beginning to be raised in some jurisdictions as to whether these activities have actually crossed over into the practice of law.8

The Big Five are more than just keen watchers in the debate over whether or not to allow MDPs. There are those who claim they are the engine driving the move toward legalizing MDPs in the United States.9 If MDPs were allowed in Oregon, it is a fairly safe bet that the Big Five would move swiftly to position themselves as prominent players in the legal services market as they have done internationally. There is much debate about how MDPs would change the practice of law. The Big Five - and those in favor of MDPs - argue that they would allow more competition into the marketplace, which would benefit the consumer.

Although our economic system is built on competition, and arguments based on increasing competition are persuasive, it should be noted that in 1994, Arthur Andersen's legal division, Andersen Legal Services, earned approximately $625,000 per fee earner. This was done in spite of the fact that almost a full 30 percent of its fee earners were non-lawyers. According to one consultant who has followed ALS closely: '[ALS has] redefined the meaning of legal services. They offer clients a more efficient process - sometimes that involves lawyers, sometimes it doesn't.'10

A comparison with the HMO industry may be instructive here. When the large HMO companies began administering health insurance programs, they were able to negotiate significant discounts with physician members. This allowed some for-profit HMOs to operate with administration costs that were 20-30 percent lower than traditional non-profit programs like Blue Cross. Nevertheless, at least one study has shown that only slightly more than one percent of this savings has been passed on to consumers.

Jon Stokholm, president of the Danish Bar and Law Society, has experienced MDPs first hand in his country. According to him, the Big Five's goal in moving into the legal field is to attract the lucrative corporate business and to leave independent lawyers what he calls the 'core' business, such as criminal and family law. In testimony before the ABA Commission on Multidisciplinary Practice, Stokholm said that the Big Five 'always go the limits.' According to him, we will see that too when MDPs hit the United States. Stokholm's advice to U.S. lawyers: 'Have fun.'11

Scenario III: Taking Control of Our Future
Although some will disagree, it is my belief that for better or worse, our profession will undergo profound changes in the coming years. My intent is to begin a discussion that should have taken place in the medical profession before HMOs became a fact of life for doctors. Whether or not such change is inevitable in our profession, I believe the factors discussed in this article would lead forward-thinking firms to evaluate their projected course throughout the next decade with an eye on where they believe market forces will lead them. It is also time for us to begin discussion as a bar and evaluate where our profession is headed.

If we wish to maintain control of the direction our profession is headed, I believe we must do two things. First, we must conduct an open and comprehensive discussion of where our profession stands and consciously decide what it should look like in 10 or 20 years. Next, we must decide what needs to be done in order to achieve our goals, and we must conscientiously implement these steps. In times of change, it is only those who have the vision to plot their own future and the fortitude to see their vision through that earn the right to control their own destiny. Others must simply adapt to change as it comes.

PLOTTING OUR COURSE
What should be done at this point to prepare our profession for the future at the turn of the century? I would propose the following:

1. Talk. First and foremost, we should begin a dialog within the bar. No one knows for sure where the next decade will take us. We have a great deal more wisdom collectively, however, than any one of us does individually. We cannot tap into this unless we begin the dialog.

Before we decide where we are going, we should take a second look at who we are. We have allowed ourselves to be defined for too long by our law school professors, who defined lawyers as instruments of the adversarial system within the common law.

The problem with this excessive connection to the adversarial system that it is becoming increasingly irrelevant to clients who are being pressured by an international market to become more and more efficient. If we cannot meet the demands of this clientele, Arthur Andersen will.

It is our job to minimize the costs of actual or potential conflicts to our clients. The law is one of the tools we use to accomplish this. Sometimes it is our job to prevent conflict from occurring. We do this when we organize businesses, write contracts or do estate planning. Sometimes it is our job to resolve conflicts that have already occurred. We do this when we negotiate settlements between disputing parties, when we mediate cases and - in a minority of cases - when we try cases. If we remember that our primary responsibility to our clients is to reduce the cost of their conflicts, we will keep the right focus both in our discussions and in our practices.

2. Listen. Tort reform is far too easy for voters to pass when lawyers are the group that the voters love to hate. Oregon's most recent round of tort reform was unsuccessful because the tort reformers went too far in trying to take away a basic right of the voters. I do not believe at all that the voters have had a change of heart with regard to trial lawyers, however, nor do I believe that the issue of tort reform has gone away permanently. The trial lawyer bar is still too often perceived as a detriment to society, filing 'frivolous lawsuits' for its own personal gain. Groups such as the Oregon Trial Lawyers Association should actively conduct market research to find out why people persist in believing myths about multimillion dollar verdicts for spilt coffee, runaway jury verdicts, greedy lawyers and frivolous lawsuits. It is only when we understand why we are perceived the way we are that we can begin to change that perception.

Lawyers in all other practices should actively solicit input from their respective clients as well. We should all know individually, and as firms, what our clients think we are doing right, what we are doing wrong and what we can do better. The bar, as a whole or through its subsections, should begin such a dialog as well. We need to know the extent to which the public has lost confidence in the legal profession and why it happened. Only when we have done this can we begin to make any meaningful change.

3. Stop losing the PR war. It is my strong opinion that those who perceive the legal profession as being populated by overly aggressive lawyers with lax ethical standards are seriously in error. If Oregon lawyers are in the midst of some kind of ethical crisis, I have not seen it in my practice. In order to be accepted into the bar, each applicant must take and pass a professional responsibility exam. As a bar, we not only aggressively investigate and discipline members who commit ethical violations, but we are the only profession that I am aware of that publishes both the transgressions and the punishments of those members publicly. Students who have passed the bar exam are subjected to a very extensive background search in order that the bar can assure that lawyers of questionable ethics are never allowed into the profession.

In addition, the Oregon bar has a strong tradition of service to our community. It is not unusual for lawyers I know to occasionally provide generous payment terms, cut their rates or even waive fees to clients who have run on hard times. Oregon lawyers have a long history of volunteering in bar-sponsored pro bono programs for low-income clients. In addition, although good statistics are not available, it is estimated that we provide pro bono services to as many as 15,000 Oregonians each year.12 Oregon was the second state in the nation to have a bar-run IOLTA program. In the 1980s, as funds for legal services programs were being cut, we were the first state to institute an organized campaign to collect funds within the bar for the legal services community. In the last year our Campaign for Equal Justice collected more than $700,000 from Oregon attorneys to help fund our legal services programs.

Lawyers have always voluntarily filled more than our share of positions in the state's school boards, land-use planning boards and other civic positions too numerous to mention. Similarly, I have always noticed attorneys involved in religious activities, child-sports programs and other non-profit organizations that I have been involved with. If this is the case, if attorneys are civic minded, if we enforce high ethical standards, if we work hard to provide access to our legal system to those who cannot afford it, why do we get such a bad rap?

The obvious answer seems to be that we allow this to happen. It is always laudable when one voluntarily serves without needing to be recognized for the service. In our case, perhaps we have done so for too long. Writing this article has had one effect on me that I did not anticipate. Reading the scores of articles I have and, especially, talking to attorneys from all sectors of the bar, has left me with a renewed pride in our profession. It is difficult to convey the sense of commitment to professionalism and to community that I found while researching this article. It is clear to me that the lives of thousands of Oregonians every year are improved in real and verifiable ways by the donations of time, money and talent from members of our bar.

While excesses committed by individual members of our profession have led to negative perceptions in some people's minds, I believe that these excesses are neither commonplace nor widespread. Just as I am convinced that taking a hard look at our profession would convince other attorneys of the commitment to professionalism within our bar, I believe that the impact on our reputation would not be adverse if people were aware of the contributions which Oregon lawyers make every year. It should be our job individually and corporately to begin to spread this word.

4. Start incorporating ADR techniques into everyday practice. Lawyers have experimented with alternative forms of dispute resolution for a quarter of a century now. It is time for some of the more successful of the tools used by ADR practitioners to be adopted into mainstream practice and for us to consider adversarial dispute resolution as the 'alternative' form of dispute resolution. Early negotiations and use of neutral finders of fact are two possibilities.

More fundamentally, we are trained as advocates to prepare cases in a way that will enable us to prevail in court. Mediators are trained to find efficient resolutions to cases and to get parties to resolve their disputes. There have been times in recent years that I have wondered whether we are as adept at this now as we were 15 years ago when I started practicing law. Back then, I personally settled most of my cases through negotiation. With the rise in popularity of mediation, I personally settle far fewer of my own cases today and resolve far more through mediation or arbitration.

Although I am a mediator myself and believe strongly in the value of mediation, my concern is that the mediation movement to some degree has allowed us to compartmentalize our practices. We can now focus on preparing cases for trial, and when it comes time to settle a case, we take it to the mediator. This should not be the case. It should be our job as lawyers to find creative and economically beneficial ways of resolving our clients' cases and to achieve these resolutions quickly and efficiently.

5. Provide legal services for low- income clients. Some of the literature I have reviewed seems to question the continuing utility of professional societies in the new century. If fields such as the law are opened to the free market, some argue, the result would be increased competition, which would lead to a lower cost of the service to consumers. This is probably true, but a profession is different than a guild, or association that exists to serve the needs of its members. The purpose of a profession is to assure that the needs of the community are met.13 We can only justify our existence as an independent profession, insulated from MDPs or other forms of market competition, if our profession provides some 'value added' to the community. That means that the bar must provide some service that is more valuable to Oregonians than the savings that would occur if more competition were allowed.

As I have mentioned, the Oregon bar has an impressive history of community service and of providing access to justice to those who cannot afford it. We cannot rest on our laurels at this time. Globalization has brought fierce competition to every sector of the free market. There is far more wealth in Oregon than ever before in history, yet there are more people living in poverty in Oregon now than there were 10 years ago. One out of five children in Oregon still lives below the poverty level. While we should be proud of how the bar has provided for Oregonians of limited means, there is more that needs to be done. Although we have provided legal services, by some estimates, to more than 40,000 low-income Oregonians last year, for every one who is served there are still five Oregonians who go without legal services because they cannot afford them. We should take this as a challenge and see what we can accomplish.

6. Focus on what our profession offers the community. We should remember what it means to be a member of our profession. The accounting profession exists to provide the financial order that is necessary in an industrialized country. The purpose of the medical profession is to safeguard the health of the community. I would argue that the purpose of the legal profession is the noblest of the three major professions. It is our mandate to assure that our community's laws are justly enforced, that disputes either be avoided or resolved fairly and efficiently, and that certain standards are maintained in the community's civil discourse. In short, to some degree, it is the legal profession's duty to safeguard the civility of the community.

It is not our job to require people to act civilly to each other, but we generally are called upon when civility has broken down and our clients are in open conflict. We serve our clients well when we resolve these conflicts civilly, economically and beneficially. We serve them less well when we act uncivilly toward their opponents or counsel or when the cost of resolving the dispute is excessive relative to the amount in dispute. In my experience, most lawyers act civilly and honorably. Most attorneys, including all of the best negotiators I have known, and most (but not all) of the best trial counsel I have seen, have all shared the ability to fight hard for their client, while not allowing themselves to become angry or to make the fight personal.

We seem to live in a time when traditional standards of civility, courtesy and respect are being revised. Public figures like Jerry Springer, Rush Limbaugh and Howard Stern, while still not mainstream figures, gain large followings for their ability 'tell it like it is.' Every lawyer I spoke with in researching this article told me that the bar is less civil now than it used to be. We must fight against the tendency. It is our job to prevent or resolve our community's conflicts. If we are intimidating and rude in our manner, we may win our case, but we only serve to increase the overall level of conflict in our community. This may be an acceptable outcome for a business. It is not for a profession.

CONCLUSION
I suspect that the reason for the decline of our profession's status has something to do with the general decline in civility that has crept into American culture. Not that people are not polite any more; they are. There is just a greater chance that a store clerk may be impatient with you, you might hear a parent yelling profanities at your child's next sporting event or that you may be the recipient of a fellow commuter's 'road rage' on the way home tonight. This 'attitude' has crept into our profession as well as everywhere else. Part of the problem is clearly simply a byproduct of our adversarial system. If we bully a witness in a deposition or in court, we may think we are just doing our job. To the witness, however, it may be a far more harrowing experience than being bullied by the rude loan officer at the bank last Wednesday. We may tell a few peers about our brilliant cross. But the version that will be widely disseminated among our target market (i.e., any person who may have future legal needs) will be the witness's victimized and exaggerated version of the event. There are times when this may be necessary in court, but it used too often in recent years in depositions where it was neither necessary nor appropriate.

The second reason is that Americans have always had an exaggerated sense of justice. If the justice system is perceived as operating poorly, Americans react much more strongly than when the highways need repair. For better or for worse, our justice system seems to reflect much more strongly on who we are as Americans.

Perhaps this is unfair. Why should we be held to higher standards of ethics and civility than other professionals? On the other hand, if I am right, and there is something nobler about our profession, perhaps it would be a good thing for us to take a second look at where our profession is heading.

ENDNOTES
1. Labor Force and Employment in Oregon, 1960. Oregon Employment Department.
2. Oregon Resident Labor Force, Unemployment and Employment, 1999, State of Oregon, Employment Department.
3. Accounting for Success, Karen Dillon, The American Lawyer, March 1994, p. 31.
4. Id. at p. 31.
5. Id. at p. 31.
6. The ABCs of MDP, Cliff Collins, Oregon State Bar Bulletin, December 1999, p. 18.
7. MDP or Not?, Lawrence Fox, Oregon State Bar Bulletin, July 2000, p. 25.
8. Idl at p. 18.
9. Id. at p. 18.
10. Accounting for Success, at p. 30.
11. Oral testimony of Jon Stokholm before the ABA Commission on Multidisciplinary Practice, Aug. 8, 1999, Atlanta, Ga.
12. Needs and Deeds, Richard Baldwin, Oregon State Bar Bulletin, December 2000, p. 11.
13. See, e.g., Sandra Day O'Connor: Professionalism, Oregon Law Review, Summer 1999, Vol. 78, No. 2, at p. 391. '. . . [P]ublic service marks the difference between a business and a profession. While a business can afford to focus solely on profits, a profession cannot.'