Are Some Firms 'More Equal' Than Others?

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In George Orwell's "Animal Farm," the animals overthrow their human oppressors and run the farm under the banner: "All animals are equal." The pigs soon set themselves up as bosses and come up with a new slogan: "All animals are equal, but some animals are more equal than others."

Is the legal profession headed the same way? It has always been the basic premise of our self-regulation that all firms are equal before the 50 state bar associations.

But last year, a group of large national and international law firms petitioned the American Bar Association with a complaint about state bar regulation, contending that, given their multi-state corporate practices, such firms are restricted by the separate state bar admission requirements on issues like conflicts of interest, liability and lawyer mobility.

These large firms often become large via the theory of "merge or die," joining together with other firms purportedly to serve clients better, but obviously creating governance problems within the self-regulatory system.

If large firms get their way, what happens to the option of providing good service and quality legal work to selected "mid-tier" clients who appreciate and value your work? What happens to the bulk of the profession, the more than 50 percent (some say as much as 80 percent) of sole practitioners who constitute small firms? These are the folks who provide most of the legal services.

Yes, there is Corporate America, a small but disproportionately powerful group being serviced by Big Law — itself a small but disproportionately influential component of the bar. The rest of the profession, however, provides the bulk of the legal work for the other 99 percent.

Then consider other examples of the multi-tier legal service system. Online legal document provider LegalZoom is currently doing battle with the North Carolina Bar Association about whether making certain forms available constitutes the unauthorized practice of law.

Plenty of other sites do the same thing, with names like Docracy and Paperlex. People who believe they need legal help but can't afford it will do the next best thing: get a form from those resources. That happens in estate planning, real estate transfers, even in some litigation and in other practice areas as well.

Segmentation or stratification in legal services will only continue to accelerate. The large companies with "bet-the-company" cases will continue to use Big Law; others with less serious matters will use lower-cost lawyers or do-it-yourself forms.

But what does that do to lawyer self-regulation, with all firms equal before the bar? The states still have the power through lawyer licensing to enforce the Rules of Professional Conduct, as well as other statutory requirements already on the books regarding lawyer conduct. Plus, unlike most trades, there is a very strong public service component to being a lawyer, which the state bar associations perpetuate.

With all its faults, the current system does look after the public interest. It's hard to see how unregulated competition among self-interested strata of the profession could do the same.

With more segmentation, more legal service providers will want to be "more equal than others." Yes, that comes in response to competitive needs, but those who wish to do away with state bars should be careful. Getting what they wish for may bring unintended consequences.

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