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Will the ABA Move to Regulate Legal Service Providers?

Last week, Robert Ambrogi of the Law Sites blog noted that the number of startups providing legal services has grown dramatically over the last few years. Using data from Angel List, a site that tracks start-ups, he found that in 2014 the site listed 412 legal startups. Now, only two years later, that number has grown nearly threefold to 1094. Technology continues to have disruptive effects on numerous industries, and many have long seen the legal services market as one ripe for disruption. 

The American Bar Association has taken notice of the rapid rise in non-traditional legal service providers, and may in the future seek to regulate these legal service providers and the services they may offer. A recent discussion paper produced by the ABA Commission on the Future of Legal Services asks for comment on whether the ABA should encourage states to develop new regulatory structures for these non-traditional (and currently unregulated) legal service providers. According to the report, the types of legal services providers perform are numerous including:  “automated legal document assembly for consumers, law firms, and corporate counsel; expert systems that address legal issues through a series of branching questions and answers; electronic discovery; legal process outsourcing; legal process insourcing and design; legal project management and process improvement; knowledge management; online dispute resolution; data analytics; and many others.”

The ABA’s Model Rules of Professional Conduct, adopted by most states including Texas, govern the actions of the attorney, but not the law firm or legal services provider. The ABA Commission notes that new regulations may be appropriate for protection of the consumers' interests even if the services performed by the provider do not amount to "the practice of law." The Commission suggests as one possible solution  entity regulation, where the entity providing the services is regulated, rather than the individual (e.g. attorney). The Commission notes that this type of regulation may also allow states to regulate some legal service providers that have a great effect on the individual consumer (like automated document services marketed toward individuals), but not others (like legal process serving) where the service is already supervised by the attorney engaging the service.

The Commission is seeking comments on the issue until April 28. The full discussion paper is available here.

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