A new model of attorney regulation?

Colorado is exploring a system that emphasizes preventative measures for attorneys on the front end in an effort to prevent rule violations on the back end.

By JIM COYLE

Fall 2015

The traditional approach to attorney regulation in the U.S. is chiefly reactive. Rules of Professional Conduct are established, and lawyers are subject to discipline if their conduct fails to comply.

But what if there was a better way to protect the public and reduce client complaints against their attorney?

Colorado is currently studying an approach to attorney regulation that is centered on prevention, not solely discipline. If enacted, this Colorado Proactive Management Based Regulation (PMBR) program would be the first of its kind in this country.

PMBR provides lawyers with resources to develop their own management systems and processes to ensure ethical conduct (an ethical infrastructure) in their firm.  Importantly, PMBR generally allows law firms, including sole practitioners, to develop their own processes and management systems using self-assessment tools. 

The idea is in line with the Office of Attorney Regulation’s growing number of prevention-based initiatives. The Office, for instance, has developed a self-audit checklist for small practices. The Office also sends to attorney groups known to be at high risk of rule violations a letter making them aware of the many tools that can prevent common missteps. The Office also offers many educational programs to help lawyers on professionalism, ethical and trust account issues.

This Office’s main goal is always to protect the public. PMBR would be a further step toward that goal. By fostering professional and ethical conduct on the front end, the we hope to prevent ethical lapses, which reduces client complaints and client harm, and the need for discipline.

Who’s studying this?

In May 2015, Colorado hosted an international regulators workshop for some of the brightest minds in attorney regulation. This was a “who’s who” of representatives from 15 leading U.S. states and Canadian provinces.  Representatives from the following groups also participated:  ABA Center for Professional Responsibility committees and staff, the National Association of Bar Related Insurance Carriers, and ethics scholars who have devoted considerable time researching alternative attorney regulation systems that might improve professional responsibility.  This workshop focused on an ambitious agenda for reform:  Proactive Management Based Regulation.  The workshop considered current PMBR programs in Australia, England, Wales and Nova Scotia, and explored the benefits of developing similar programs throughout the United States and Canada. 

As a result of this regulators workshop, David Stark, Chair of the Colorado Supreme Court Advisory Committee, created a subcommittee to explore PMBR in Colorado.  Subcommittee members include sole practitioners, lawyers from other sized law firms, a law firm administrator, a Certified Public Accountant, a Better Business Bureau representative, law firm ethics counsel, Colorado Bar Association leadership, the CBA Director of Law Practice and Risk Management, and court staff.  The subcommittee will make recommendations to the Advisory Committee on whether the Advisory Committee should suggest that the Supreme Court develop PMBR programs.  Illinois is also actively considering the development of PMBR programs.

What is Proactive Management Based Regulation?

The term “Proactive Management Based Regulation” refers to programs designed to promote ethical law practice by assisting lawyers with practice management.  These programs generally have three features.  First, they emphasize proactive initiatives as a complement to traditional, professional discipline.  Second, they tend to focus on the responsibility of law firm management to implement policies, programs and systems – in short, an “ethical infrastructure” – that is designed to prevent misconduct and unsatisfactory service.  Third, they strive to improve legal services and reduce problems by establishing information-sharing and collaborative relationships between the regulator and constituent lawyers. 

PMBR is heavily based on the approach taken by many U.S. malpractice carriers who found it cost effective to focus on preventative efforts rather than simply paying for mistakes by their insureds after they happen.  Thus, many Colorado law firms already have management systems and processes in place to ensure ethical conduct.

Which jurisdictions presently use some form of PMBR?

Australia and England & Wales presently use some form of PMBR.  Nova Scotia just unveiled its new program.  Also, over the past several years, the Canadian Bar Association developed a voluntary “Ethical Practices Self-Evaluation Tool”.  This self-evaluation tool encourages Canadian lawyers to explore and improve upon their law firm practices.  The Canadian tool is an amped-up version of the self-audit checklist that this office has promoted in Colorado for the past ten years. 

What specifically is regulated?

In Australia, law firms are required to implement and maintain “appropriate management systems” to meet ten management objectives.  These management objectives concern areas in which lawyers have traditionally had difficulty, such as negligence, communication, delay, liens/file transfers, cost disclosure/billing practices/termination of retainer, conflicts of interest, record management, employee supervision, and trust account requirements.  Law firms must notify the regulator that they have completed the self-assessment process and meet management objectives in the above ten areas.

In England and Wales, the Solicitors Regulatory Authority identifies duties that apply to individuals and firms.  The handbook establishes a comprehensive ethical framework for law practice.  Entities and individual solicitors are expected to have risk management systems in place but the rules do not prescribe what this should be.  Entities and solicitors are also required to report material breaches of any mandatory outcomes. 

In Nova Scotia, the Law Society has developed a Management System for Ethical Legal Practice that will be administered through an annual questionnaire that must be answered by all legal entities, including all law firms, in-house counsel, government lawyers and non-profit providers of legal services.  Each entity must certify whether it is fully compliant, partially compliant or non-compliant in each of ten management objectives.  If partially compliant or non-compliant, the entity will work with the regulator to become compliant in each identified area.

What are the advantages of PMBR?

There are significant advantages to PMBR.  First, PMBR encourages the regulator to devote resources to (1) improving the management and culture of law firms and (2) prevent client and public harm, rather than focusing on individual conduct and discipline after-the-fact.  Putting more emphasis on PMBR encourages those who control a law practice to develop management training, supervision and quality control systems.  Second, PMBR improves the relationship between the regulator and the regulated because the regulator focuses on helping to improve the practice as a whole and reduce complaints while shifting the regulatory focus away from discipline alone. 

In those jurisdictions that have adopted PMBR programs, complaints against lawyers for misconduct have dropped considerably.  Thus, the cost of developing and maintaining a PMBR program is offset by savings from fewer disciplinary actions against lawyers in the jurisdiction.  Research by Professor Susan Saab Fortney, of Hofstra University in New York, in conjunction with the regulatory authority in New South Wales, revealed that lawyers who completed the self-assessment process ended up revising their firm systems, policies and procedures, or adopting new ones, and thereby strengthened their firm management through such self-assessment. 

I will keep you updated on the progress of the PMBR subcommittee.  Should you wish to attend the PMBR subcommittee meeting, you are welcome to do so.  The meetings are held on the third Wednesday of each month, at the Office of Attorney Regulation Counsel, 1300 Broadway, Suite 500, at noon. 

Resources

For more information on PMBR programs, I recommend the following reading list:  Susan Saab Fortney, Promoting Public Protection Through an “Attorney Integrity” System: Lessons from the Australian Experience with Proactive Regulation of Lawyers, The Professional Lawyer, Volume 23, No. 1 (2015); Susan Saab Fortney, The Role of Ethics Audits in Improving Management Systems and Practices: An Empirical Examination-Based Regulation of Law, 4 St. Mary’s J. Legal Mal. & Ethics 112 (2014); Ted Schneyer, The Case for Proactive Management-Based Regulation to Improve Professional Self-Regulation for U.S. Attorneys, 42 Hofstra L. REV. 233 (2013); Ted Schneyer, On Further Reflection: How “Professional Self-Regulation” Should Promote Compliance with Broad Ethical Duties of Law Firm Management, 53 Ariz. L. REV. 577, 585 (2011); and Laurel S. Terry, Globalization and the ABA Commission on Ethics 20/20: Reflections on Missed Opportunities and the Road not Taken, 43 Hofstra L. REV. 95, 128, N.142 (2014) (Suggesting the idea of using Rule 5.1 to achieve PMBR). 

Also, review:

·       Colorado’s Self-Audit Checklist

·       Canadian Bar Association’s Ethical Practices Self-Evaluation Tool

 

Jim Coyle is Attorney Regulation Counsel for the Colorado Supreme Court. In that capacity, he assists the Supreme Court with regulating the practice of law in Colorado, including attorney admissions, registration, discipline, disability, diversion, mandatory continuing legal and judicial education, unauthorized practice and inventory counsel functions.