Scenario #1
Let’s say you received a speeding ticket. You could upload a photo of the ticket and your driver’s license to a company that would tell you if the ticket is worth fighting or if you should pay up.
If it is determined that the ticket is worth fighting, the company refers your case to an attorney and charges you a percentage of the ticket’s penalty. The attorney can accept or decline the case. If they accept it they are paid a fixed fee by the company.
If you lose the case, the company will pay all defense costs, including court costs and fines, and refund fees paid if points are assessed against your license.
Would you find this service valuable?
Scenario #2:
Let’s say you’re seeking a Chapter 7 discharge in bankruptcy and have less than $8,000 in property. You find a website with a free tool that walks you through how to download, complete, and file the 23 forms required by the bankruptcy court. The tool also instructs you on taking the required courses and preparing for the mandatory meeting of creditors.
Would you find this service valuable?
Both of these scenarios are based on real events. They demonstrate how technology can connect people to resources that make asserting their legal rights easier. In other words, technology can perform tasks that just decades ago would be considered only the work of lawyers.
Although the consumers in these scenarios found the services helpful, and there was no evidence of consumer harm, the services were hit with charges of unauthorized practice of law (UPL).
This article focuses on the enforcement of UPL laws and statutes against technology companies and posits that the survival of the legal profession rests on its willingness to re-examine how it applies UPL enforcement in the context of technology-driven legal products and services.
What is UPL?
Anyone who provides legal advice in a state but has not received a law license from that state supreme court is guilty of UPL (some states have begun licensing paraprofessionals to provide limited legal services, but that’s beyond the scope of this article). The stated rationale for regulations restricting who can practice law is to protect the public from unscrupulous or incompetent individuals or bad services. A laudatory goal no doubt.
So if you’re the company offering the technology in one of the scenarios above, you would want to make sure you do not run afoul of rules against UPL. Unfortunately, the definitions of “the practice of law” and UPL vary by jurisdiction, if they are defined at all. The definitions may be ensconced in a statute, a case, an ethics advisory opinion, or a court rule. There is no national standard.
Despite multiple efforts, the American Bar Association (ABA), which promulgates the Model Rules of Professional Conduct that most states adopt, has failed to define the practice of law. The ABA’s draft model definition is a tautology:
“The “practice of law” is the application of legal principles and judgment with regard to the circumstances or objectives of a person that require the knowledge and skill of a person trained in the law.”
Statutes are equally broad and vague. Those that mention activities generally proscribe three broad categories of activity: (1) representing another in a judicial or administrative proceeding; (2) preparing legal instruments or documents which affect the legal rights of another; and (3) advising another of their legal rights and responsibilities.
Exceptions to UPL statutes generally include providing information (as opposed to services), self-representation, and at times lay representation before certain local courts or state administrative agencies.
The approach of judges in case law can be summarized as: the practice of law is hard to define but is characterized by whatever activities lawyers have traditionally performed.
What has developed over time and across most jurisdictions is a distinction between legal information and legal advice.
Anyone without a law license may provide information to another person about what the law says, as long as they refrain from offering advice as to how it might apply to that person’s real-world facts and circumstances. For example, court personnel are trained on how to provide information but not advice to court users, who are increasingly representing themselves in court. As technology advances, the distinction between information and advice shrinks.
Enforcing UPL
UPL actions against lawyers are prosecuted by bar counsel or other designees of the state supreme courts. Individuals who are not licensed lawyers but allegedly violate the UPL statutes in the jurisdiction may also be prosecuted by state attorneys general or states’ attorneys. Lawyers may be prosecuted by both the judicial and the executive branches.
For many years, the judiciary has cooperated with other branches in the enforcement of UPL. Bar associations continue to investigate UPL and refer cases to the attorney disciplinary process approved by the state supreme court. In addition, bar associations refer UPL cases to the state attorneys general or states’ attorneys.
Typically, local or state bar associations receive complaints about potential UPL. The complaint usually comes from a member of the bar association rather than a member of the public. Tom Pyrz, executive director of the Indiana State Bar Association, observes that it is not surprising that complaints come from lawyers because “bar associations are looked at as protecting the legal profession, more than protecting the consumer.”
The sanctions available for UPL violations are far-reaching, and include cease-and-desist letters, a civil injunction, civil fine, criminal misdemeanor, criminal felony, or prison/jail time. Two-thirds of U.S. states have made UPL a criminal misdemeanor. For multiple violations, some states have made UPL a felony.
Where does AI-provided legal Information end and law practice begin?
The line between the practice of law and sharing information and services via technology is blurry. Many activities that once made up an attorney’s work are now being performed by computers. And courts are struggling to apply UPL concepts — which were developed decades ago and are primarily directed to impersonators or incompetent lawyers — to the rapidly changing technology space.
Let’s return to scenario #1
This scenario is based on the case The Florida Bar v. TIKD Services LLC and Christopher Riley, individually and as founder of TIKD, No. SC 18-149. The Florida Bar Association charged that TIKD held itself out as qualified to make legal decisions and engaged in UPL.
A judicial referee found that TIKD was not engaged in UPL, but it only provided administrative and financial services, and that all legal services were provided by Florida-licensed attorneys. The referee recommended that the bar’s petition be dismissed with prejudice and judgment be entered in favor of TIKD.
The Florida Supreme Court, by a slim majority, disagreed with the referee and agreed with the bar association. Citing prior Florida Supreme Court authority, Justice Lawson set forth the standard for determining whether the activities constitute the practice of law:
[If] the giving of such advice and performance of such services affect important rights of a person under the law, and if the reasonable protection of the rights and property of those advised and served requires that the persons giving such advice possess legal skill and a knowledge of the law greater than that possessed by the average citizen, then the giving of such advice and the performance of such services by one for another as a course of conduct constitute the practice of law. (Emphasis added.)
The court found important rights of drivers were affected and TIKD engaged in UPL because it screened traffic tickets and selected which matters got assigned to a lawyer, TIKD’s terms of service designated when an attorney-client relationship could be initiated, the fee paid to each attorney was set and collected by TIKD, and the contract between TIKD and the attorney requires the attorney to provide legal service in accordance with TIKD’s guidelines.
Justice Lawson found the fact that TIKD made no money except through the provision of legal services persuasive. He concluded that this ruling was in line with a Florida precedent in which arrangements “resulted in a nonlawyer either deriving income from or exercising a degree of control over the provision of legal services.”
The dissent, written by Justice Curiel with two justices concurring, noted that TIKD stated on its website that it did not provide legal advice or services and found persuasive that once an attorney was chosen, TIKD did not participate in any attorney-client communications. The dissent rejected the majority’s claim that there were no cases or rules approving a bifurcation between lawyers and nonlawyers on the provision of legal services.
“That presumes, incorrectly, that it is up to us to authorize how people in a free market bargain with lawyers and nonlawyers to address their legal problems. If we have such authority, it is not given to us by our constitution, which says merely that we ‘regulate the admission of persons to the practice of law and the discipline of persons admitted…’ That mandate cannot be read to include a plenary power to regulate the business models of lawyers or their firms, to say nothing of nonlawyers and their enterprises.”
The language in the dissent shows judicial restraint in the regulation of nonlawyers and UPL. Indeed, Justice Curiel seemed to acknowledge that the judicial branch may be extending beyond its authority and expertise in regulating the business models of all industries involved in addressing legal problems.
As a result of this ruling, TIKD was shuttered. Ticketed drivers in the affected Florida counties are now on their own to decide whether to pay their tickets or find an attorney who might be willing to take their case.
Analyzing Scenario #2
In the second scenario, a judge in the U.S. Bankruptcy Court for the District of Maryland noticed something curious about Chapter 7 bankruptcy petitions filed by Renee Peterson and Kimya Dawn Crawford.
Peterson and Crawford included identical declarations of pro se assistance in their petitions, stating they were filing without a lawyer and acknowledging that the legal aid nonprofit Upsolve had provided free legal assistance in preparing their bankruptcy forms. The bankruptcy judge suspected UPL and sua sponte entered a rule to show cause against Upsolve.
In pleadings and at a hearing on the rule, Upsolve explained that its software was used in simple bankruptcies only. Upsolve said the software automated the information intake process and auto-populated bankruptcy forms, which were then reviewed by an attorney.
In a lengthy memorandum opinion, the court found UPL.
The court focused on the fact that Upsolve’s software selected bankruptcy exemptions that Peterson and Crawford could claim based on the information they provided. Selecting exemptions has historically been the province of lawyers, not software that showed an appropriate selection based on a user’s inputted information.
The court wrote:
“Upsolve fails to recognize that the moment the software limits the options presented to the user based upon the user’s specific characteristics—thus affecting the user’s discretion and decision-making—the software provides the user with legal advice.”
The court also found that Upsolve engaged in UPL when its website seemingly limited users’ options by pointing them to the Kelley Blue Book website to find the trade-in value of their automobile (rather than relying on a lawyer’s judgment as to value) and in the limited way its software handled fee waivers.
The courts in both TIKD and Upsolve found UPL because the tasks performed by AI or software were historically performed by lawyers. Can this be a sound standard when technology is steadily automating the tasks of lawyers?
What Will Happen to UPL When AI Develops Further?
The legal industry has been incorporating machine learning and artificial intelligence into legal processes for years. Think e-discovery and document automation.
However, the hype has exploded in the last several months with OpenAI’s release of Chat GPT-3 and more recently of Chat GPT-4. These developers have taught machines to speak in human language rather than asking humans to speak in computer language. For example, Chat GPT-4 provides literacy (i.e., it can read, summarize, and categorize text) and can interpret images and spell out the reasoning for conclusions.
In a much-heralded accomplishment, Chat GPT-4 passed a simulated bar exam (both the multi-choice and essay portions) with a score in the top 10% of human test-takers. Passing the bar exam and analyzing and categorizing legal information was historically the work of lawyers—but not anymore. Lawyers, like many other workers, are projected to have half or more of their workday tasks affected by LLMs.
If lawyers want to be at the forefront of delivering legal advice and services, we should be involved in figuring out how to ensure that the technology-enabled delivery of legal services is accurate and ethical.
And if UPL enforcement is truly about protecting consumers, we need a workable regulatory framework. The saga of DoNotPay illustrates this need. DoNotPay bills itself as as “the world’s first robot lawyer” and claims to use AI to help consumers. CEO Joshua Browder was able to raise $27.7 million from technology-focused venture capital firms, including Andreessen Horowitz and Crew Capital. Browder announced an AI-powered chatbot that helped people negotiate bills and cancel subscriptions. Browder went even further, announcing that he would put his “lawyer robot” into courtrooms. The plan came crashing down earlier this year after a paralegal named Kathryn Tewson tried out the offerings on the DoNotPay website. Tewson found they were not as advertised, and cried “B.S.” in a Twitter thread that went viral. She has now filed a New York lawsuit alleging fraud. The company is also facing a lawsuit filed by Chicago-based Edelson, which asserts the company is practicing law without a license and that, “[u]nfortunately for its customers, DoNotPay is not actually a robot, a lawyer, or a law firm. DoNotPay does not have a law degree, is not barred in any jurisdiction and is not supervised by any lawyer.” Edelson requests class certification of a purported class of all California residents who purchased subscriptions to DoNotPay.
We Need to Regulate for Our Times
Technology can deliver legal information (and “services”) to vast swaths of citizens who are under or unserved by the legal profession. This reality cannot be denied and should be encouraged.
As a self-regulated profession, we have an obligation to make sure that legal services delivered to the public are accurate and transparent. We cannot fulfill this responsibility by shutting down any service that seems to intrude on lawyers’ historical territory. We need to rethink the regulation of UPL.
Part of this thinking must include the many implicated ethical issues including data privacy, client confidentiality, and legal privilege.
As we consider a new approach, we should remind ourselves: when UPL concepts were conceived, ostensibly we were concerned that individuals did not masquerade as lawyers without being licensed by the state supreme court. That’s still a valid concern.
But should the same regulations be applied to individuals and to generative pre-trained transformers? Why would society regulate technology companies the same way we regulate individual lawyers? Should the legal profession be regulating technology companies at all? After all, protecting consumers is the mission of the Federal Trade Commission.
Can we learn from other industries? By way of analogy, compounding pharmacists are regulated differently than pharmaceutical companies. A compounding pharmacist creates a custom formulation of a drug to meet a unique need of a patient.
The competency of individual pharmacists, like most in the licensed medical professions, is regulated by the state, i.e., the state boards of pharmacy. Pharmaceutical companies also manufacture drugs and are regulated by the Food & Drug Administration.
The FDA is concerned about whether the pharmaceutical company has processes in place to ensure the safety and efficacy of the drugs produced. Perhaps regulation of legal tech companies should focus on whether they have processes in place to ensure the accuracy and efficacy of their deliverables.
Legal regulation is behind the times. At this moment, we have more questions than answers. But technology is iterating exponentially, not linearly. We should get to it.
About The Author
Jayne R. Reardon is the former executive director of the Illinois Supreme Court Commission on Professionalism. She now provides ethics and regulatory advice to lawyers and other legal service providers and serves as a neutral in alternative dispute resolution proceedings.