Should All Your Employees Return to the Office?

With vaccination rates rising and states reducing restrictions around COVID-19, discussion in the legal services industry has turned to whether and to what extent law firms will require their people to return to offices. A lot of media reports have framed this issue as a tug-of-war between managers and their workers. The simplified conclusion is that many white-collar workers want to continue working from home at least some of the time, while decision-makers argue that remote work makes it “difficult to train junior talent and maintain a cohesive culture.”

While the tug-of-war narrative generates good headlines and potential villains, the reality on the ground is more nuanced. For starters, the sources of information about what employees want are questionable. Dan Ciampa, writing for the Harvard Business Review, warns against taking employee surveys as “gospel” and suggests surveying management separately. The types of collaborative and innovative tasks required at higher levels of an organization’s ranks might warrant more in-person time than the work required of other employees. This may, to some extent, account for managing partners’ preference for having lawyers and staff return to the office. This might be more important and helpful for those actually managing the firm or its practice areas than for most attorneys or staff. Firms should think about an approach that considers how much in-person collaboration actually impacts the productivity and efficiency of particular lawyers.

Firms should also be cautious about justifying a wholesale return to the office on a generalized sense that it will increase camaraderie. There is no reason to assume that camaraderie will improve if people are working together in an office. Moreover, it’s possible to improve camaraderie without requiring everyone to return to the same space. For example, the firm could organize in-person meals or get-togethers one or two days a week, or perhaps the firm could host a party or other social event once a month. These options can have the desired effect while still hearing lawyers’ interest in continuing their work remotely.

The question for those advocating for a full return to the office is: how much talent are you willing to lose? If forced to choose between heading back to the office full-time and looking elsewhere, some of your best lawyers and staff will likely walk away. The inclination to push for a return to normalcy is, at some level, about habit and control. While many are reluctant to discuss the latter, a sense of constant supervision certainly plays into leaders wanting their employees to work in the same office.

For those who champion never returning to the office on a full-time basis, the question is: how much career advancement are you willing to risk? When law firm leaders are in the office, there is a non-trivial risk that the better assignments and promotions will disproportionately go to those who are also in the office. COVID-19 has been a huge disrupter, but it hasn’t entirely killed off the concept of face time.

Don’t fall for the narrative that this is a simple dynamic that pits managers against rank-and-file lawyers and staff. Whatever initial conclusions you come to as a firm leader, you should be revisiting the topic, discussing it with your team, and reevaluating regularly. This is a decision that merits an extra-large dose of patience and humility.

The Time Is Now for CA Lawyers to Voice Their Opinions on Nonlawyer Ownership in Law Firms

Members of the State Bar of California’s Closing the Justice Gap working group are split over how broad to make the state’s trial of regulatory changes. The board of trustees approved the working group, which is tasked with considering changes in nonlawyer ownership and fee sharing, in May 2020. Its SCOPE subcommittee is currently debating whether or not the organizations allowed to participate should be limited to those serving low-income individuals.

The program stems from the state bar’s Access Through Innovation of Legal Services (ATILS) task force, with the initial aim of making legal services more affordable and accessible to residents in the low-to-middle income brackets. Some members of the group, including law professor Bridget Gramme, argue that findings from similar regulatory changes in countries like the UK have suggested that “to promote innovation, it makes the most sense to keep the structures as open as possible, ‘especially at the beginning.’” Others counter that allowing nonlawyer ownership in legal entities that serve businesses would not “have as much chance at downward assistance,” as put by OneJustice Volunteer Of Counsel Toby Rothschild.

Depending on how the state bar and ultimately the California Supreme Court decide, ownership and investment in law firms could be shared by organizations including the Big Four accounting firms and venture capital firms, as well as tech companies like Rocket Lawyer, which was among the first entities allowed into a similar regulatory scheme in Utah.

Utah’s situation is instructive. The program was initially created on a two-year basis but recently extended for a total of seven years. Of 22 authorized entities reported so far by the Utah Supreme Court’s Office of Legal Services Innovation, several fall into the categories of “lawyers employed/managed by nonlawyers” or “non-lawyer provider w/ lawyer involvement.” The long-term repercussions of more generous regulatory changes are not yet apparent, with Arizona making one of the more drastic moves just last summer when it completely eliminated the ethics rule barring nonlawyer ownership.

It’s difficult to overestimate the significance of these current and proposed changes, but attorneys in California still have time to make their voices heard. If you are part of the legal services industry in California, now is the time to get involved, attend the meetings, and voice to representatives of the state bar your support for or opposition to these shifts. With the working group due to make recommendations to the State Bar of California’s board of trustees next September, the coming year will have an enormous impact on the future of the legal profession in the state. According to Bloomberg Law, the SCOPE subcommittee will meet again June 4, with the full working group meeting June 18.

Utah and Arizona Moving Forward With Nonlawyer Ownership of Law Firms

As California considers major regulatory changes that would allow non-lawyers to own stakes in law firms, we are closely following updates in Utah, where similar shifts are a step ahead.

Citing “crisis levels” of demand for affordable legal services stemming from the effects of COVID-19, the Utah Supreme Court on August 14 announced its decision to permit nonlawyer ownership and investment in law firms as a move toward greater access to justice. Accompanied by changes to the Rules of Professional Conduct, the regulatory sandbox created a two-year trial period, at the end of which the Utah Supreme Court can make these changes more permanent.

With the exception of one solo practitioner offering a 10% stake to his paralegal, the initial batch of organizations allowed into Utah’s pilot project is largely comprised of legal technology firms.

LawHQ is sharing revenues with software developers in relation to an application which would allow users to report spam communications and join lawsuits against those behind the messages or calls. 1Law is offering legal advice via chatbots, and LawPal would automatically generate legal documents for matters of divorce, custody, eviction, and property-seizure. The last of those announced so far is Rocket Lawyer, which the ABA Journal emphasized in its coverage earlier this month. The platform, which has already been serving as a middleman between consumers and attorneys, along with assisting in the creation of legal documents, is taking this opportunity to hire lawyers directly.

Arizona followed Utah just weeks later, eliminating rules that previously blocked nonlawyers from having financial stakes in firms, and the state went a bit further. The Arizona Supreme Court at the same time created a category of nonlawyer licensees permitted to represent clients in court. These “legal paraprofessionals” are expected to adhere to the same ethical requirements applicable to lawyers, and one must “meet education and experience requirements, pass a professional abilities examination, and pass a character and fitness process” to qualify.

The changes in Arizona have gone into effect without a temporary trial period, but alternative business structures will have to go through a “rigorous application process.” Arizona’s Task Force on the Delivery of Legal Services cited technology and free market competition as benefits of this change that could lead to greater access to justice. Rocket Lawyer is also expected to play a role in Arizona.

It remains unclear how nonlawyer ownership in law firms will evolve. For example, will the Utah Supreme Court or other proponents of this shift prevent venture capital and private equity firms from backing legal technology firms that are, in turn, permitted to own or invest in law firms? The answer to this question may have a huge impact on the financial fortunes and independence of lawyers, especially as California considers moving in the same direction as Utah and Arizona.

CA State Bar Innovation Task Force Takes a Pause

As we have previously reported (see posts here and here), a task force assembled by the State Bar of California has encountered significant pushback from the legal community. The Task Force on Access Through Innovation of Legal Services (ATILS) was created to address issues of access to justice in the state. Charged with “identifying possible regulatory changes to enhance the delivery” of legal services, the group offered sixteen recommendations last summer, which, most notably, included proposals for non-lawyers to share in ownership and fees.

The outcry suggested that such changes would put consumers at risk, with some referencing the state’s recent issues with “notarios.” These unlicensed immigration consultants were banned by the state assembly after allegedly “tak[ing] advantage of vulnerable populations,” and many argue the existing regulations around who is eligible to provide legal services protect clients from unethical practices. Other state bar associations have also expressed their opposition to allowing non-lawyers to invest in firms and share law firm profits.

On Thursday, March 12, the bar tabled recommendations from the task force, describing the move as “an attempt to make sure we have the best information in front of the board at the right time.” The regulatory body credited “political headwinds” for its decision to delay approving any recommendations. Among the next steps held off by trustees was the launching of a group to study a regulatory sandbox much like the one established in Utah. Such a pilot program would test recommendations on a small scale to predict the impact of each proposed shift.

Members of the task force expressed disappointment as the foundational issue remains unaddressed. Nearly 4,000 Californians were surveyed in the California Justice Gap Study which ATILS used as the basis for its recommendations. The data expressed that people in the state “regardless of income” were often “navigating critical civil legal issues without legal representation or meaningful legal assistance.” With Californians receiving “inadequate legal help” if any for eighty-five percent of legal issues, the survey concluded, “Failure to access legal services is a result of both a service gap (supply) and a knowledge gap (demand).”

These findings led the task force to its viewpoint that “something more than modest tweaks to the existing regulatory environment is needed,” and the group set out to evaluate such regulations as those concerning fee splitting from the get-go. ATILS endorsed “the twin goals of public protection and enhanced access to legal services,” but many of the 3,000 public comments received in reply questioned the ability of the task force’s recommendations to meet those aims. The opposition proved enough to postpone the bar’s efforts, at least for the next few months.