Bankruptcy Petitions

March 17th, 2015 / By

Michael Sousa has written a thoughtful paper about the issue of non-lawyers preparing bankruptcy petitions for consumer debtors. As Sousa acknowledges, some of these preparers urge their clients to commit fraud; others serve their clients incompetently. But then again, the same is true of some bankruptcy lawyers–and the lawyers charge more than many consumers can afford.

After reviewing the field, Sousa proposes creation of a cadre of licensed petition preparers for no-asset Chapter 7 bankruptcy filings. The United States Trustee’s Office could regulate these practitioners, requiring them to demonstrate adequate knowledge of the law and adherence to appropriate ethical standards. The practitioners, however, would not need JD’s or law licenses.

Sousa’s proposal makes sense to me. I note it here because he has identified yet another area in which non-lawyers may be able to handle the law-related needs of clients who cannot afford an attorney’s fee. As Sousa details, the federal government already allows qualified non-lawyers to represent clients before the IRS, US Patent and Trademark Office, and (in immigration matters) the Department of Homeland Security. The transfer of law-related business to non-lawyers has been slow but steady.

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The FTC and Piano Teachers

December 10th, 2013 / By

Wall Street Journal columnist Kimberley Strassel recently described the FTC’s investigation of a nonprofit association of piano teachers. According to the FTC, the Music Teachers National Association (MTNA) was supporting anti-competitive practices through its code of ethics. One provision of that code discouraged music teachers from actively recruiting students from other teachers.

Strassel recounts that MTNA assured investigators that they had never enforced this provision. The association also offered to drop the provision immediately from its code. The FTC, however, persevered in its investigation. The agency required MTNA to produce thousands of documents, including some that were two decades old. MTNA complied with these requests, but the ongoing cost of the investigation prompted it to settle. As part of a consent decree–in which MTNA admits no fault–the nonprofit agreed to appoint an antitrust compliance officer.

Here’s where lawyers and legal educators should take note: The FTC wanted MTNA to appoint a lawyer as its compliance officer, but the nonprofit explained that it couldn’t possibly afford that expense. The regulators then allowed MTNA’s executive director, Gary Ingle, to fill the compliance role. Ingle is a former music professor, choral conductor, and academic administrator with a BA, MA, and PhD in music. He completed some “additional study” at the Cumberland School of Law, but does not hold any type of law degree.

In addition to taking over the compliance position, Ingle seems to have supervised his organization’s response to the FTC’s document request. Lawyers accompanied Ingle to an initial meeting with the FTC, but the nonprofit seems to have minimized legal expense as much as possible–both during the investigation and going forward.

What’s the Moral?

Strassel tells this story as one of outrage against government overreaching–her description of the document request as a “federal colonoscopy” is particularly memorable. You may agree or disagree with that position. This looks to me like a misallocation of government resources, if not downright abuse, but I have no idea what MTNA might have been up to.

I describe the MTNA story because of what it suggests about some of today’s legal work–and about how we might adapt our degree programs and business models to serve clients like MTNA. The FTC’s investigation was a significant “legal” moment for the nonprofit: When the feds come knocking, it’s time to call your lawyer. Attorneys, however, seem to have played only a small part in the investigation; they accompanied MTNA’s executive director to his first meeting with the FTC, and perhaps represented him in other meetings. MTNA, however, handled much of the response to FTC demands, and it will conduct its own compliance work (without lawyers) going forward.

According to Strassel’s column, MTNA has an annual budget of $2 million and a staff of twelve. This is not an indigent organization; it is more akin to the small businesses that many lawyers hope to serve. It also seems that the organization would have welcomed assistance at the right price. Ingle reports that he and his staff spent “hundreds upon hundreds” of hours responding to document requests. Rather than serve as untrained document reviewers, Ingle and his team might have preferred applying their expertise to helping music teachers. The market, however, did not provide an appropriate solution for the organization.

Entrepreneurs are starting to find ways to meet needs like the one MTNA experienced. Small businesses can post discrete legal projects online, seeking bids from experienced lawyers. Businesses and nonprofits can also hire a part-time general counsel or compliance officer. Small companies may also learn that they can hire document review workers directly, without paying a mark-up to their lawyers.

Lessons for Law Schools

As legal educators, we need to get on top of these trends. For too long, law practice has consisted of expensive services and pro bono work. As a nonprofit, MTNA may even have benefited from some of the latter. But there is a vast amount of legal work between those two ends of the spectrum. We need to figure out how lawyers (and non-lawyers) are tapping that market, and how we can prepare students to serve it.

This won’t be easy. It’s not as simple as adding a few clinical courses or experiential credits to the curriculum. Nor can we simply urge our graduates and career services staff to network with nonprofits and small businesses. The type of work that MTNA needed to respond to the FTC investigation, and that it will require for its future compliance role, won’t pay the wages that JD graduates hope to earn during their early years–and that many of them need to pay off large loans. Instead, we need to rethink both the structure of our degree programs and how “lawyer” tasks interact with non-lawyer work.

One response is the layered legal education that I have proposed and that others have recommended. Another is creation of early-career work that allows JDs to develop expertise while serving clients in cost efficient ways. Some law schools are trying to create those opportunities on their own or in partnership with for-profit companies.

Neither of these approaches is cost free. Nor are they guarantees of good careers for all. We know very little about career progression in the new legal market; those tracks will take many years to unfold. Meanwhile, stories like the one about MTNA remind us that we need to keep tabs on what is happening with clients and legal providers in today’s legal market.

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Unbottling Legal Education

January 23rd, 2013 / By

The JD is a terrific degree, but it’s an expensive one. Most students take three full years out of the workforce to earn a law degree; they also pay significant tuition for their education. The shrinking job market has reduced the immediate return on that investment, and no one knows what today’s graduates will face five or ten years from now. A JD costs more, but promises less, than it did a generation ago. College students are responding to that equation; many fewer of them are applying to law school.

Law schools will adopt several strategies to respond to this market shift. Some are increasing scholarship aid, effectively reducing tuition. Others are cutting class size. Still others are increasing the number of foreign LLM students they enroll. Many schools may pursue all three paths.

Relatively few schools, however, have considered “unbottling” legal education. In today’s economy, more workers than ever apply legal rules. Law is so pervasive in our society that it has ceased to be the exclusive province of lawyers. Compliance officers, HR managers, architects, engineers, insurance agents, realtors, mediators, and workers in dozens of other categories use the law. They all need to “think like a lawyer” at least some of the time.

We are legal educators, but we do not try to educate any of these workers. Instead, we deliver legal education in a single, tightly corked bottle: the JD. We do offer LLMs for domestic and foreign students, but most of those programs target students who have already consumed their first law degree. Why don’t we unbottle our legal education and serve some of it to other types of students? Here are five reasons why schools might not have done this in the past, but why we should consider doing so now:

1. We will undermine the demand for JDs. For better or worse, it’s far too late to worry about this now. At one time, lawyers may have been able to restrict the activities of realtors, accountants, HR managers, and other people who use the law, but those barriers fell long ago. As one of many signs of the times, a district court recently rejected the IRS’s attempt to regulate “tax return preparers.” From individual citizens who probate wills with court-published guides, to corporations with hundreds of HR workers, our society is full of people who use the law without lawyers.

Rather than resist this trend (which is irresistible, given the extent of legal regulation today), why not embrace it? Why not provide courses for undergraduates who will work as compliance officers or HR managers? Why not educate citizens on how to complete basic legal transactions? Why not offer specialized courses for engineers, architects, computer software designers, and others who use the law?

2. Thinking about the law is complicated; you can’t teach it in less than three years. If this is true, we’re in trouble as a society. Almost everyone in our law-driven society has to think about the law. Who are we to say that non-JDs are incapable of engaging with the law at any level? There’s no need for every engineer, small business owner, intestate heir, or compliance administrator to synthesize cases or argue before the Supreme Court. But all of these citizens can benefit from some basic education in legal principles and thinking like a lawyer.

We will still educate JDs to analyze the finest points of law, pursue new regulations, and reconcile policies with legal principles. But the market is telling us that today’s society needs fewer JDs and more citizens with some grasp of the law. If we don’t fill the latter need, someone else eventually will. If we’re true educators, we can find ways to teach people what they need to know.

3. Faculty don’t want to do it. This is probably true. Law professors are accustomed to teaching JD students and they like teaching those students. A few hanker to teach undergraduates, but they probably don’t want to teach those students the basics of banking regulation. Soon, though, at least some faculty won’t have a choice. If we want to keep our institutions in operation, if we want to teach any students and do any scholarship, we may need to broaden our educational base.

4. Faculty won’t know how to do it. This is probably also true. For most of these new audiences, the case method and socratic questioning won’t do the trick. Don’t get me wrong: I don’t envision teaching non-lawyers to memorize a few black-letter principles. In any job, the best workers understand why particular rules apply; they know the origin of the rules and their intended purpose; they also have the capacity to identify new situations that fall outside of a prior rule. As legal educators, we should develop those facilities in all students we teach. But we may have to develop new methods and pedagogies for teaching non-JDs.

On the upside, faculty who are willing to invest in these new methods will realize two gains. First, we will educate a much broader base of students–benefiting both those students and our own institutions. Second, we almost certainly will improve the teaching methods we use for our JD students. Although there are many innovators in law schools, we are still quite complacent about our basic pedagogy. Teaching new audiences will challenge us to think about how we teach law and legal reasoning to any audience.

5. The bottle may be emptier than we thought. What if we uncork our JD bottle, look inside, and discover that there’s less in the bottle than we were claiming? What if “thinking like a lawyer” isn’t as distinctive as it was fifty years ago? What if other types of thinking are as important–or more so–in today’s economy? What if it doesn’t really take three years to learn how to think like a lawyer?

These are realistic fears. When I went to law school in the late 1970’s, I thought legal reasoning was pretty impressive. But it wasn’t the only rigorous analysis I learned. As a college senior, I took an economic policy course from Thomas Schelling. That course blew me away; thirty-five years later, I still remember the thought exercises from Schelling’s class. More recently, I’ve been reading the work of psychologists and management theorists. Those experts have some pretty impressive thought systems as well.

As legal educators, our own bottle is far from empty. But today’s market won’t allow us to be arrogant about what we provide. We need to look inside the bottle, candidly analyze the contents, and explore how legal education could serve the needs of students outside the traditional JD class.

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