WSR 19-09-023

RULES OF COURT

STATE SUPREME COURT

[April 4, 2019]

The Practice of Law Board, having recommended the suggested amendments to GR 24—Definition of Practice of Law and having requested that the comment period for GR 24 be extended, and the Court having approved the suggested amendments for publication;

Now, therefore, it is hereby

(a) That pursuant to the provisions of GR 9(g), the suggested amendments as shown below are to be re-published for comment in the Washington Reports, Washington Register, Washington State Bar Association and Administrative Office of the Court's websites in May 2019.

(b) The purpose statement as required by GR 9(e), is published solely for the information of the Bench, Bar and other interested parties.

(c) Comments are to be submitted to the Clerk of the Supreme Court by either U.S. Mail or Internet E-Mail by no later than August 30, 2019. Comments may be sent to the following addresses: P.O. Box 40929, Olympia, Washington 98504-0929, or supreme@courts.wa.gov. Comments submitted by e-mail message must be limited to 1500 words.

dated at Olympia, Washington this 4th day of April, 2019.

General Rule 24

Submitted by the Practice of Law Board

Practice of Law Board

Hon. Paul Bastine, ret., Chair

Practice of Law Board

806 S. Raymond Rd.

Spokane Valley, WA 99206-3530 (Email paulbastine@msn.com)

Staff Liaison/Contact

Julie Shankland, General Counsel

Washington State Bar Association

1325 Fourth Avenue, Suite 600

Seattle, WA 98101-2539 (Phone: 206-727-8280)

General Rule (GR) 24 defines the practice of law in Washington. Section (b) of the current rule permits certain conduct whether or not it constitutes the practice of law. Pursuant to the discussion with the Court in April, this proposal would add new language to section (b) permitting online self-representation legal service providers. Pursuant to the discussion regarding this issue in April at the Practice of Law Board's annual meeting with the Court, the Practice of Law Board initially prepared this submission as a report for the Court. Given the suggested amendments to GR 24, however, the report has been incorporated into this GR 9 Cover Sheet.

Consumers are, in the context of self-representation, increasingly going online to seek legal information, generate legal documents, and seek assistance from unlicensed entities. The public interest is served by protecting consumers from incompetent, unfair, and deceptive online self-representation legal service providers (OLSRLSPs). In addition, online legal service providers want guidance on where the boundaries are in providing self-representation legal services and avoiding the unauthorized practice of law (UPL). Additionally, Washington consumers need to have clarity on where to go with concerns related to OLSRLSPs.

To address these changing consumer needs, the POLB recommends that the Washington Supreme Court amend the definition of "the practice of law" to explicitly authorize' information and document preparation services under clear limitations with registration of such provider entities with the WSBA.

What does "practicing law" mean in the age of information technology, globalization, and market disruptions that are transforming everything from health care and transportation to the music industry? The lines separating unauthorized from authorized practice of law have blurred. Online legal information, generation of legal documents, online dispute resolution, and direct representation are not just an inevitable part of the future—they are here and growing at an exponential rate. The concept of a law office being an entity owned and run exclusively by lawyers is changing. Multi-jurisdictional practice is an inescapable consequence of technology. The traditional idea of the lawyer-client relationship is changing as disciplines start to merge and innovate to find more effective and efficient ways to solve complex problems that have a legal component.

Like it or not, the culture is rapidly and continually producing innovative business models that promise more competitive services and products. The practice of law, as defined and regulated by the Court and administered by the state bar association, must thoughtfully and incrementally adjust to changing conditions by exploring ways to expand access to justice while protecting the public from the risk of harm. As technology marches forward and people look for cheaper and more efficient legal services, the organized bar should be a central player. The court, the bar association, and individual lawyers can play a leading role or sit back and watch an under-regulated potpourri of technological innovators, predators, lay people, and legislative partisans define the new world of legal services.1

The current sources of regulation of OLSRLSPs are RCW 2.48 (Unauthorized Practice of Law (UPL); the Consumer Protection Act, chapter 19.86 RCW, which regulates all matters in trade or commerce; and GR 24, which defines the practice of law and identifies otherwise permitted exceptions to the definition of the practice of law.

The rationale in support of a significant revision to GR 24 flows from the recognition that the internet is inexorably a marketplace where people seek information and assistance in every aspect of life, including legal matters.2 Many consumers in need of legal information and assistance believe they cannot afford to hire a lawyer and have limited access to free or low-cost traditional legal services. It is estimated that 80% of consumers with legal matters do not seek the assistance of a licensed attorney. Often, consumers seek information and assistance online because it is accessible, affordable, and efficient.

As online self-help legal services expand, providers who are currently operating in Washington are largely doing so without effective regulation or oversight, albeit they are subject to the criminal prohibition of the unauthorized practice of law and the Consumer Protection Act (CPA) and held accountable through contract and tort law to the professional standard of care. Perkins v CTX; 137 Wn.2d 93, 106, 969 P.2d 93 (1999). The rationale for regulating this marketplace and displacing competition is that consumers of OLSRLSPs are at risk of harm by under-regulated online providers that knowingly, deceptively, or negligently create the misperception that licensed lawyers are assisting consumers or that the particular provider is legally authorized to provide the legal assistance adapted to individual needs.3

Existing practice of law rules in Washington do not expressly authorize the provision of interactive online legal assistance outside the scope of the conventional lawyer-client relationship. Once a legal service is personalized for an individual's situation, it crosses over from lawful provision of generic legal information (or a mere form/scrivener service) to particularized legal advice subject to the rules and regulations governing the practice of law. Thus, only individuals authorized to practice law may lawfully provide web-based legal assistance adapted to individuals' needs. OLSRLSPs may wish to introduce innovative interactive software and helpful online services in Washington, but the legitimate prospective players will only do so if the Washington practice of law rules clearly provide permission for the services.

To address the regulatory gap, emerging OLSRLSPs could be fairly characterized as "pro se" assistance businesses that are an exception to the lawyer-centric practice of law. And, if the providers have attributes of the traditional "practice of law," they could nonetheless be expressly "authorized" within the qualified pro se exception. This authorization would be justified because these providers deliver critical information and guidance to consumers who are seeking non-lawyer assistance to assess and respond to legal issues that routinely arise in their lives. Whatever mechanism for regulation and accountability is put forward, it should be narrowly tailored to protect consumers' expectations; promote competition and access to justice; and adhere to the GR 12.1 Regulatory Objectives

The North Carolina Statute (NCS) § 84-2.2 is an example of state regulation of online legal assistance involving software that generates legal documents based on information inputted by a consumer. However, rapidly evolving technology and artificial intelligence inevitably will enable entrepreneurs to offer consumers particularized legal advice and opinions (not just documents) based on consumer input and needs. These technological developments in online legal services should be considered by the court as it considers amending GR 24.

The Practice of Law Board recognizes that this suggested amendment to GR 24 could be viewed as impacting competition in the legal services marketplace. This suggested amendment attempts to narrowly tailor the proposed regulations to protect consumers while avoiding unnecessary inhibitions on competition and innovation. In a June 2016 letter to the North Carolina legislature, DOJ and FTC Anti-Trust Division staff offered support for the proposed North Carolina statute. The letter stated, in part:

[S]taff believe that "the practice of law" should mean activities for which specialized legal knowledge and training is demonstrably necessary to protect consumers and an attorney-client relationship is present. Overbroad scope-of-practice and unauthorized-practice-of-law policies can restrict competition between licensed attorneys and non-attorney providers of legal services, increasing the prices consumers must pay for legal services, and reducing consumers' choices.

Accordingly, the Agencies recommend that the North Carolina General Assembly consider the benefits of interactive websites for consumers and competition in evaluating HB 436. Interactive software for generating legal forms may be more cost-effective for some consumers, may exert downward price pressure on licensed lawyer services, and may promote the more efficient and convenient provision of legal services. Such products may also help increase access to legal services by providing consumers additional options for addressing their legal situations.

The Agencies also recognize that such interactive software products may raise legitimate consumer protection issues. The Agencies recommend that any consumer protections, such as requiring disclosures, be narrowly tailored to avoid unnecessarily inhibiting competition and new ways of delivering legal services that may benefit consumers.4

The Rule the POLB proposes here would expand competition in the legal services marketplace while establishing the minimum regulation necessary to protect consumers.

To protect consumers from entities operating outside the scope of the authorized practice of law (including outside the amended GR 24), the POLB has recommended to the WSBA and Attorney General's Office that they consider a bill providing that the Unauthorized Practice of Law is a per se Consumer Protection Act violation. See Attachment A for rationale and details of this approach.

The threshold question in evaluating potential regulatory approaches is, "Which branch of government should regulate online legal services activity?" If it is deemed "permitted activity" under GR 24 within the definition of the practice of law, the Court may prefer to maintain control over such entities in order to fulfill its traditional constitutional role to regulate the practice of law in Washington. If it is deemed an exception to the definition of the practice of law, it could be regulated as "mere" commercial activity by the legislature and executive branches of government.

Our recommendation is that the Court structure the "permission" so as to retain control of the scope of the exception and who is authorized to engage in the restricted activities. Consumer protection could be strengthened by having the legislature make the unauthorized practice of law a per se violation of the CPA (the Practice of Law Board is currently working with WSBA to advance this suggestion). This statutory change will empower consumers, who suffer actual damages caused by UPL, to obtain recovery and deter unfair and deceptive practices in this emerging online self-representation legal services marketplace, while keeping authority over the practice of law with the judicial branch. This advances the public interest in access to justice and promoting a fair and non-deceptive market place.

The POLB's recommendation focuses on the Court retaining regulatory authority over of online self-help legal service providers. This recommendation is based on our anticipation of the Court's potential concerns that legislative/executive branch oversight may violate separation of powers and tread on the Court's inherent and plenary authority to regulate the practice of law.

The POLB makes its recommendation in light of the Supreme Court Order Reconstituting the POLB dated July 8, 2015, which directs that the POLB focus on "educating the public about how to receive competent legal assistance and consider new avenues for non lawyers to provide legal and law related services." Our recommendation is fully aligned with that charge.

A hearing is not recommended.

Expedited consideration is not requested.

The Board has involved stakeholders during the development of this rule proposal, including representatives from the Access to Justice Board. The proposed rule was provided to the WSBA Board of Governors. The Board has not received written comments from stakeholders on this rule.

Attachments:

GR 24 Proposed Redline

GR 24 Proposed-Clean

(a) [Unchanged.]

(b) Exceptions and Exclusions: Whether or not they constitute the practice of law, the following are permitted:

(1)-(11) [Unchanged.]

(c) - (f) [Unchanged.]