In September 2018, Utah launched its small claims court online dispute resolution (ODR) system. Years in the making, a goal of Utah’s new ODR system is to provide greater access to justice for Utah’s citizens. The ODR system has been designed to provide “simple, quick, inexpensive and easily accessible justice” that includes “individualized assistance and information that is accessible across a multitude of electronic platforms.”
This description of Utah’s new ODR program comes from Utah Supreme Court Justice Deno Himonas’s article entitled Utah’s Online Dispute Resolution Program Justice Himonas’s article should be of particular interest to readers who followed the work of the ABA Commission on the Future of Legal Services or readers interested in developments such as Washington’s Limited License Legal Technician program (LLLT) or New York’s Court Navigator program.
Having a public ODR program, as opposed to private ODR providers such as eBay, is not a new concept. For example, UNCITRAL (the United Nations Commission on InternationalTrade Law) has been working on this topic for years. In the United States, the National Center for State Courts has documented and facilitated state court ODR developments. Some state courts have linked up with ODR providers such as Modria on a limited basis. Utah, however, is the first U.S. jurisdiction to launch a “soup-to-nuts” ODR system for its small claims disputes, which currently include claims up to $11,000. The implications of this development are profound. As Justice Himonas observed in his Utah ODR article, “at this point in time we’re only authorized to implement ODR in small claims court; but it doesn’t take much of a stretch of the imagination to see that if it’s successful, we’ll take it to the next level.”
The beginning of Justice Himonas’s Utah ODR article provides information that explains why Utah created its ODR system. It recites “access to legal services” statistics that are depressingly similar to statistics that many have read elsewhere. For example, the World Justice Project’s Rule of Law Index ranked the U.S. 94th out of 113 countries with respect to access and affordability. Utah-specific statistics tell a similar story. In the Third District where Justice Himonas served as a trial court judge for ten years:
- 99 percent of the respondents in debt collection cases were unrepresented. (These were the bulk of cases that were filed);
- 98 percent of the respondents in landlord/tenant cases were unrepresented; and
- in approximately 60 percent of family law cases, one or both parties were unrepresented.
Statistics such as these show why the Utah Courts have devoted considerable resources to helping self-represented clients. After briefly reviewing some of these initiatives, many of which are set forth on the Court’s excellent “Self-Help Resources” webpage, the article reviews the process by which the Utah Court system developed its ODR system.
The article continues by reviewing the ODR system’s four stages as well as the philosophy behind each. The first stage of the process provides resources to educate the prospective litigant and to help that person evaluate the claim. The article includes an ODR screen shot that shows how defendants can ask for information about their options before responding to a complaint. The second stage in Utah’s ODR process allows litigants to gather additional information. As Figure 1 shows, defendants can respond to the suit by stating that they have already paid the debt, or they want to make a full or partial payment, or they are in bankruptcy, or it is not their debt, or they dispute the claim. (P. 883). The follow-up exchange between the parties will differ depending on the option the defendant selects. The third stage provides an opportunity for settlement discussions. Figure 2 is a screen shot that shows the options available if a defendant indicates that the defendant wants to make a payment. (P. 884). Figure 5 illustrates a chat box the parties can use for their settlement discussions. (P. 888). During the fourth stage of the small claims ODR process, either the parties will settle, or a judicial officer will make a ruling based on the documents the parties mark as “public.” Justice Himonas described this stage of the process as follows:
Let’s say you can’t resolve the dispute with the facilitator, then the facilitator is going to prepare a trial preparation document. The trial preparation document will narrow the issues, the facilitator will help the parties describe what’s left, what they’ve been able to resolve, if anything, and what they’ve been unable to resolve and put it in simple understandable terms for the judge. The facilitator will allow the parties to upload whatever documents they think are appropriate and may help guide that decision. If the judge feels like he or she needs a live hearing, they can do that; if not, the parties can elect to do this entirely electronically and have the judge make a decision.
One of the most notable and important aspects of Utah’s ODR system is its use of trained facilitators to help the parties resolve their disputes. As Justice Himonas explains:
As soon as both parties have joined the web portal, a facilitator is assigned to the case. The facilitators will go through extensive in-house training. We’re going to start with five individuals who have been intimately involved in the development of the process and involved in drafting the manual for the facilitators to use as we train them in the future.
When reading this article, I appreciated the fact that Utah ODR includes screen-shots of the ODR system that supplement the article’s explanations of how the system will work. Figures 1-4 show some of the interview questions, while explaining that the litigants’ answers do not become part of the court record. (P. 883-886). Figure 5 is a screen shot that illustrates the ODR system’s chat function that allows the parties to speak directly to one another. (P. 888). Figure 8 is a screen shot that shows how the parties are able to preview, edit, sign, or reject a settlement document. (P. 891). Figure 11 shows the ODR portal from the facilitator’s perspective. his section contains information about the “trial preparation” document the facilitator prepares in the event the parties are unable to settle and the dispute is sent to a judicial officer for resolution. (P. 894). (Under Utah’s ODR small claims system, if the parties do not like the small claims court ruling, they have the right to a de novo appeal to a Utah district court.) In short, after reviewing these screen shots and reading the article’s accompanying narrative, a reader will understand why Utah created its new ODR system, the philosophy and assumptions that drove its design, and the logistics of how it will work.
My one regret regarding this article, which is an edited transcript of Justice Himonas’s Symposium remarks, is that it did not include the lengthy footnotes and citations found in a traditional law review article. Citations that would have provided additional information and context include documents from the National Center for State Courts, the Utah Court system, and others such as the American Bar Foundation, IAALS, and others. Despite this regret, I recognize that Penn State’s Dickinson Law Review was extremely fortunate to have Justice Himonas participate in its 2018 “Access to Justice” Symposium and that his behind-the-scenes article about the development of Utah’s groundbreaking ODR system is an invaluable resource.
In sum, Utah ODR is now on the short list of articles that I am recommending to others. It is worth reading not only because it documents Utah’s cutting-edge access to justice efforts and provides a wealth of details to which the reader would not otherwise have access, but also because it is uplifting to read about the Utah Courts’ outside-the-[jury] box efforts to serve its citizens and remain relevant. It was difficult to select just one article for this Jot, but this topic was the one I knew the least about and learned the most from.
The fascinating case made by Yuval Feldman’s recent book is that most wrongdoing is done by good people who, too frequently, allow themselves to do wrong. We are egocentric; our brain works hard to promote self-interest whilst protecting the self-image that we are morally upright. And it does so quietly (my word, not Feldman’s); much of the decision-making is done subconsciously, intuitively – albeit sometimes, importantly, with glimmers of recognition.
Feldman classifies us into three types: deliberate wrongdoers; situational wrong doers, subject to this quiet egocentricity; and the genuinely good. Even the latter are prone to moral blindspots. Concerned about the prevalence of the last two groups, Feldman makes a strong case for taking situational ethics more seriously. This allows a psychological engagement with sociological questions of structure and agency. Situational ethics sees anxieties about bad apples and bad barrels as being better understood as a concern with bad decisions; we are located in webs of design and accident. What Feldman wants is for regulatory design and jurisprudence to take bad barrels and bad decisions more seriously. The normative judgements that drive ex post punishment as a regulatory strategy are superseded by seeking improvements in behaviour before wrongs can manifest. Intentionality, he suggests, is “outdated.” (P. 40.)
My interest is narrower: how his insights apply to lawyers and their regulation. Much of Feldman’s work is of general application to lawyers as ‘ordinary’ humans; but for me there were also many questions posed for lawyer exceptionalism. The book is a treasure trove of cognitive challenges especially relevant to lawyers. Might lawyers need to pay more attention to the objectivity illusion, given a naïve belief that they are trained to see facts from all sides? Does thinking like a lawyer encourage us to discount the impact of intuitions and emotions on our decision-making? How littered is our world with post hoc rationalisations for the misconduct, of ourselves or of clients? How varied are our moral identities and attentiveness? If tiredness and quick decision-making under pressure diminish ethics, how well are lawyers’ working lives constructed for good decision-making? If collaborative rather than competitive environments encourage good conduct, what then of the cultures of law firms and law schools? And perhaps most fundamentally, if an appetite for ambiguity is strongly associated with conscious and unconscious unethicality, how should we see a central facet of lawyering: managing or exploiting the ambiguities of facts and law?
Feldman surveys a vast range of his own and others’ work, teasing out the impact of our motivations and cognitive limitations on making ‘good’ decisions. He then turns to the crucial, but under-researched, field of solving or ameliorating these problems. He urges greater attention to the expressive function of law, the ways in which the choice of rules, and their framing, effect motivation and behaviour. Do the specifics of rules, their clarity, how punitive they are, even social identities revealed in phrasing, encourage good people to be better; do they even encourage bad people to refrain from punishable wrongs?
Designing decision processes, training and de-biasing, better conceived and delivered codes of ethics, may all challenge quiet unethicality. Similarly, group norms are generally thought to inhibit self-interested behaviour, that is part of the point of the profession, but do the particular group norms of lawyers or law firms do that? Not enough, might be a fair, if trite, response. Feldman shows that it might be important to have more precise understandings of individual and group characteristics: how many lawyers are bad, or situationally vulnerable, or good but with blind-spots, for example? What are the expressive functions of lawyers’ ethical rules?
The book is also a treasure trove of findings: a mixture of the important and the quirky. Carrying weights, washing hands, lowering lighting, and reducing glucose levels all have an impact on misconduct; at least in some experiments. So does making a decision in a room full of children’s toys. The nudges, primes and self-deceptions are mainly, but not always, automatic. Feldman thinks about how to encourage more awareness of the risks of self-deception and begins a debate about how our rational models of ethics can influence our unconscious ones. In reminding the reader of the now familiar (but contested) System One and System Two thinking from Kahneman and Tversky, he focuses crucially on how individuals and regulators can heighten awareness, controllability and attention on ethical deficits.
Regulatory strategies may need to be developed for each of his three groups. Such strategies may be in competition with each other, or they may be capable of “acoustic separation” (see Dan-Cohen 1984): the intriguing idea that the same rules can send different messages to different audiences. Such work highlights fundamental dilemmas. Regulators need to be persuaded that poor conduct is widespread if they are to act against it, but signalling that misconduct is common encourages that misconduct. If I think tax avoidance is widespread, I am less likely to pay my taxes. If I fine the parents who pick up their kids late from nursery school, some of those parents will quietly redefine the payment as a tax, which they pay for the privilege of being late, and tardy pick-ups will increase. Heavy-handed regulation or the overuse of incentives and punishments may crowd out better behaviour. It may also signal distrust of the regulated community, diminishing levels of compliance. But contrarily it may sometimes be necessary punish overt unethical conduct severely. And Feldman notes times when getting the basics right is more important than behavioural sophistication: in one study, monitoring tax payer income does more to foster tax compliance than the working of motivational levers.
Feldman is rightly worried about the methodological limitations of behavioural ethics, and he is also right that there is nowhere near enough work to be confident about the underlying mechanisms behind these problems and the solutions to them. Many studies are small and experimental. Quirkiness is fun, but magic circle firms are not about to start building difficult-decisions suites stuffed with cuddly toys. Yet in these limitations is the central challenge: can ecologically realistic, methodologically robust, replicated studies develop our understanding of behavioural ethics further? Feldman and his collaborator’s own studies are a rich resource here. Can regulators, or even lawyers and compliance managers, be encouraged to experiment with behavioural interventions? After all, lawyers need to be interested in both how rules work and how people behave ethically if they are to do their job effectively. Feldman’s book shows us how important this could be.
You Don’t Own Me is a colorful telling of the Bratz v. Barbie battle, a modern David and Goliath decade-long dispute fought by MGA Entertainment and toy giant Mattel. It is a story of competition, innovation and greed, economic espionage and corporate personalities larger than life, of creativity and its legal treatment, of dolls, and ultimately of American culture itself. In Professor Orly Lobel’s masterful hands this award-winning book ((For reviews of Professor Lobel’s book see Wall Street Journal, New Yorker Magazine, and the Financial Times.)) effectively mixes legal analyses and business insights to offer a compelling read.
At the same time, if you dig a little deeper, You Don’t Own Me is also a fantastic account of the legal profession saga behind the toy story, examining the various roles legal actors–outside counsel, in-house lawyers, judges and jurors–played in the litigation, and their interactions with clients, related parties, and the general public. In particular, Part III, titled Warring Titans (Pp. 125-243), is a must read for lawyers and law students interested in contemporary law practice.
Briefly, Mattel sued MGA (then a smaller toy manufacturer) and Carter Bryant (Bratz’s designer) in federal court for intellectual property infringement in 2005, asserting that Carter initially conceived of Bratz, the so-called anti-Barbie doll, while he was an employee of Mattel; that Carter assigned to Mattel all his future creativity and innovation while at its employment; and that Mattel owed the copyright to Bratz. Initially, Mattel prevailed, winning a 2009 jury verdict after which Judge Stephen Larson issued a global all-inclusive injunction ordering MGA to pull Bratz from the market and stop production. (Pp. 145-174.) Judge Kozinski writing for the Ninth Circuit Court of Appeals reversed (chapter 9, Taming Barbie, Pp. 175-191), and MGA prevailed before Judge David Carter in 2011 (chapter 10, Round 2, Pp. 193-229). Recounting this legal saga within the greater story, Lobel provides deep insights into the practice of law.
To begin, consider the interplay between the following three phenomena in contemporary law practice: the federal-state court litigation dichotomy, the corresponding distinction between BigLaw and litigation boutiques, and increased specialization. As Lobel explains, elite BigLaw firms tend to dominate federal court litigation—especially specialized litigation, such as intellectual property infringement cases—leaving the less prestigious state court litigation to solo practitioners and small law firms. Thus, MGA’s decision, in preparation for Round 2, to retain a general litigation boutique to take over the lead in its defense from the BigLaw firms which handled Round 1, was surprising. How bold, and uncommon given the under-representation of women lawyers in positions of power and influence in the legal profession, was the move to entrust the first chair to Ms. Jennifer Keller of a small all women-owned law firm? Less surprising was the establishment’s response to these moves: “Mattel’s Quinn Emanuel attorneys,” writes Lobel, treated Keller condescendingly. “At one point John Quinn said about Jennifer dismissively, ‘She’s behaving like a state court attorney.’” (P. 195.)
Relatedly, Lobel’s gripping account provides a window into the complex world of lawyer identity, client identity, and corporate attorney-client relationships. MGA’s unorthodox decisions, points out Lobel, were made by its flamboyant immigrant outsider Chief Executive, Isaac Larian, because he “had been unable to get along with the highly paid lawyers from some of America’s biggest law firms.” (P. 194.) In contrast, Mattel, led by Robert Eckert, its “all-American professional CEO” (P. 168), opted for BigLaw elite outside counsel. Eckert was “[p]art of an old boys’ network of Fortune 500 professional CEOs, [who] frankly admits that lucrative executive gigs only go to members of an exclusive society.” (P. 110.) You Don’t Own Me suggests similarly that lucrative legal gigs (still) only go to members of an exclusive legal society, the elite club of elite large law firms, in part because of the informal ethno-religious and class affinity between their lawyers and C-Suite executives making decisions as the authorized constituents for Fortune 500 entity clients.
Next, the book details Mattel’s aggressive corporate and litigation strategies, including spying on Larian and his family in conjunction with the litigation by, for example, taking pictures of his kids coming and going from their home. (P. 170.) It then chronicles the aggressive conduct of Mattel’s lawyers in the courtroom: “one of Mattel’s attorneys read one of Larian’s work emails back to him,” in which Larian responded to a female employee’s request for $12,000 for a project. (P. 171.) “Larian originally wrote, ‘All the women in my life–my wife, my secretary, you–want so much from me.’ But on the stand, Mattel’s attorney asked Larian why he wrote that his wives (plural), secretary, and so forth make demands. Larian,” writes Lobel, “face bright with anger exploded. ‘Wives?!? What did you say? Wives?!? You racist!’…Mattel’s attorney said it was only a slip of the tongue; Larian’s Iranian heritage had nothing to do with his accidentally saying ‘your wives,’ rather than ‘your wife.’ He turned to Larian’s wife and apologized.” (Id.) Whether Mattel’s lawyer indeed had a good faith slip of the tongue, whether his conduct revealed implicit bias, or whether this was an instance of explicit bias which backfired is beside the point. Rather, You Don’t Own Me raises challenging questions about the interplay between client identity and conduct, and lawyer identity and conduct, and the subtle and complex ways in which they shape and inform each other, as well as questions about the prevalence and use of bias in our courtrooms.
Finally, Lobel’s account of Judge Larson (Pp. 149, 174), his evidentiary rulings (P. 170) and jury instructions (P. 173), juxtaposed against the colorful personality and philosophy of Judge Kozinski (Pp.175, 178, 182), and contrasted with the calm and composed judicial temperament of Judge Carter (Pp. 196, 198) and his jury instructions (P. 205), provides an illuminating view of the role and impact of judges–trial and appellant–on litigation, the parties and the law. You Don’t Own Me’s detailed account reminds us not only that, to an extent, the law is what the judge had for breakfast, but also that the law is a function of the judge’s experience (or lack thereof, in the case of Judge Larson), philosophy, judicial temperament, and ambitions.
One of the manuscript’s many strengths is that it does not exaggerate the role of lawyers and other legal actors in the overall saga. This is not a book about lawyers, and it is not intended primarily for lawyers. Yet, it is a book lawyers (among others) should read: it carefully and compellingly documents how lawyers interact with and advise powerful clients, how clients in turn shape lawyers’ behavior, how lawyers’ conduct impacts related parties (do not miss Lobel’s moving but never sentimental account of Carter Bryant, left crashed and penniless, after two rounds of bitter litigation between the corporate titans (Pp. 199-202, 238)), how lawyers’ professional identity interacts with their personal identity and firm ethos, and how the practice of law reflects and features some of the highs and lows of American culture, its imagination and creativity on the one hand, but also its biases and injustices.
Cite as: Eli Wald, The Legal Profession Saga Behind the Toy Story
(July 26, 2018) (reviewing Orly Lobel, You Don’t Own Me: How Mattel v. MGA Entertainment Exposed Barbie’s Dark Side
Frank Pasquale, A Rule of Persons, Not Machines: The Limits of Legal Automation
, George Wash. L. Rev.
(forthcoming 2018), available at SSRN
It’s funny that people who are so infinitely fallible consistently seek to eliminate that fallibility—to get rid of the vagaries, inconsistencies, and unpredictable nature of human decision-making. In this insightful article, Frank Pasquale exposes a recent incarnation of this effort and its effect on the future of the legal profession. Legal futurists insist that software and new technology can edge out lawyers with a better, more efficient, and more consistent product. There is little that lawyers do that cannot be done better by artificial intelligence, smart contracts, and other block chain technologies. Governance itself will be more efficient, fair, and even-handed if we minimize the human element. Pasquale guides us through the flaws in the argument, the dangers and unintended consequences of the unbridled use of these tools. In doing so, he argues that legal futurists ignore the irreducibly human and discretionary nature of the law and he concludes with a more modest future for technology in the law.
Pasquale begins by exploring and debunking several myths about law and technology. Promotors of the new legal technology suggest that the products can eliminate human discretion. Part of the appeal of legal automation is that it can replace bias with fairness and human error with mathematical precision. The more social scientists teach us about how bias works, the more skeptical we become about the ability of well-trained individuals to make good decisions. But this goal is illusory. Technology does not remove human choice. It merely shifts responsibility from lawyers, judges, and regulators to programmers. In doing so it hides the human choices that are equally plagued by error and bias under the guise of neutrality and objectivity. It shifts decisions from those trained in law to those in a different discipline.
Legal futurists argue that technology solves a problem that has plagued the bar for over a century—this vaunted technology, they claim, will expand access to legal services by the poor and middle class. By routinizing and mass marketing legal information, LegalZoom and other innovators have been able to reduce costs and provide access to important services to those who couldn’t afford it before.
But, without disputing the value of products like LegalZoom, Pasquale notes that this software makes up a small fraction of the aspirations of legal futurists who seek to mechanize private legal arrangements among powerful businesses as well as governance itself. Many of the innovations will not begin to address unequal access to justice because they are designed for high-end consumers who do not serve lower-income clients at all. Further, even if legal technology is preferable to lawyers in some areas because of its power to reach underserved communities, it is no panacea: It is plagued by error and risks empowering new financial interests to influence normative policy areas. The tax software companies have, for instance, developed into a strong lobby, at times pushing for laws that create a market for their product but undermine the public interest in simplifying certain types of tax law. In addition, without the proper legal training and specialized knowledge, programmers can miss essential components of the law. The wills that LegalZoom drew up, for instance, neglected the effect of employer-sponsored retirement accounts, leaving many individuals with no provision for the distribution of those funds.
Pasquale also exposes a third myth—the promise of perfectly impartial technological governance—as both unrealistic and undesirable. True, robotic law enforcement seems unproblematic in some areas. Red light cameras, for example, automatically take a picture of cars speeding through stop lights and send notices of conviction and fines to the owners. But Pasquale explains that this simple tool also has downsides. Most notably, it can shift costs from the government to individuals. It does so by imposing a difficult appeal process on those who have a viable defense. In addition, it dispenses with due process and denies the defendant the right to confront his accuser. Proponents argue that the genius of innovations like this is that they eliminate unwanted bias replacing it with a fair and impartial machine, but studies have shown that algorithmic risk assessment and sentencing regimes are not immune to racial and other biases, but instead integrate them into the system. Robotic law enforcement spawns market reactions like donotpay.com, which serves a legitimate purpose in helping innocent individuals avoid paying their fines but also encourages bad actors to game the system, which leads inevitably to more technological innovations to monitor individual behavior.
Another unrealistic promise of legal futurists is that technology can displace discretionary value judgments. Block chain technologies purport to replace both intermediaries and regulatory regimes. This innovation, for instance, could allow an individual to transfer a car without waiting on the long lines at the DMV to register ownership. But as, James Grimmelmann and Arvind Narayanan have argued, block chain technology can eliminate banks, exchanges, and registries like the DMV, but without a regulatory system, run by humans, the technology itself cannot solve the problem of equity and ownership. The technology may, for instance, make it possible to transfer a car immediately by using digital signatures. It could guard against theft by making it such that the buyer’s key will not work in the car until the money has been debited from his account and credited to the seller’s. But if a hacker manages to obtain someone’s key, we still need laws, norms, and human judgment to resolve the dispute.
Ultimately, computers cannot capture the “messy complexity of discordant human meanings” that define our physical reality. (p.26.) Equity requires human judgment, a nuanced, culturally sensitive understanding of meaning. As Pasquale recounts, in the 1990s, the first computerized chess program beat a grandmaster. By the 2000s, no grandmaster could beat a computer in a game of chess, but a grandmaster and a computer together can still beat a computer alone. The addition of human understanding, judgment, and the nuanced play of meaning is essential.
Pasquale speculates that part of the enthusiasm for technology is driven by investors. In addition, legal futurists may be motivated by the age-old desire of one part of the profession to assert superiority over another. No one likes to be associated with the image of the old guard, resistant to change and insistent on the way things have always been done. Legal futurists tend to cast those who are skeptical about technology in this way. Old, out-of-touch, stodgy, and perhaps even self-interested, these lawyers will do anything to preserve their world which is quickly disappearing whether they like it or not.
But, ironically, it is the legal futurists who are clinging to an outdated view of the law. They assume that the law is a set of clear rules established by a recognized authority prior to their application. Underlying their worldview is an understanding of law comprised of clearly ascertainable edicts that determine appropriate conduct and specific legal outcomes. But this formalist conception of the law was debunked over a century ago. Even in seemingly simple arrangements, law is full of ambiguity and its application is indeterminate and inevitably dictated by the views of the decision-maker.
Embracing a more contemporary view of law as a set of fair processes, which ensure a degree of internal logic, a connection between law and reasonableness, Pasquale argues that it is less obvious how a machine alone could surpass a human. If reasoned elaboration is the hallmark of law, then it seems more nuanced, more integrally connected to human understanding. Outcomes are both culturally dependent and linguistic in nature. If law is essentially a social institution, then it is harder and perhaps even impossible to mimic perfectly in code.
Like chess, the law is not a mathematical equation, and human relations are even more complex than chess moves. The sometimes arcane legal rules crafted and applied by humans are a suitable if imperfect adaptation to the messiness of real social interactions. Pasquale concludes that legal technology can be an important tool for lawyers. Together the lawyer, technology, and artificial intelligence may surpass the lawyer alone. But in order to realize this potential, legal futurists need to develop automation that cultivates and helps develop attorneys’ services rather than seeks to replace it.
Deborah L. Rhode and Scott Cummings, Access to Justice: Looking Back, Thinking Ahead
, 30 Geo. J. Legal Ethics
485 (2017), available at SSRN
In Access to Justice: Looking Back, Thinking Ahead, Deborah L. Rhode and Scott Cummings—two giants in the field—take stock of where we are when it comes to access to civil justice in the United States. Not content merely to offer an anodyne retrospective, they then use the opportunity to outline a bold agenda for future progress.
Rhode and Cummings begin their inquiry by assessing the scope of the problem. But, in so doing, they confront the same dismal paucity of reliable data that’s afflicted this inquiry for decades. As Rebecca Sandefur has bluntly put it: “[A]t present, we have no idea of the actual volume of legal need, and no idea of the actual volume of unmet legal need.” While the Legal Services Corporation (LSC) reports that “over four-fifths of the legal needs of the poor remain unmet,” it is hard to know whether that is true, as even identifying what a “legal need” is or isn’t is surprisingly difficult. (P. 487.) Many situations raise legal issues, have legal consequences, or pose legal risks, but how do we know whether any given situation is one of true legal need that can only be handled by someone with bona fide legal expertise? Worse, how do we assess those situations based on lay people’s sometimes hazy recollections, often long after the fact?
Then, assuming a genuine legal need exists, a second empirical question arises: How do we address that need? More to the point: Are lawyers required or can others suffice? In recent years, scholars have poured a huge amount of energy into answering that question, but Rhode and Cummings sum up the current state of the inquiry nicely: “Well-designed studies on the contributions of lawyers in routine cases are scarce and conflicting.” (Pp. 486-87.)
Where does this leave us? Rhode and Cummings are right, I think, in declaring that, notwithstanding uncertainty about just how big the civil justice gap is or how best it can be filled, “the limited data we do have suggest an unsettling lack of progress in assisting those who need help most.” (P. 487.) Though we can only roughly estimate the justice gap’s precise shape and exact size, there’s no question that the gap is large. Nor is there a question that this gap imposes significant costs: The individuals who are denied assistance, even in the face of urgent legal need, are obviously hurt, as they are thrust into the roiling waters of eviction, bankruptcy, family dissolution, deportation, or personal injury, without a legal lifeboat. And even beyond that, when some Americans’ legal problems are expeditiously resolved, while others’ problems are left to fester, the lopsided provision of legal services creates grave problems for society, all but guaranteeing the inadequate enforcement of law and the exacerbation of injustice and inequality.
Finally, as bad as it already is, there is also no doubt that the situation is poised to get worse: The LSC’s federal budget has dropped almost forty percent in the past thirty years, and the Trump White House, which has already shuttered the DOJ’s Office for Access to Justice, seems intent on defunding the LSC entirely.
So, what to do? Rhode and Cummings roll up their sleeves and provide helpful guidance. In so doing, they spell out what is, in effect, a kitchen-sink strategy, suggesting that we attack the problem from multiple directions at once.
First, they call for more non-lawyer assistance. In their words, we need “more access to justice, not necessarily more access to lawyers, and the profession needs to do more to support options apart from lawyers.” (P. 490.) Here, they observe that the ABA’s “preferred strategy . . . for increasing access to justice has, unsurprisingly, been increasing access to lawyers.” (P. 489.) But this strategy has drawbacks. Practically, it is completely unrealistic: At a time when even the LSC is on the chopping block, there is no political will to supply more publicly-funded lawyers, and, even if there were such will, many low-income individuals distrust lawyers supplied by government programs. Further, they argue, the ABA’s lawyer-centric strategy almost certainly stunts our support and development of worthwhile out-of-the-box options, including streamlined self-help courts, technological innovations like LegalZoom, and the expanded licensure of non-lawyer legal technicians. Accordingly, Rhode and Cummings argue that we ought to soften unauthorized practice restrictions to enable more non-lawyers to assist individuals with routine legal problems, and we should reserve restrictions on unauthorized practice only to those instances when there’s “demonstrated consumer injury.” (P. 491.)
At the same time, recognizing that lawyers are sometimes part of the solution, they call for lawyers to step up and make pro bono work “a higher priority.” (P. 492.) While pro bono assistance has increased in recent decades, it remains pitifully low—only a third of lawyers report meeting the fifty-hour annual goal set by the Model Rules of Professional Conduct, and a fifth of one survey’s respondents reported doing no pro bono work at all. (P. 493.) Moreover, even when lawyers do this work, it is sometimes shoddy: Rhode has previously found that nearly half of public interest legal organizations report dissatisfaction with the quality of pro bono work by firms. Rhode and Cummings thus propose making the current fifty-hour goal mandatory (with a buyout option), encouraging more voluntary pro bono contributions, and demanding greater accountability for the work that’s done to ensure that it is impactful, cost-effective, and satisfies the client.
A remaining corner of the access to justice landscape is occupied by public interest organizations. These organizations have experienced outsized growth over the past thirty years: The number of public interest jobs has increased nearly 300-fold, and the public interest sector’s percentage of the bar has nearly doubled. Meanwhile, these organizations have also changed shape and direction, as more conservative groups have sprung up, while others have shifted their focus, away from litigation and toward education, research, and policy. Compensation, however, remains abysmal. Rhode and Cummings thus call for increased financial assistance and a renewed focus on creating entry-level positions for attorneys who want to pursue this kind of work right out of the gate.
Rhode and Cummings’s essay ends with the famous quote by President Jimmy Carter—that we, in the United States, are “overlawyered and underrepresented.” (P. 500.) Four decades after Carter’s proclamation, Rhode and Cummings show us that Carter’s message still resonates, even while they seek to sow the seeds of future reform.
Many professors reading this review teach professional responsibility courses. These courses cover the law of lawyering, commonly focusing on the ABA Model Rules of Professional Conduct. As revealed in a small survey that I conducted in 2011, many professors do not devote much attention to studying legal malpractice law. The survey revealed that an even smaller percentage cover legal malpractice insurance. As a result, the majority of law students likely graduate without the basic understanding of legal malpractice insurance and without considering the crucial role that insurance plays in a professional’s practice. Professors’ failure to discuss the role insurance plays in helping lawyers function as accountable professionals may contribute to the large number of lawyers who fail to carry legal malpractice insurance. From the standpoint of access to justice, uninsured lawyers may leave injured persons without a remedy because experienced malpractice counsel often decline to sue lawyers who do not carry insurance or have significant assets to cover a malpractice judgment or settlement.
Among practice settings, solo practitioners constitute the largest group of uninsured lawyers. Although some scholars have studied the role that insurance plays in affecting the conduct of lawyers in large firms, no one has studied the issues related to malpractice insurance and solo practice. That is why I especially liked Lawyers Going Bare and Clients Going Blind by Leslie C. Levin. The article provides a fascinating window into the world of uninsured solo lawyers.
To put the issue of uninsured lawyers in perspective, the article opens by discussing mandatory insurance for lawyers. Unlike other common law countries, in the United States, only two states now require that lawyers in private practice maintain a minimum level of malpractice insurance. With this background on insurance requirements, Professor Levin’s article examines the profile and perspectives of lawyers who “go bare,” drawing on data derived from a 2011 survey of uninsured New Mexico lawyers and more recent surveys of insured and uninsured lawyers in Arizona and Connecticut. The data paint an interesting portrait of uninsured lawyers and their conduct. Most notably, the results address the role that cost plays in lawyers going bare. The results reveal a “disconnect” between what some lawyers know about cost and the reasons they indicate for not carrying insurance. Although New Mexico lawyers most frequently cited cost as the reason for not carrying insurance, 40.8% of New Mexico lawyers never applied for insurance. (P. 1290.) This suggests that the lawyers may not have actually known of the relatively low cost of insurance (around $3,000 per lawyer for minimum levels of coverage). This amount appears to be relatively low, assuming that you are a lawyer with a profitable practice.
A number of respondents in the survey reported that insurance was unaffordable because they were running their practices on a shoestring, practicing law without support staff and without a dedicated office. By contrast, a significant percentage of uninsured lawyers reported that the cost of insurance was not prohibitive and that they would purchase insurance if the state required them to do so. (P. 1291-92.) From the standpoint of client protection and accountability, this group of lawyers may be the most troubling, despite their claims that they could afford to hire counsel to defend a claim. Evidently, these lawyers make an economic calculation, weighing the cost of insurance, the value of insurance protection, and the likelihood of a plaintiff will successfully recover on a malpractice claim.
Some lawyers refuse to carry insurance because they believe that insurance makes them more attractive targets. Others reported not carrying insurance because they practiced in areas, such a criminal law, in which their civil liability exposure is limited. (Pp. 1293-94.)
As a professor who directs a post-graduate incubator program that is designed to train recent law graduates pursuing solo and small firm practice, the insight I found to be the most interesting is the finding that a lawyers’ early practice experience may affect the likelihood that lawyers will opt to carry malpractice insurance later in their career. The results suggested that lawyers who were insured in their early careers were more likely to carry insurance later in their careers. (P. 1296.) As noted by Professor Levin, the lawyers who were covered by insurance when they first enter private practice may come to view insurance “as a necessary part of doing business.” (P. 1296.) This observation points to the value of requiring insurance in post-graduation incubator programs.
One factor that may influence lawyers’ decisions to purchase insurance is a state requirement that lawyers disclose that they do not carry insurance. Professor Levin’s article systematically examines insurance disclosure requirements canvassing the different approaches states take, as well as the possible impact of those approaches. Interestingly, the data does not clearly indicate that disclosure requirements create an incentive for lawyers to purchase insurance (though the disclosures still may have other benefits). (P. 1308.) At the same time, Professor Levin explains that there is no evidence to support the arguments that disclosure requirements stigmatize uninsured lawyers and contribute to an increase in frivolous lawsuits. Id. Professor Levin concludes by urging that states develop more effective disclosure regimes to inform the prospective clients before they contact lawyers.
Rather than relying on enhanced disclosure requirements, Professor Levin recommends that state high courts seriously examine the issue of uninsured lawyers. (P. at 1330.) After Professor Levin’s article was written the Illinois Supreme Court took that challenge addressing the special risks of lawyers who go bare. On January 25, 2017, the Court adopted revisions to Rule 756, requiring that uninsured lawyers periodically self-assess their knowledge of ethics and firm practices. In the same year, the Supreme Court of Idaho took a big leap on the insurance front. On March 30, 2017, the Idaho high court adopted See rule amendments requiring attorneys in private practice to carry minimum levels of insurance.
Moving forward, Professor Levin’s work can inform the work of other regulators formulating new approaches to address concerns related to uninsured lawyers. Thanks to Professor Levin, these regulators can use empirical data and her recommendations in charting a course to enhance public protection.
Anthony Sebok, Selling Attorney's Fees, U. Ill. L. Rev.
(forthcoming 2018), available at SSRN
The humble fee-splitting rule—Rule 5.4(a) of the Model Rules of Professional Conduct and its substantial equivalents in various states—plays an outsized role in structuring the delivery of legal services in the United States. The rule provides that, with limited exceptions, “[a] lawyer or law firm shall not share legal fees with a nonlawyer.” The fee-splitting rule is substantially the same even in jurisdictions with quirky rules of professional conduct, such as California, New York, and Texas. The only exception is the District of Columbia. Historically the concern of the fee-splitting rule was mostly payments to nonlawyers for referrals of cases, or the use of “runners” or “cappers” to solicit personal-injury clients. It featured prominently, however, in the debate in the early 2000’s over the proposal to allow multidisciplinary practices (MDPs), such as partnerships between accountants and lawyers. The acrimonious MDP debate ended with lawyers doubling down on the claim that the practice of law is a profession, not a mere business, and that avoiding the sharing of fees with nonlawyers is an essential firewall protecting lawyer professionalism. (Insert snark here about how an industry with total revenues of $86.7 billion—the 2017 AmLaw 100—can claim with a straight face not to be a “business.”)
Tony Sebok’s article, Selling Attorneys’ Fees, begins on familiar ground. The inability of law firms to obtain equity investments from nonlawyers limits their sources of capital to firm revenues and debt financing. This leaves them strapped for the cash that might catalyze Silicon-Valley-style innovation in the delivery of legal services and makes them vulnerable to economic downturns. One of the motivations for the ABA’s Ethics 20/20 Commission was to consider whether regulatory innovations might enhance the delivery of affordable legal services. However, the proposal to permit certain types of alternative business structures, which would have required relaxing the fee-splitting rule, went down in flames. The Illinois Bar Association filed a formal resolution opposing changes to the fee-splitting rule, and the Ethics 20/20 Commission responded by tabling any consideration of alternative business structures.
The first question Sebok addresses concerns the application of the fee-splitting rule to law firm financing transactions. If the policy underlying the fee-splitting rule is protecting the independent professional judgment of lawyers (and Sebok shows that this is the best constructive interpretation of the rule), then one would think the rule would focus on the extent of control exercised by a third party. That is sometimes the way the rule is applied, but not always. Here is an illustration from the Hazard, Hodes & Jarvis Law of Lawyering treatise, which Sebok uses in his article: Three lawyers would like to construct a law office; each is required to contribute $50,000 to the project. Lawyer A borrows $50,000 on a line of credit with a bank. Lawyer B obtains $50,000 from a wealthy friend, in exchange for a promise to pay 10% of his net legal fees. Lawyer C takes $50,000 from a recent settlement of a client’s matter and plows it back into the construction costs. Which of these lawyers has violated Rule 5.4(a)?
If the answer depends on whether attorneys’ fees are literally shared with a nonlawyer, then Lawyers A and B both violated it. There is plentiful authority, however, supporting the conclusion that making interest payments on an ordinary commercial line of credit with a bank does not violate the fee-splitting rule. One of the many contributions of Sebok’s article is to show that the covenants in loan agreements with banks grant a significant degree of control to the lender over the operation of the law firm. If the concern underlying Rule 5.4(a) is preventing outsiders from meddling in the representation of clients by lawyers, Lawyer A may be in trouble also if she accepts covenants potentially granting control to the lender. As for Lawyer B, one might rely on the principle that it is permissible to pay a fixed interest rate to a lender, one not contingent on the outcome of any given matter, but there are some state bar ethics opinions prohibiting these sorts of fixed-rate contingent advances. The prohibition becomes more uniformly applied where the return to the lender is calculated as a percentage of the proceeds of a litigated matter handled for a client. Further complicating the analysis, law firms commonly engage in factoring transactions, in which they sell their accounts receivable to a nonlawyer, in exchange for a discounted cash payment. A recent U.S. District Court decision in Massachusetts followed the well-established rule that selling accounts receivable – which, after all, necessarily are comprised of attorneys’ fees – to a nonlawyer does not violate the fee-splitting rule.
It is then but a small step to recognize the permissibility of factoring unmatured attorneys’ fees, as distinguished from payments due for services already completed. (“Unmatured” here means that a definite obligation to pay the lawyer a specific amount has not yet accrued; in a contingent-fee representation, for example, the client may have agreed to pay 1/3 of the gross proceeds, but until judgment or settlement, the precise extent of the client’s obligation has not yet been established.) As Sebok notes, “attorneys are factoring unmatured contingent fees today” (P. 32.), courts are aware of the practice, and have allowed the existence of this practice to pass without comment. Interestingly, one New York decision he cites inverts the “core values” objection to fee-splitting and contends that a formalistic application of the fee-splitting rule treats lawyers worse than other similarly situated businesses. (P. 33.)
But the factoring of unmatured fees would violate what Sebok calls the Direct Relation Test (DRT), which is his attempt to make sense of the incoherence in fee-splitting cases and ethics opinions. The DRT prohibits the payment of legal fees to a nonlawyer if and only if the nonlawyer’s profit or loss is directly related to the success of a lawyer’s representation of a client. (P. 21.) “Direct” here means something like “linked to the result in a particular case or small subset of cases.” Courts and bar associations therefore have a choice: Either prohibit factoring of unmatured fees, thus applying the DRT, or permit this common practice and junk the DRT.
It is impossible in this short comment to do justice to the sophistication and subtlety of Sebok’s argument. His resolution of the dilemma is ingenious. If I understand correctly, the DRT is not implicated in the factoring of unmatured fees because what the attorney sells to the buyer is a peculiar type of property—a lien on the proceeds of the lawsuit. The lien creates an equitable assignment of property (the client’s cause of action) in favor of the nonlawyer. Because the property interest never passes into the hands of the lawyer, the lawyer seller is not sharing fees with the nonlawyer buyer. (Pp. 38-39.) If courts and ethics committees analyze the fee-splitting rule in this way, however, it becomes possible for clever lawyers and financiers to draft around the rule’s prohibitions. Non-recourse loans, for example, can be reworked as the purchase of a property interest in an unmatured fee. It is therefore impossible to hold onto a principled interpretation of the DRT, because a return to an investor that is directly related to the attorney’s performance may fall outside the fee-splitting rule. Regulators may be tempted to respond by overcorrecting in the direction of a highly formalistic interpretation of Rule 5.4(a) that would prohibit a form of financing commonly engaged in by contingent-fee lawyers.
One solution to the dilemma identified by Sebok would be to focus not on the nature of the property interest conveyed, but on the effect of the transactional structure on the lawyer’s exercise of independent professional judgment. (He suggests this reading when he notes that one of the most important sticks in the bundle of property rights is control over any portion of the interest.) Briefly, the question would be, is there any circumstance under which the lawyer would do better financially by taking actions that adversely affect the client’s matter? That is one way to synthesize many of the state ethics opinions he cites, and is consistent with the policies underlying the rule. But regulators have a distressing tendency to veer erratically between formalistic and functional or policy-sensitive interpretations of Rule 5.4(a). Furthermore, as Sebok has shown, the possibility of control and interference by third-party financiers is much more pervasive than lawyers may realize.
At the end of the day, Sebok’s proposed resolution is a kind of unjust-enrichment revision of the rule, under which “non-lawyers may not benefit from gains generated by legal resources that were enabled by the non-lawyer for the use of an attorney on behalf of her client.” (P. 51.) The client’s recovery is supposed to depend on the lawyer’s “knowledge, skill, experience, and time expended.” (P. 51, quoting Texas Bar Op. 576.) If a third-party financial investment helps the attorney maximize the effect of her skills, that is fine; the client then benefits directly, and the investor indirectly. What is impermissible is for third parties as well as clients to benefit directly from their investment. The direct benefit would somehow convert them into “officious intermeddlers,” in the language of many old champerty cases.
I am not entirely persuaded that the functional approach to the interpretation of the fee-splitting rule should be abandoned. To my mind, a focus on the “productive or generative” relationship between the nonlawyer’s financial contribution and the lawyer’s provision of professional services is getting far afield from Rule 5.4(a)’s emphasis on the lawyer’s independence. It’s true that some aspects of third-party financing of litigation are best explained in terms of the nonlawyer’s motivations. Sebok himself has written the definitive article rationalizing the law of champerty and maintenance along these lines. Whether in the end courts and bar associations follow Sebok’s suggested interpretation, there is no doubt that this article is by far the most comprehensive and ambitious treatment in the literature of an important, if under-appreciated feature of the law governing the legal profession.
In Lawyers, Confidentiality and Whistleblowing, Christine Parker, Suzanne Le Mire and Anita MacKay make a case for a “gatekeeper of justice whistleblowing obligation” based upon the special relationship of lawyers to their clients and to the law:
… lawyers hold special appeal as potential whistleblowers. They are trained and able to spot illegality and abuses of the justice system. Their duty to the administration of justice and to the court is considered to be paramount; prioritised over the duty to their client. This duty could place a responsibility on the lawyer to respond to, prevent or perhaps expose misconduct that affects the administration of justice. (Pp. 1010-11.)
Having established the obligation, they propose a model for deciding when and how to whistleblow, which contains three “ethical touchstones” to be considered:
First, the relationship between the lawyer whistleblower and the wrongdoer. Secondly, the type of wrongdoing to be disclosed. Finally, the process adopted by a lawyer whistleblower faced with misconduct… (P. 1016.)
The authors draw inspiration for this model from exiting legislation protecting, and even encouraging, whistleblowing in Australia and the USA. However, these statutes only cover a small part of lawyer activity, and the traditional justifications for strict lawyer confidentially informs their interpretation. The authors largely accept the need for confidentiality but contend that a “gatekeeper of justice whistleblowing obligation” is consistent with existing requirements. Nevertheless, they concede that lawyer whistleblowing against their clients is very rare. They argue that change is required to rules of professional conduct to provide clear protections so as to encourage lawyer action to fulfil their justice gatekeeping role. They suggest expanding the voluntary exceptions in the rules to “explicitly introduce[e] an exception to confidentiality … where the crime-fraud exception to privilege or the iniquity rule exception to breach of confidence would apply.” (Pp. 1049-55). Parker et al also propose that this discretionary breach of confidential client information be made to an independent lawyer regulator for investigation. (P. 1045.)
The authors are particularly concerned about deliberate abuses by well-resourced corporate clients as exemplified in their case study from the Australian chapter of the “tobacco files.” In the first test case against a tobacco company for smoking-related disease it was revealed that its lawyers had for many years “warehoused” hundreds of thousands of incendiary documents while their clients destroyed the originals, and now claimed they were privileged. (Pp. 1002-03.) The case dragged on for years with many interlocutory skirmishes, and the lead plaintiff died prior to settlement. On the evidence before them, courts ultimately condoned the “document management” practice, and the tobacco lawyers who took part weren’t investigated or sanctioned. Several years after the case, a concerned partner who worked for the firm representing the tobacco company provided documents to the media and to opposing lawyers revealing more about his firm’s and its client’s activities. The authors use this case to work through their decision-making model for whistleblowing. At first glance, a system designed to hide documents from evidence is a clear breach of professional norms which ought to, and could ethically, be exposed. However, the article illustrates how the contours of ethical whistleblowing even in this case can be complex and arguable.
The authors suggest that, for such outside counsel of a misbehaving client, as well as for lawyers vis a vis their misbehaving law firm, there is a “strong argument” to whistleblow based on their unparalleled “relationship” access to such knowledge – the first ethical consideration. Yet they conclude that under existing legal and ethical regimes “both insider and outsider lawyers are in need of protection.” (P. 1029.)
They then turn to the type of wrongdoing required to activate whistleblowing obligations. Under existing rules, some client wrongdoing can be exposed. However, in the tobacco example, there was no court finding of illegality of action or purpose by the client or “imminent harm” caused. Thus, while the whistleblowing partner explained his actions as legally justified under common law exceptions to privilege (for iniquity or fraud), and that it was an ethical breach of confidentiality in the ‘public interest’, he was on uncertain professional ground. The authors argue that this leaves us with an unsatisfactorily narrow set of client activities that are likely to be revealed. Conduct rules therefore need to expressly permit exposure of actions that prejudice the administration of justice.
This takes us to the final aspect – process. Gatekeeper whistleblowing must be carefully constrained to ensure the lawyer “only leak[s] confidential information where it is ethically justified to do so and do[es] not unnecessarily breach other ethical obligations in the process.” (P. 1041.) The process is to: first “use judgement and [be] accurate in [the] assessment of any wrongdoing”; “minimise the breach of loyalty” by making it the last resort and use institutionalised avenues available where possible; and “fairness of accusation” such that it is proportionate to the public harm revealed. (P. 1042.) In the tobacco client case, the whistleblower had strong evidence and an apparently genuine concern about a lack of public knowledge about how the justice system may be misused in the future. However, he went to the media, and he blew the whistle years after the lawsuit was resolved. The authors rather ambivalently conclude: “On the best interpretation then, [the partner’s] leak potentially created a more open, fairer, democratic discussion about what behaviour in litigation was and was not appropriate.” (P. 1048.) Even by their proposed model, people may argue about whether the partner’s actions were ultimately justified.
The article undertakes a important project to encourage and enable lawyers to protect the fair working of the justice system. They rightly concede that application to other contexts rather than corporate client abuses may need more consideration. To my mind, they succeed in framing a coherent professional obligation to the ethical clarity needed for more lawyers to expose misconduct by clients and their firms. They then neatly distill the whistleblowing literature to formulate a simple and practical model for that lawyer to apply in fulfilling this obligation.
Reading Robert W. Gordon’s Essay The Return of the Lawyer-Statesman? on Ben W. Heineman Jr.’s book, The Inside Counsel Revolution (an introduction and link to the book can be found here) reminded me of three virtues. One is of the review essay, the ability to luxuriate in another’s work and allow it to be seen through one’s own ideas. This is something I confess I have never attempted, fearing the reflex to critique or the urge to self-publicize would surface too strongly. The second is of the need to return to familiar but central ideas. Gordon has written on the themes in this essay many times before (see for example, Corporate Law Practice as a Public Calling and A New Role for Lawyers: The Corporate Counselor after Enron). His arguments are the more elegant for it and, importantly, our reading of Heineman is more rewarding too. But the third is the one that struck me most forcefully, which is the wisdom to be gained from well-told legal history.
The central virtue of Gordon’s essay is the historical contextualization of Heineman’ book. Gordon gives us a taut, rich, and informative narrative on the importance of political context. In seeking to answer whether General Counsel can be both [business] partner and [public] guardian as Heineman puts it, we are reminded how we have been here before: the tensions in the General Counsel role—and their currently high status in corporate affairs – are not peculiarly modern. Most importantly we also see how lawyers’ ethics are shaped by far larger forces than law schools and bar associations. So the influence of inter-war industrial relations, Reagonomics, the politics of corporate leaders, and latter day skepticism of the corporation post-financial crash may all play a role.
The starting point is Louis Brandeis’s 1905 call for a more independent, judicious, public-interest focused model of corporate representation in his 1905 speech, The Opportunity in the Law. We are reminded of Brandeis’s call for lawyers to advance democratic citizenship but also that their ability to do this depends on their business clients desiring or permitting such a role. Gordon points too, to some signal successes for one of Heineman’s early predecessors as a General Counsel at—and perhaps more importantly as Chairman of—General Electric, Owen Young. Young lived the Brandeisian dream: company unions, company sponsored life insurance, mortgage benefits, employment and wage security and the like were the result. Leaders of large corporates formed the Committee of Economic Development (CED) in 1942 to advance moderate public interest agendas, prefiguring Heneiman’s ideas about how corporates should lead. Economic and geopolitical problems of the 1970s, familiar to the World conjured by Brexit or by Donald Trump’s rustbelt America, prompted a reversal of a particular kind. The CED was replaced by a Business Roundtable which shifted towards a public program centred on cutting taxes, social spending, labor costs and reducing regulation. By the late 1990s, Gordon puts it like this: “professional management was still connected to a policy program and social vision, though by this time a very conservative one.” (P. 1742.)
The benevolent capitalism of Brandeis was replaced with the ideas of business as a mere collection of contracts. Managers were notionally aligned with shareholders and practically freed to promote their own wealth as a priority, “until the bubbles burst and the music stopped.” (P. 1743.) This nod to the Financial Crisis is, I think Gordon’s way of bringing both his history, and Heineman’s book, into the sharpest social and political focus. The corporate amorality, driven from the 1980s onwards by Milton Friedman amongst others, was mirrored by client-first notions of professionalism: “This orthodox view of the corporation as amoral profit-seeking servant of its stockholders is, I believe, disturbing enough on its own terms. But it becomes positively frightening when coupled with the orthodox view of the lawyer as equally amoral zealous servant of his client….” (P. 1744.) In settling some scores with the shallow ethicality of Friedman’s vision, Gordon sets out the central—if perhaps a little exaggerated— role of lawyers in subverting the rule of law through gaming, creative compliance, or what my lawyer informants sometimes refer to as sharp or clever lawyering. He sees law, as frequently practiced today, as a cost on the business that can be ignored if the rewards are high enough. He sees how corporate amorality does not act as a bar to rent-seeking and right-wing populism. Instead, he writes, “[t]he amoral corporation guided by the amoral zealous advocate is potentially a monster, a powerful engine of destruction, a licensed sociopath” aided and abetted by the ethics of lawyers to “libertarian Babbitry.” (P. 1750.) The critical point here is that a certain kind of business logic (amoral, short term, aggressive) is aided by the professional ethic of zealous advocacy that helpfully absolves the lawyer of professional responsibility. The danger is a mutually reinforcing logic of irresponsibility.
With the language of criticism flowing so freely, and powerfully, Gordon nevertheless sees hope in Heineman’s book. The key, I think, is in Gordon’s observation that, “[e]veryone is, or at least pretends to be, just an agent.” (P. 1763.) The point is that the agents service the amoral, profit drive beast, and feel able to disclaim responsibility because of notions such as amoral zeal. And it is very clear that Heineman takes a very different view. Gordon writes:
Heineman articulates a vision of the general counsel’s role that is in many ways at odds with 1980s-era managers’ and lawyers’ ethics. He emphatically rejects the Jensen-Meckling thesis that the sole task of management is to maximize shareholder value, as measured by short-term share price, and resurrects the managerialist view that the corporation has responsibilities to its many constituencies—including employees, customers, creditors, suppliers, and communities. He also rejects both the “bad man’s” view of law as simply a price on conduct and the view of law as texts to be construed formally and technically rather than in the light of their “real purpose[s]” and likely social consequences. He urges company lawyers to respect the law as embodying norms, or “binding judgments made by a society’s duly authorized legal and political processes,” and argues that “[g]lobal corporations must give deference to the law of the nation in which they choose to operate, even if there is some discretion in determining what is the law of that society.” A general counsel must say “no” to clearly illegal conduct. But the lawyer-statesman must ask what is right as well as what is legal. And more than that, he must ask what the long-term global economic, policy, and cultural tendencies are that may affect the corporation’s future and to develop strategies to anticipate them. Heineman calls for—and his career exemplifies—a powerful and proactive general counsel, not a team of lawyers waiting passively to be consulted by business managers. (Pp. 1754-55.)
Gordon poses a series of well-judged questions about the book. Does Heineman live up to his own counsel? Did he fail or lose some battles in dealing with some of the ethical problems associated with GE? If he did, why did he lose them? Gordon acknowledges the reasons why Heineman would not or could not always prevail: these include the possibility that Heineman’s hands were tied by obligations of professional privilege and confidentiality, a clever example of the way in which legal professional privilege silences error and scandal but allows the promotion of success.
I am a fan of the Heineman book, but Gordon’s criticisms are well made and fair, as is the praise. I want to end with that, because for all that critique is important, the praise is important too and—to my mind—well judged. When someone as experienced and as wise as Gordon says a practitioner’s work is “utopian, in a good way” something is up. (P. 1736.) It is, Gordon says (and I agree), “the most comprehensive and detailed vision of an in-house counsel as lawyer-statesman who promotes public values and the rule of law as well as self-interest of his client company.” (P. 1753.) And “it is full of concrete examples of public-minded activism and pragmatic proposals for the institutionalizing the locus of such action in the general counsel’s office.” (P. 1762.) To be sure, not everyone will agree with every point Gordon (or, for that matter, Heineman) makes. But with the sweep of history reminding us of the past and its promise, as well as its pitfalls, Gordon, and Heineman’s work can help General Counsel chart a different and better course—and their ideas can help law schools, as they redouble their efforts to teach students ethics and impart professional identity, with greater vigour, purpose, and understanding.
The bar exam has rarely been of great interest to legal scholars. Although its format and pass rate vary substantially across countries and jurisdictions, it is often dismissed as merely a qualifying exam aimed at “controlling the production of producers,” as Richard L. Abel argues in his seminal book American Lawyers. Even in Japan, where the bar exam pass rate used to be as low as 2-3%, most discussions contemplating reform have focused on whether or not it is desirable to increase the number of lawyers. Although many law professors have taken the exam—and some, famously, have flunked it—there seems to be little scholarly interest in understanding its content.
This is why Rachel E. Stern’s new study on how China politicized its bar exam is both refreshing and insightful. In the process of researching Chinese law, Stern keenly observed a phenomenon that most other researchers took for granted. In particular, over the past decade, a number of “political questions” have been inserted into the National Judicial Examination—China’s unified bar exam for judges, procurators, and lawyers. These questions are not aimed at testing the test-takers’ legal knowledge or technical expertise but, rather, their understanding of the “socialist rule of law and the correct role of the Chinese Communist Party (CCP)” (P. 507), which are only remotely related to legal issues or the structure of the legal system. Although the political questions account for merely a small percentage of all exam questions, given the exam’s relatively low pass rate (only 11% in 2013), most test-takers still take them seriously.
The answers to many of the political questions appear enigmatic to non-Chinese readers, yet for the would-be Chinese legal professionals who prepared meticulously for the exam, finding the correct answers is not a difficult task. As Stern argues, this involves a process called “preference falsification” by political scientists, that is, an act of “navigating the gap between private beliefs and public expression.” (Pp. 525-26.) For citizens living in post-socialist or other authoritarian regimes, this is “an instinctive strategy for survival” (P. 526) acquired through years of living (and test-taking) experience. Through the bar exam and many other state-controlled exams, Chinese young adults are trained “in the art of orthopraxy,” (P. 527) and they can easily display public loyalty to the Party-state orally and in writing without true inner belief in its legitimacy. As one of Stern’s interviewees put it, “I have my personal opinion, but for the test I will do whatever the correct answer is.” (P. 526.)
Then comes the obvious question: Why put such political questions in a professional qualifying exam if few test-takers truly believe in their answers? Here Stern’s usually clear and convincing analysis gets a little ambiguous. She gives four possible explanations (i.e., to weed, warn, persuade, or train) but then rejects all of them. (Pp. 523-24.) Indeed, given the small percentage of political questions and the fact that most Chinese adults have mastered the “art of orthopraxy” in primary and secondary education long before they stand for the bar, the purpose of inserting this political element into the bar exam seems puzzling. Stern argues that the bar exam is not a warning, persuading or training tool, but “a site of political learning where test-takers refine and practice the implicit rules governing interactions with the state.” (P. 525.)
This is certainly true for the bar exam, but it is also true for many other exams. As Stern points out, similar questions widely exist in the college entrance exam, the civil service exam, and other professional licensing exams in China. Accordingly, finding the “standard answers” to political questions is a highly routinized practice for ordinary Chinese students and citizens. In this sense, inserting political questions into the bar exam is perhaps not as surprising to Chinese test-takers than to outside observers. It is possible that the practice reflected the particular political climate of the late 2000s, when “China’s turn against law” occurred, as Carl Minzner observes in his widely cited article. In that turn, the Chinese government and the CCP explicitly sought to situate the legal system under the more pressing concerns of maintaining social stability and preventing social unrests. Under this political background, making sure that future legal professionals at least understand (if not believe) the Party-state’s policy concerns seem a reasonable explanation for the “political turn” in China’s bar exam. After Xi Jinping’s rise to power in 2012, the CCP has been even more assertive on its role in the legal system and, therefore, the continuing use of political questions in the bar exam is not surprising.
Nevertheless, I agree with Stern that we need to take the political nature of professional qualification seriously, in China and elsewhere. In American Lawyers, Abel documents the history of “character tests” in the United States as a tool to exclude political dissidents from entering the bar. (P. 70.) In comparison to the exclusionary nature of the American-style character tests, the political questions in the Chinese bar exam constitute a subtler way of promoting lawyers’ political loyalty to the regime. Even though test-takers could theoretically give up all the political questions and still pass this exam, in practice most of them are trained to find correct answers to those questions, often through intensive cram courses and repeated practice exams. As a result, what Stern calls “preference falsification” exercises a symbolic function of defining the boundary of acceptable ideology and behavior under China’s political regime.
In this sense, the seemingly technical bar exam becomes an instrument of political control over the legal profession, a form of “soft repression” exercised not only by the state, but also by all the participants of the bar exam preparation. Stern gave a fascinating example of how a bar exam cram school lecturer explained to his class the fundamental logic of political questions in the exam: “memorize this one sentence . . . our Party is always glorious, great, and correct.” (P. 528.) As he continued to elaborate on this point with stories and jokes, the students laughed. But would they also laugh when they saw hundreds of activist lawyers detained in the “709 Crackdown” in 2015? Or when they heard the Supreme People’s Court President publicly denouncing judicial independence as an erroneous “Western concept” in 2017? Beneath the veneer of preference falsification there is a hard truth: The Party always trumps the law. This is the lasting pain of becoming legal professionals in China, and the bar exam is merely one of many symptoms in their careers that confirm it.