Tech Regulators Need to Revise Their Policies to Bolster Technology-Based Legal Services' Growth
In a bid to promote competition, technological innovation, and consumer access in the legal services sector, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) have identified anticompetitive restrictions on tech-enabled legal services as a key issue.
These restrictions, which often limit market entry for tech-enabled legal services that do not conform to the traditional lawyer-centric model, isolate law firms from partnering with technology companies, and protect incumbent lawyers and law firms from competitive pressure by non-lawyer tech providers, are seen as detrimental to consumer welfare.
The potential benefits of tech-enabled legal services, such as increased efficiency and improved accessibility for individuals and businesses, are being thwarted by these barriers, which can lead to decreased innovation and higher costs for consumers seeking legal help.
The FTC and DOJ believe that changes to state rules regarding tech-enabled legal services could have a positive impact on consumer welfare. To better understand the issues at stake and how changes could benefit consumers, the agencies are considering opening proceedings to investigate the impact of state rules restricting tech-enabled legal services on consumer welfare.
Allowing non-lawyers to own and invest in law firms could support the development of tech-enabled legal services. Similarly, the amendment of state rules to allow businesses to own and operate tech-enabled legal services could potentially offer better, cheaper, and more accessible representation to individuals and businesses.
The FTC and DOJ have intervened in similar cases in the past. As federal antitrust enforcers, they could take several actions to address this issue. They could investigate and challenge state laws or professional rules that unduly restrict competition by barring technology-enabled legal service providers or partnerships. They could also issue guidance or policy statements clarifying that overly restrictive rules on non-lawyer involvement in legal services or law firm partnerships with tech companies violate federal antitrust laws.
Moreover, the agencies could coordinate with state attorneys general who may be concerned that federal enforcement alone is insufficient, as states are becoming more active in antitrust enforcement efforts. They could also use their authority to launch investigations or enforcement actions against anticompetitive practices in the legal services market, particularly where they hinder innovation or protect incumbents without valid justification.
These kinds of antitrust actions would be consistent with the broader federal push to address anticompetitive restraints in technology-related sectors. By examining and potentially curtailing these state-level restrictions, the FTC and DOJ can promote competition, technological innovation, and consumer access in legal services.
State bars and courts, which set licensing rules for practicing law, are typically run by lawyers who may have a financial stake in avoiding competition with tech-enabled legal services. To address this, the FTC and DOJ plan to host a joint workshop to explore the topic of anticompetitive restrictions on tech-enabled legal services.
In summary, the rules limiting non-lawyers and tech partnerships in legal services are anticompetitive because they constrain market entry and innovation. The FTC and DOJ aim to address this issue by enforcing federal antitrust laws to eliminate these barriers and encourage competitive legal markets.
- The Federal Trade Commission (FTC) and the Department of Justice (DOJ) are considering investigating the impact of state rules restricting technology-enabled legal services on consumer welfare, as these restrictions are seen as detrimental to technological innovation, consumer access, and efficiency within the legal services sector.
- The FTC and DOJ are considering taking actions to address anticompetitive restrictions on tech-enabled legal services, such as investigating and challenging state laws that bar technology-enabled legal service providers or partnerships, or issuing guidance clarifying that overly restrictive rules on non-lawyer involvement in legal services or law firm partnerships with tech companies violate federal antitrust laws.
- Allowing non-lawyers to own and invest in law firms, as well as amending state rules to allow businesses to own and operate tech-enabled legal services, could support the development of better, cheaper, and more accessible representation for individuals and businesses.
- The FTC and DOJ plan to host a joint workshop to explore the topic of anticompetitive restrictions on tech-enabled legal services, with the aim of addressing the issue of state bars and courts, which are typically run by lawyers, potentially having a financial stake in avoiding competition with tech-enabled legal services.
- By eliminating anticompetitive barriers and encouraging competitive legal markets, the FTC and DOJ's antitrust actions would be consistent with the broader federal push to address anticompetitive restraints in technology-related sectors, promoting competition, technological innovation, and consumer access in legal services.
