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Bar Journal - June 1, 2000

The Future of the Legal Profession & the Organized Bar

By:
 

This article began as a presentation to the National Conference of Bar Presidents at its Los Angeles meeting in February 1999 that then became the foundation of a letter to Bill Hart, President of the State Bar of Idaho. That letter grew and grew and became a full-blown report that I ultimately delivered to President Hart in May 1999. In the interim, it has undergone several revisions and additions, and in fact, I suspect it will never become a fully completed work. In this mutation,2 I have tried to synthesize about an inch of material into a version suitable for publication.3 

The subject remains a moving target. With each day comes a new challenge to (and in many cases for) the legal profession and the organized bar. Having been a participant in the recent ABA dialogue on Multidisciplinary Practice (MDP), I realize that we as attorneys are not of one mind on the subject of our noble profession's future. I for one welcome the controversy. Put glibly, this old, honorable, and once grand profession of ours may have fallen into a state of disrepair and be in need of significant attention and updating. The questions are many: What still works? What's broken? What opportunities does the present offer? And most importantly where do we start? I hope that the thoughts and ideas this article presents provoke significant debate and discussion on the subject. I honestly believe that effective and positive change can only occur after dialogue begins, opinions are aired and consensus (at least as to the major points) can be reached.

I fear that we will sit back expecting things to go on as they have in the past only to wake up in the cloud of dust created by the other segments of society passing us by. If we let them, others will decide how to deal with our profession's important issues without having stopped to collect the benefit of our experience or judgement. Editorially, these are my personal views and opinions, and not an official position of the Attorneys Liability Protection Society (ALPS) or its Board. I am, however, grateful to my Board for challenging me to "think outside the box" and allowing me to express ideas that may not fit well into current models or thought processes. We on the ALPS Board continue to deal with these very same issues as we work to chart the course of ALPS into this new millennium. At the end of the process I hope that when the profession, the bars and ALPS finally settle on the proper course of action, we remain focused on maintaining the rule of law, our obligations to each other, and most importantly, the needs of the public.

THE PROBLEM AND PERSPECTIVES

The legal profession is steeped in the principle of stare decisis or reliance on our view of the past. As I visit with attorneys I find two distinct groups: 1) those who want the future to be entitled "Nostalgia-A retrospective return to a gentler time," and 2) those who want it to be "A Bold New World-Practicing law in the new millennium." As a rule the former group tends to come from those of us who are over 45 and with twenty years of practice under our belts. The latter group generally comes from the YLS crowd, or its recent graduates. Anybody that says that either group is being naive or missing the point doesn't understand the problem. The profession has great traditions, not the least of which is upholding and continuing the rule of law. At the same time it needs to be innovative and provide leadership to a society that changes every day.

To begin this process I need to establish some perspectives on the real question: What issues does the future present to the profession (all attorneys), the Bar (the Organized Bar), the Court (The Bar Regulator) and the public (the legislators and legal consumers), and what are the possible answers to some of the more pressing questions?

Lets start by establishing a point (or points) of reference. To a great extent, seeking perspective is like looking at an unidentified object in a room with several different windows. The perspective of the strongest light source (whose view of the object) will determine how we identify the issues. So before we start looking at the future and seeking solutions, we need to step back and take a look at each of the perspectives.

The Attorney: 2000 is an interesting time for our profession. Steeped in tradition we are, as a rule, slow to change and slow to recognize that the world around us is moving at a faster pace than the practice. Let's face it, the legal profession is being attacked from all sides:

Attorneys would like the public to believe that we as a profession are charged with protecting the rights of the under protected, preserving the rule of law and (as officers of the court) facilitation of the equitable administration of justice for the benefit of the public. Why then do the polls show that the public views us as a greedy, non-caring arrogant bunch that look out for number one and the working public be damned?

The press love to pick on us with sensational headlines about outrageous fees collected in the tobacco cases, the occasional attorney that gets in trouble and, most of all, sensationalizing cases where attorneys take positions (in order to preserve the rule of law and our constitution) that the public doesn't personally care for.

The accounting profession, the title companies, the banks and even the legislature chip away at the bread and butter business of the practice making it harder and harder for attorneys to make even a sustainable living.

The ABA law school accreditation standards make it impossible for our state law schools to keep the graduating class size consistent with the needs of the public. We are proliferating at a rate that cannot be absorbed into society and preserve the professional aspects of the practice of law.

Lastly, and most importantly, we are attacking our own, and the courts are not stepping up to stop the bleeding by requiring us to act like ladies and gentlemen of the Bar.

The Bar: As the legal profession changes, the organized bar finds itself betwixt and between. Is the organized bar a trade association that is supposed to represent the interest of attorneys? Is it a social club intended to maintain collegiality among its members? Is it a regulatory body is to keep the profession in line? Or is it a consumer protection agency that protects the public from members of the Bar that use their position of power to abuse the system? All good but somewhat rhetorical questions, I'm afraid, because by the time the system moves to answer the questions, they will no longer be the questions. In short, the organized bar must assume that it is all of the above and find a way to become more nimble. It must be able to recognize the current questions, make decisions and take decisive actions to address each situation. In short, the organized bar needs to be empowered by the court, the profession and the public to meet their respective needs.

The Court: What of the court? Ah yes, the Supreme Court. Constitutionally, the regulation of the practice of the law and the maintenance of the profession have fallen to the court. In the past it has not been difficult-the attorneys were a genteel and honorable lot and respected by all. Not so today, and the court is now facing a greater burden for which it and its individual members are ill prepared. It is not that the Justices won't do the job; it may well be that under the current paradigm they can't. They have more responsibility, bigger case loads, and smaller budgets. They don't have the resources to do it, unless they empower the organized bar to help. Herein lies the rub. The court has the responsibility which it takes seriously, but is reluctant to vest some of the power and responsibility in the organized bar because they do not directly control its functions. After all, the officers and directors, managers, examiners or trustees are elected by the attorneys they are charged with regulating. It's a bit like letting the inmates run the asylum. They in fact may do a pretty good job, but it just doesn't look right.

The Public: The public does not trust us. There is a common belief, which I doubt has any basis in history, that holds that "once upon a time" - a poll was conducted and that the consensus of the participants indicated a total distrust for attorneys and the legal profession except for their own attorney. Even if not substantiated, the story is pretty much true. When people take the time to establish a personal relationship with an attorney (credible, honest, hardworking and ethical) they generally leave with a good aftertaste. However, for those (the majority) who rely on the anecdotes told in the local bars, stories reported by the modern press or (God forbid) on what they see on TV legal dramas to form their opinions of attorneys and the profession, it will not be a good opinion. This public feels let down by the court, the organized bar and the legislature for the wrongs they see and for giving attorneys our "license to steal" in the first place.

From these perspectives the issues are limitless and the debate can and will be endless. So let's start with a few of the more important ones and focus on those things that we can change that will make a difference from as many perspectives as possible. Then we can re-focus and attack the next batch.

THE IMPORTANT ISSUES AND ANSWERS

Preserving the Practice: What can attorneys, the bar and the court do to see that attorneys maintain the ability to have meaningful work?

The issue of "Multidisciplinary Practice" is the hot topic of the day for bar associations. But let's face reality-it is old news. The ABA has issued a Commission Report4  on the subject and its House of Delegates scheduled to debate the subject at its August 1999 meeting, only to defer it for further study until August of 2000. I am, however, reliably informed that nobody expects the House to decide the matter even in August. It is likely to be deferred again because the issue will remain too hot to handle. After all, why should we hurry? We have been facing (or ignoring) the symptoms for years.

It doesn't take much of a psychic mind to look into the future and see a time when attorneys in America will become Barristers. The rest of the traditional practice of attorneys is slowly being eroded to other perceptibly less expensive professions and business enterprises. The accountants are taking the tax, trust and estate practices; the banks and title companies are taking the abstracting, real estate and loan closing practices; and the courts and automation are beginning to chip away at domestic relations and debtor/creditor practices.

The accounting profession is way ahead of us in recognizing that the winds of change are blowing against us. With the probable advent of significant tax reform (even possibly a flat tax), new and very sophisticated tax preparation software, electronic filing, the growth of H&R Block and AMEX tax services, the accountants are already changing. If we look at their ads, what do we notice? They are changing their names. "Arthur Anderson, Auditors and CPAs" is now "Anderson Consulting." When Ken Keis, a former partner with the law firm of Baker and Hostetler in Washington, D.C. left his post as Chief of Staff for the Joint Committee on Taxation (probably the nation's most powerful position when it comes to federal tax policy), he didn't go back to his old firm. Instead, he became the head of the PricewaterhouseCoopers, Taxation and Governmental Affairs (lobbying) section, at a reported (but unconfirmed) seven-digit salary package. This is nearly ten times what he likely made at the committee and probably well over twice what he made with his old firm. The accountants get it. If they can provide a bundle of traditionally non-accounting services to their clients along with the accounting services, they are enhancing their value and will be able to garner a larger part of the clients' professional fees. Further, it sells well to the clients who see it as the opportunity for one-stop shopping.

In the Western US, the title insurance companies already have a big part of the real estate practice. Attorneys can't afford to compete with the cost of closings offered by the title insurance industry. Banks already use sophisticated software to prepare notes, financing statements, mortgages, deeds of trust and the like. The consumer no longer has to pay an attorney (even if it was the bank's attorney) to prepare the documents, and the banks and title companies collect a modest fee (by comparison to what an attorney would have charged) which covers their costs and puts a little profit in their pockets. They get the business and the consumer saves some money. Everybody (but the attorney) wins. Why did this happen? Simple-nobody perceives that the attorney adds any value to the transaction. True or false, it is the perception, and that segment of the practice is likely gone forever.

So what is the answer? I'll start by telling you what isn't. It simply won't work to have the Supreme Court, the organized bar and the attorneys circle the wagons and issue prohibitions against the unauthorized practice of law under the guise of "protecting the public from shabby work by people who don't have the formal training that attorneys do." To do so is intellectually dishonest. Much of the work that attorneys do in those areas, they do the same way, using secretaries and paralegals to prepare the basic documents from forms that attorneys prepared and stored in a computer. Some attorney, somewhere did the same thing for the banks, title companies and software manufacturers, so that their staff could produce them just like the lawyer's staff. The difference lies in the fee structure. Document prep is a primary service for the attorney and his or her fees are based on that assumption. The banks on the other hand treat it as an ancillary profit, with the bulk of its income coming from loan origination fees or an expected interest stream.

If we are to succeed in saving any of this work, we need to do it by adding value to the transaction, a value that the public can see, wants and is willing to pay for. What does all this mean? Encyclopedias provide a good example. In the early 1990s The Encyclopedia Britannica came hardbound in thirty-some volumes and cost about $2000. It was sold by a professional sales force and had the lions' share of the serious buyers market. Today the sales force is gone, and you can buy the same (current) information on 2 CDs for $89 at Costco or Sam's Club. What happened? Microsoft is what happened. It bought one of the "supermarket brand" encyclopedias, bundled it onto a CD and called it Encarta and offered it for under $99. It contained less than 20% of the information that Britannica offered, but it presented a new package. Britannica countered with its own multiple CD version for the same $2000 that the hardbound books cost. Their market continued to crash so they reduced the price. Then they offered online updates as part of the subscription, but the free fall didn't stop until they got to Encarta's price point (now expanded to offer 2 CDs but still offering less than a quarter of the information of Britannica). The point of all this is that price rules unless you can demonstrate a perceptible value differential. To compete, attorneys will need to do things differently to make their services relevant in a way that the public can see and appreciate.

Where should the bars come down on this issue? The simple answer may be to follow the ABA MDP Commission recommendations and open the profession to allow attorneys to freely associate with other professionals as equals. At present, no one but attorneys can own any part of a law firm. Why? It is a control issue. Well guess what, the public doesn't understand or care; they only want good service at a fair price and they will go where they feel that they can get it. If Ken Keis (an attorney) can take legal services into a CPA firm and become a partner,5  why can't we allow accountants, actuaries, human resource people and others to become owners in law firms (or attorney controlled consulting firms)? This is a tough issue and I am going to do little more than ask the question at this point. The debate on this issue needs not to be in this paper but within the Bar and between the attorneys and the Courts.

We can look to the profession's past or we can try to project its future, but to find the real answers we need to ask what the public wants and needs. What is really important is that the profession take a position and that it be seen publicly as responsive and that the Bar be seen as a positive influence in the process. If the decision is taken out of our hands or made by others without our input, the future could be pretty bleak.

Preserving the Profession: What can attorneys, the bar and the courts do to maintain the integrity of the profession, protect the rule of law, and improve the image of the profession?

This is a tough problem; it is long on issues and will take a coordinated effort by all concerned to design and implement a solution. We need to put some public trust and confidence back in the equation. This will require swift, but just and equitable resolutions to attorney discipline problems and a perception that the public's interests are being looked after. It will require better education in the schools at all levels. It will require attorneys to be seen doing good things. It will require attorneys to re-assume positions of prominence in legislatures, city and county governments and on public boards and charitable institutions. But perhaps most importantly, it will require attorneys to act like professionals and treat each other, the public, judges, clients and juries with respect. It doesn't sound so hard to do-then why is it? I suspect that there are a number of answers, but one of the most significant comes right back around to protecting the practice. Attorneys are under a huge amount of stress. There is too little profitable work to go around and attorneys can't give up the time to be active in their communities. There are, in many communities, too many attorneys for the population they serve, and perhaps most importantly, it seems like the standards (bar admission and law school graduation) have diminished.

On a related subject, how attorneys charge fees and what they need (or think they need) to live on can't synchronize. For the shock value of the statement, I am fond of telling audiences of attorneys that I talk with that "every attorney I know is only worth $5.15 per hour, and only that because the federal minimum wage law says so." A lawyer's value to a client is not the time spent, but rather the result achieved and the product produced because of their knowledge. Simply stated a deed in Missoula, MT is only worth $25.00 to $35.00 because that is what the market will bear. It does not matter whether an attorney types it, a secretary types it, or it is spit out of a canned software program. A regulated fee schedule (regulated by a free market and supervised by the Court) would go a long way to fix a much of what is wrong with the profession's image. Before I get jumped, I know the US Supreme Court struck down uniform fee schedules, but that was a different time and we have (or should have) learned enough to be able to design one that will pass constitutional muster in the new millennium.

I had a partner, now retired, who almost never had a fee dispute (in nearly 40 years of practice) with a client. Every bill he sent got scrutinized from the perspective of "if I got this bill would I want to pay it if I were the client, and does it fairly represent the value of the service I performed?" If the answer was "no," the bill was written up or down until both parts of the question were able to be answered "yes." The few times a client questioned one if his bills he always allowed the client to decide the answer to those questions and took what the client offered. He felt, and I still believe, that the final arbiter of the reasonableness of a fee has to be the client. Do they feel that the fee was fair? With hourly fees, the questions don't fit-hours are simply a mathematical factor that we apply to avoid answering the question of value.

Lastly, we are going to have to practice some conservative (legal) family planning. Very few, the bench, the bar or the public, will dispute that we have too many attorneys in private practice for the amount of legitimate legal work available. Shall we blame the law schools? Perhaps, but perhaps not. We want ABA accredited law schools, and with that comes some minimums: faculty to student ratios, minimum library standards, minimum graduation rates and the like. Looking at the future of the practice and assuming that my suggestion that more attorney work will be going to other professions or to pro se representation, the problem will only get worse. The answer-produce fewer attorneys, close some law schools and regionalize legal education, find other work for law graduates outside private practice, don't encourage them to take a bar exam immediately upon graduation, and lastly beef up the admission standards. All of these have some merit and corresponding problems. But this issue can't be avoided; the debate needs to take place. It needs to happen soon and it must include not just attorneys, but judges, and the public. Without the three sectors at the table the debate will not work and the solution will be flawed and destined to fail.

Protecting the Public: How and to what extent should attorneys, the bar and the court be involved in providing protection for individual clients injured by the actions of attorneys?

Protecting the rights and interests of clients should be one of the court's, the lawyer's and the organized bar's most significant obligations. As a matter of fact, it is one that the ABA and Jurisdictional Bar Associations have taken seriously for years. The threshold question, however, is not the bar's role, but rather what does client protection mean? From a historical perspective: thirty years ago, one could conclude that the level of required protection was limited to policing attorney ethics; fifteen years ago it grew to include malpractice protection and client security (malfeasance) issues; and ten years ago fee disputes and general attorney behavior issues began to surface. So today I believe the organized bar and attorneys individually need to focus on a concept that, for lack of a better term, I call "Comprehensive Client Protection." It is best described by a goal or mission statement that might read something like this:

The Bar assures consumers of legal services, comprehensive client protection by providing an integrated program of malpractice and malfeasance indemnity, detection of attorney impairment issues, maintenance of the highest ethical standards among its members, and screening and resolution programs for all disputes and issues that arise out of an attorney-client relationship.

Take a minute and read it again. This is "Comprehensive Client Protection" and pretty well sums up what the bar's ultimate role could (should) be. The next question becomes, how do we get it accomplished, and is this an all or nothing proposition? Clearly it is not. There are a significant number of mutations, degrees and approaches that bars have and can take to attack the issue.6  Many bars have studied the problems and several have tried solutions. They cover the waterfront, from the Oregon Professional Liability Fund (the USA's only true mandatory malpractice fund) to Alaska and South Dakota's recent efforts in adopting "client notification rules." In short the following is a short list of the favorite topics:

Mandatory Malpractice Funds - The bar operates a mandatory program that all licensed attorneys must participate in and fund.

Mandatory Coverage Requirements - Attorneys must prove coverage to maintain licensure.

Client Protection Funds - Many state bars maintain a mutation of this to protect legal consumers from attorneys that misappropriate (steal is such a strong word but it fits) client assets.

Impaired Attorneys Programs - These may be voluntary or funded and staffed to deal with attorneys who have substance abuse or stress related problems.

Client Notification Rules - At this point only Alaska and South Dakota have official rules requiring attorneys to advise clients if they are not insured for professional liability risks.

Fee Arbitration Panels - Programs designed to resolve disputes between attorneys and their clients over fee bills and services rendered.

Together, some combination of the above constitutes "Comprehensive Client Protection" as I have envisioned the term. Let's face facts, the public has a right to expect that the attorneys will adhere to certain standards and fulfill certain core levels of moral expectations. Is it really too much for the public to expect that their attorneys will not steal from them, will not let their drinking, drugs, or stress reduce the level of care their matters receive, that the fees charged will be fair and reasonable for the service provided, or that the level of competency with which an attorney handles their matter will not cause them harm? I think not. While we know how the system works and that for the most part it works pretty well (from our perspective), it really doesn't matter what we think or know about the situation.

Let's be realistic. The public is frustrated and their issues go beyond public protection and include judicial administration, access to justice and even legal compensation and fee fairness. They don't care about clogged court dockets, the need for endless discovery, attorney stress or standards of care. All they know is that the system is not working for them. It costs too much, works too slow and often the results do not make sense to them. To paraphrase from NETWORK (the movie) it won't be long before "they get mad and won't take it any more." To understand the importance of the bar taking action to address these concerns, one only needs to contemplate what our lives as attorneys might be like if, due to public outcry, the legislature were to get its tentacles around public protection and judicial administration issues related to attorneys.

The remainder of this paper presents some ideas about how a Bar might go about addressing some of the issues presented above. I've said it before but I need to say it again-this is not my recommendation or even my suggestion as to how the New Hampshire Bar should proceed. I don't even espouse that I understand the issues that face your Bar. These are, rather, my thoughts on a plan pertaining to the issues raised and problems that face the whole legal profession in this country. It is only my hope that I might create discussion among you on the problems you see. As the old adage goes-if the shoe fits, wear it, if not, keep looking until you find one that does.

THE PLAN

Who are the players and where does all this lead us? I look to the future of a dynamic and exciting profession that can once again be viewed as noble with its members high on the public respect scale. But for this to happen, we will need to learn from the current (in vogue) business model and listen to our customers. We will have to change the public view of the Bar as a closed club with its secret handshakes and passwords. We need to become understood instead of misunderstood. Most of all, we need to be seen as responsive to the public's needs and truly interested in the well being of all citizens. In short, the public needs to believe that as a profession, attorneys put clients interest first and ahead of their own egos.

The New Hampshire Supreme Court needs to lead. It needs to become a partner with the public and the attorneys in the process. A few years ago I had the privilege of participating in the study and debate on the subject of Mandatory Malpractice Insurance in Idaho. The Idaho Bar appointed a committee that worked very hard on a model that was truly visionary. They prepared a detailed explanation of the proposed model and the debate took place over several years during various Bar functions and the annual "Road Show." The result-it was voted down by the membership. Was I surprised? Not in the slightest. I thought the debate was great and the model really made some sense, but the effort failed because the debate only included one part of the equation (the bar). We didn't ask anybody outside the profession to participate, and we only talked about what we thought was right for the profession and ultimately the public. The result was preordained by the make-up of the voter pool. I don't even wonder what the result would have been like if we had let the legislature or the public decide the issue without input from the bar. It would have passed with little debate. That result would have been just as preordained and after the inevitable amendments would probably have been just as wrong.

In short, solutions to problems as serious as the future of our profession and public protection require a comprehensive airing of all perspectives of the problem. It will simply not work to say "attorneys understand the problems of the profession and will do the right thing." A lawyer's view of the world is not always the same as the public's, and one has to wonder when addressing the problems of the profession whether the public view might provide a clearer and more objective assessment.

I have served on the State Bar of Montana Fund for Client Protection (or its predecessor) since the late 1970s. We functioned as an attorney-comprised board and things went quite smoothly until several years ago when a very insightful bar president appointed a lay representative to the board. All of a sudden, decisions that had always been quite clear to the rest of the board were no longer quit so clear. We all understood the distinction between attorney malpractice (which the fund did not cover) and attorney malfeasance (which it did). However, from the lay member's perspective it wasn't so clear. All he understood was that the client was out some money because of attorney conduct. It suddenly became clear to me why the Fund had not done more to improve the image of the bar. The public didn't care about technical distinctions, and since we denied more claims (malpractice) than we approved (malfeasance), the perception was one of protecting our own rather than the public. My point is not that the Fund should pay for malpractice, but rather that we lacked the perspective to see a different point of view.

It may seem like there is no starting point. In fact, it may be simpler than we think. Why not start with the organization of the bar and its functions.7

A PLAN FOR A DYNAMIC BAR

The bar leadership needs to represent its constituents (customers) who are attorneys, the bench and the public. This being the case, why not consider a model which provides very broad representation at all levels. Such a model might look something like the following:

The House of Delegates has policy-making responsibility and could be made up of a fixed number of at-large members (attorneys, judges and lay persons) from the various judicial circuits or districts, totaling not more than 75 and including all past presidents of the bar. Clearly, the balance of the House should come from the practicing bar, with a strong minority of lay members and a representative number of judges. I might even consider making the Chief Justice of the Supreme Court the automatic Chair of the House.

The Board of Governors (the Directors) carries the load of the responsibility for strategic planning (setting goals and selecting programs and functions that the bar should undertake in order to fulfill House policy). They also are responsible for monitoring the performance of the Bar officers and staff. The Board should consist of nine at-large members (4 attorneys, 2 lay members, 1 circuit judge and 2 Supreme Court justices), the Bar Executive (as a full voting member), the Bar officers (president, president-elect, secretary and treasurer, all elected by the House of Delegates), plus the Chairman of the House of Delegates. This would make a total of 15 members.

The Bar Officers and the Bar Executive make up the Executive Committee of the bar and are responsible to the Board for carrying out the plans and policies of the bar. The Executive Committee is also charged with providing vision to the Board and House as to policy and programs the Bar should consider and has supervisory and monitoring responsibility over the Bar Executive.

The Bar Staff, under the leadership of the Bar Executive, carries out the strategic programs and functions of the bar. In short, this body doesn't change much except that the Bar Executive will be given a bit more flexibility in designing the means to carry out programs and functions.

The Judicial Branch carries out the discipline function of the bar. This body should be at least half Supreme Court Justices (with one designated as presiding judge or chair), have some attorney and lay representation, and should have the power to decide all discipline issues. If the bar were to adopt the concept of "comprehensive client protection," this body would also oversee the administration of those programs. The staff for this would be provided by bar staff with the Bar Executive or his or her designee answering directly to the presiding judge or chair for the functions of the judicial branch.

This is a radical plan, and it throws a lot of tradition out the window. It represents a sketch from which the current Bar leaders and members of the Supreme Court can start designing the "New Bar." The critical elements are: inclusion (all parties having a voice), judicial involvement (the Supreme Court needs to lead the process to a conclusion), and integration (each of the components-the House, the board, the officers, the staff, and the judiciary-need to mesh so the decisions and policy flow down from the top and implementation flows across all layers).

With such a model in place thoughts now turn to addressing some of the underlying systemic problems that lead to the public's distrust of attorneys and the system. Starting with the most obvious, clients need to feel protected in the attorney/client relationship. How do we do that in a meaningful way that uniformly applies to all, without regard to ability to pay or social position? Again the "New Bar" needs to take the lead.

THE PLAN FOR COMPREHENSIVE CLIENT PROTECTION PROGRAM

I proposed this concept several years ago to the Idaho and Alaska Bars as a way that the Bars could utilize outside resources (of course ALPS is the perfect resource) to accomplish Comprehensive Client Protection (an expanded Oregon model) without significantly impacting and expanding Bar resources and staffing structures. This model was then and still may be ahead of its time in terms of perceived need or acceptance by the profession. In the end, however, from a public point of view, it probably appears long overdue. In order to charge the debate, I have elected to float it again.

This Comprehensive Client Protection Program operates much like a Fund for Client Protection in that it creates a pool of resources, which fund the various components of the program. The assets of the program would be maintained and operated as a risk pool with premiums and assessments being determined as needed to assure that the fund remained solvent and able to meet its actuarially determined needs. In short, shortages would require additional assessments and overages would result in future assessment reduction or dividend payments. Since the fund covers all attorneys8  who are active members of the Bar regardless of competence or risk, the Bar can set the rates and corresponding coverages at whatever levels it deems appropriate. For example, if you wanted to impose an appropriate price, you could offer a policy form that basically says, "If you did it in your capacity as an attorney, it's covered." This, in essence, is the Cadillac or Mercedes for those that prefer an import. I don't recommend taking this quantum leap initially as the cost of insuring that kind of risk remains substantially higher than market premiums for similar limits of coverage currently carried by most attorneys. Remember, you can add benefits more easily than you can take them away. After you have several years of experience, it will be much easier for you to determine whether it is meeting the needs of the public and of the Bar Association and whether the additional coverage would warrant the cost.

To undertake a comprehensive client protection program will require a paradigm shift in bar members' thinking about client protection. In short, we are all going to have to start thinking about malpractice and malfeasance in a different light. Since it is a compulsory program and all people have to participate initially, the pricing will probably be set on a flat basis regardless of type of practice or past loss experience. As the program goes forward and losses are incurred, you can, if you choose to, impose penalties on those who have claims. But understand that you will never be able to raise an individual's premiums enough to cover the losses that an attorney with a high frequency pattern will incur. The bar and its members will have to recognize the program as a risk-sharing pool in its purest form. All attorneys are undertaking, at their expense, the protection of the clients of each and every attorney in the state to the extent of the limit of coverage offered by the program. This, in essence, is the paradigm shift I spoke of earlier.

The Plan would likely present a policy form that combines client security fund aspects and malpractice program (using a fairly standard coverage form) in one pool. The program would include the following components:

Malpractice Coverage in the amount of $250,000/$500,000 (or whatever amounts the bar chooses);

Fidelity Coverage in a like amount as a sub-limit of the malpractice coverage (i.e., $100,000 in the aggregate);

Lawyers' Impairment Assistance services to allow attorneys with problems to seek and obtain help without totally sacrificing their practices;

Discipline Diversion and Screening programs that allow attorneys with impairment issues to seek treatment and, within defined limits, contract with the discipline authority for deferred imposition of sanctions;

Attorney - Client Dispute Resolution processes that allow attorneys and their clients access to speedy and just resolution to all disputes-from fee disputes to malpractice claims.

Assuming a fictitious block of 2400 attorneys, the program would initially produce a gross premium base of approximately $8 million. The program administrator would segregate an amount equal to approximately $2 million for administration of the program (including the bar services described above), and establish a working staff to operate the program. A portion of the staff would be housed in the Bar offices and a portion (shared resources) in administrators' offices. The initial staffing in the bar offices would probably include a substance abuse coordinator, discipline defense counsel (sort of a public defender) and appropriate staff to support the program's functions. These people, in conjunction with the home office staff of administrator, would then set in place formal programs for claims handling, risk management, discipline diversion, and substance abuse counseling and prevention.

Because of the economies of scale, by using shared resources these programs can reach magnitude that the Bar could never fund using totally in-house staff. We are talking about audit programs, intervention programs, office practice maintenance programs (while someone is in recovery), assistance to discipline counsel in understanding and dealing with substance abuse cases and the like. Herein we'll get a little partisan and use ALPS as an example. If ALPS were the program administrator, the underwriting functions, risk management and claims administration would be handled by your state's Policyholder Service Team out of the ALPS offices. The team would be responsible for handling all claims that occur in the state. Here we create significant economies of scale in that ALPS could reformat its existing insurance program in New Hampshire to substantially reduce its price by offering, in essence, its existing policy forms with a self-insured retention that matches up to sit on top of the fund below. The fund participants receive the same high level of service as all other ALPS insured attorneys, and those that carry excess limits receive the benefit of an integrated defense.

The balance of the premium collected, approximately $6 million, would be allocated to the purchase of reinsurance and the payment of claims. Hypothetically, the fund would take $1.5 million of that $8 million and purchase reinsurance to guarantee the economic viability of the pool (which would have an initial opening balance of $4.5 million). The reinsurance would include what we call CAT or catastrophe coverage that provides for payment of claims in excess of funds available in the pool. Generally speaking, this coverage is available and would offer $3 million in additional protection above the fund balance of $4.5 million. Accordingly, this would give the compulsory program $7.5 million available to pay claims in its first year of operation. This represents thirty maximum ($250,000) claims. Based on ALPS' experience, that is extremely unlikely to occur. In fact, we estimate on a high end that there will be 20-40 claims against the fund in its initial year. Many of these claims won't be anywhere near the maximum, and in fact, we anticipate that there will be a fairly substantial amount of the $4.5 million left over after the first year. In the second year of operation, taking into consideration paid and incurred losses (those that the fund set up reserves in anticipation of ultimate disposition), the first year's balance would be carried forward. Assuming that the premiums stay the same in the second year, the number of attorneys stay the same and the fund's costs and expenses stay the same, this would add another $4.5 million to the pool. Hypothetically, if we carried forward $1 million, that would give us $5.5million. The fund could either buy additional reinsurance to provide extra excess capacity or can simply leave the reinsurance purchase agreement at the same level and increase the number of dollars that it maintains in the pool for initial payment of claims, thus pushing our limit up. The latter is the most likely scenario and, in fact, over time, it would be nice to build up approximately $10-$15 million in the pool so that we could reduce our dependency on reinsurance.

If the fund's experience is good, the Bar Association has a couple of choices. It can return premiums in the form of dividends to its members or it can reduce premiums for future years. These, however, are decisions that should not even be addressed for the first five years of the program. This is a long tail kind of risk and that much time will be required to establish a comfort level for the claims patterns.

Based on ALPS' own experience in the nationwide and the Oregon programs, you should expect the first year of operation to go very smoothly. The second year would likewise be fairly easy from a loss standpoint. The third and fourth years are the critical years in determining whether or not we have adequately reserved and charged enough premium to provide the fund with appropriate solvency. These are the years in which the reinsurance relationships are most likely to be tested. In years five and six the program should stabilize and make determinations as to whether or not the fund's premium levels are appropriate. Understanding that this is a risk pool, the premiums will be set each year based on the loss experience. If experience remains good, premiums can go down or stay the same. If experience turns bad, in order for the pool to stay solvent, premiums necessarily have to go up. In this kind of program you should expect level to slightly increasing premiums for the first four years. After that, based on the experience of the Oregon Plan and similar Canadian companies, I would expect a stabilization that would perhaps permit a reduction in premium.

Ultimately, what does this all mean to the individual practitioner in New Hampshire? I suspect that solo practitioners will see their premiums be approximately the same for similar coverage. Those that chose to buy excess coverage from ALPS or another carrier would probably find that initially their premiums also would stay about the same to the level of $2 or $3 million. Above that, they might see some increase due to potential severity factors recognized currently by the reinsurance markets. Attorneys practicing in firms that are relatively low risk (i.e., general practice or defense firms) will probably see a slight increase in their overall premium at any level. This, in essence, is the consequence of the paradigm shift in terms of the sharing of responsibility. The fund can, of course, risk rate the various types of practice and size of firm. It would simply require an increase in staffing to undertake the underwriting process.

Comprehensive Client Protection is a huge topic and an even bigger responsibility. History has proven, as the experience of several Bar Associations can attest, that nothing can happen without the support and initiative of bar leaders, bar members and most importantly the unreserved resolve of the court which controls the privilege of practicing law. As a closing caution, this is not an issue we can hide from. Today, we (attorneys, bar and court) control destiny and can demonstrate the leadership that the public demands and expects. If we don't, public demands will shift to legislative venues to gain the satisfaction they expect and we (attorneys, bar and court) may well be on the outside looking in as these issues are addressed by legislative committees.

CONCLUSION

This article has but touched on a few of the topics that need to be addressed in order to exhaustively look at the future of our profession. I leave ADR, e-practice, legal education and MDP (to name a few interesting topics) for discussion at another time and place. The future of the bar and Comprehensive Client Protection offer quite enough controversy for now.9  Please remember that I am not proposing that the State Bar of New Hampshire adopt "the Plan" in its present form or adopt my concept of "Comprehensive Client Protection." Rather, I hope to pique enough interest in the subject that New Hampshire attorneys, the Bar and the Supreme Court open further discussion of the issues raised by my concepts. I want to keep the debate alive so you can find answers that are right for the New Hampshire Bar and the citizens of New Hampshire who count on your Bar to protect their interests and preserve the rule of law.

Thank you for giving me the forum and the freedom to express some of my thoughts and ideas for and about the future of our profession. I love the law and as unpopular as it may be in society today, I really like attorneys. I like who they are, how they think, what they do and, for the most part, I even like how they do it. I know that much of what I've said in this paper will not be popular with all members of the Bar. The fact that the State Bar of New Hampshire has published this article explains much of my passion for attorneys and the law as a profession. It is now for you who have accepted the title "Attorney" or "Lawyer" and the responsibilities that got with that title to step into the future and continue to protect the public and preserve the rule of law.

You still hold the keys to the future of the legal profession in New Hampshire. Let's not lose them or fail to begin the debate that so badly needs to take place. I feel compelled to close this article with the following thought:

The future of the profession remains (at least for the moment) ours to decide, but the longer we wait, the less control we may have over the process. Each decision we put off today could well be made for us by others without our input or the public's best interest in mind.

ENDNOTES

1. ROBERT W. MINTO, JR. serves as President & CEO and Director of ATTORNEYS LIABILITY PROTECTION SOCIETY, A Mutual Risk Retention Group (1987-present). While serving in this capacity, he remained a Principal with the law firm of Worden, Thane & Haines, P.C. until 1991. Mr. Minto received his B.A. degree in Business Administration from the University of Washington in 1969 and his J.D. from the University of Montana School of Law in 1973. He has been a member of the State Bar of Montana and the American Bar Association since 1973. Mr. Minto serves on the ABA Standing Committee on Lawyers' Professional Liability; the State Bar of Montana Lawyers Fund for Client Protection where he served as Chairman from 1984-91; the State Bar of Montana Law Practice Management Committee and as a member of the State Bar of Montana Insurance Committee (1979-91). He stays active in the American Judicature Society; the Professional Liability Underwriting Society; and the American Management Association, the National Association of Bar Related Insurance Companies and as a Patron Fellow of the American Bar Foundation. Mr. Minto also active in the Alliance of American Insurers where he serves as Vice Chair of its board. Mr. Minto has twice received the State Bar of Montana Distinguished Service Award, the Wyoming Trial Lawyers Dedicated Service Award and the State Bar of Montana Pro Bono Service Award. Mr. Minto also speaks and publishes nationally on the future of the legal profession, bars and professional liability insurance.
2. This article, originally published in two parts in the Idaho Bar Journal, has been reformated by the author for application to the practice of Law in New Hampshire, and is published in this journal with permission of the State Bar of Idaho.
3. For those of you interested in further study on the subject, the entire text of the report (2nd Edition) is available in the library on ALPS Web Site: http/www.alpsnet.com, or if you would like a hard copy please feel free to request one from the author directly at: ALPS, P.O. Box 9169, Missoula, MT 59807.
4. I have not attached a copy of the ABA report on Multidisciplinary Practice, as it is way too long and in fact is in a state of constant revision. It is available on ABANet at http://www.abanet.org. For those that have not read it, I highly recommend you do so. While you may not agree with the conclusion, it was very thoughtfully drafted and raises many good questions.
5. Note that he is probably a partner in the "Consulting Division" not the actual accounting firm. Sneaky, huh, the public won't recognize the difference. What they see is the one-stop shopping.
6. As referenced in foot note #1, the verbatim materials presented by a panel I chaired at the American Council of Bar Presidents meeting in February 1999 are available for review or downloading at ALPS Web site at http://www.alpsnet.com. These materials outline most of the issues and approaches that have been tried with varying degrees of success and my personal favorite the "Comprehensive Client Protection" model that will test the resolve of even the most committed Supreme Court and group of Bar leaders.
7. What follows is a compilation of several different models that I have studied over the past several years. I don't intend it to be viewed as the perfect model, but rather a model that would work to address the issues presented in this paper.
8. Depending on the decisions made by the Bar, appropriate levels of participation for corporate attorneys, government attorneys and non-resident attorneys can be set to appropriately spread the cost of the program based, in part, on the risk represented by particular classes of attorneys.
9. This article has been a long time in development and to a great extent remains a work in progress for you and your Bar Leaders to ponder, nurture and develop or discard as you see fit. As I update the underlying report, and conclusions, they will be posted to our Web Site and if I have sparked your interest I hope you take the time to visit the site and share the vision. Your thoughts and comments are always welcome, positive or otherwise; they will help shape future editions. ALPS remains ready to provide information and be your resource in this journey.

The Author

Attorney Robert W. Minto, Jr. is President & CEO and Director of Attorneys Liability Protection Society, Missoula, MT.

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