By

Michael D. Freeborn

(Reprinted with permission from

The Docket, American Corporate Counsel Association, September/October 1997)

The professor was old and gray. He looked out from the lectern across a sea of young, impressionable faces. Regardless whether they had studied science, math, literature, or history, now they were assembled for the first day of an entirely new learning experience: The Law.

It took a lot to get here, and Julie was eager to learn. Raised on a farm in Indiana, her exposure to The Law had been the grain contracts her father signed, and the deed which conveyed the south 40 acres to a real estate developer last year. For Julie, The Law was in documents like these, transacting her father’s business.

Her classmate, Horace, was raised in Boston by wealthy parents whose ancestors arrived on the Mayflower. He lives off the proceeds of a trust, which sets forth in excruciating detail the circumstances under which he gets money, and at what age. His exposure to The Law had been a will, solemnly explained by the family’s lawyer when his grandmother died. Thus, for Horace, The Law was whatever his grandmother said it would be.

Jackson, who sat between Horace and Julie, was an inner city kid from L.A. He knew nothing of grain contracts, deeds, wills or trusts. Instead, he was acquainted with "street law". It had been the body of codified statutes and rules which the police enforced, as well as the unwritten rules prescribed by the local gang. In either case, Jackson could ascertain The Law by asking someone he knew.

Despite the diversity of their backgrounds, all three had some things in common. None of them fully appreciated yet how much of the rest of their professional lives they would spend looking to the past, rather than the present, for guidance on The Law. As we shall see, they would rely entirely too much on antiquated and obsolete precedent, would inherit a longstanding bias against "advertising" by lawyers, and would learn to depend too much on conventional hourly billing methods, with inherent disincentives against innovation.

The professor turned to the blackboard, and began to write. The class quieted down and watched as the chalk letters formed a word: "stare."

Interesting, thought Jackson. A familiar word. Rhymes with hair. Means to look at something intently and steadily. If it gets no more complicated than this, law school won’t be so hard after all.

The next word likewise began with a look that seemed familiar enough. But that was where the familiarity ended. Rather than ending as something recognizable, like "decide" or "decision," it eventually looked like a spelling mistake: "decisis."

The professor returned the chalk to the tray, and began to speak. "Starry dee-SIE-sis," he said, "is one of the most important principles of The Law." The students hung on every word.

It is Latin, and means literally "to stand by things decided." This is the time-honored legal principle requiring courts to abide by precedents previously established as applicable to a similar set of facts.

In other words, to answer the question, "What is The Law?", we must first look to what someone else has already said The Law is. People you know may purport to describe The Law, and may draft documents reflecting their understanding of it. But ultimately, The Law is largely precedent. Moreover, that precedent may have been established long ago; indeed, the older the better. With the passage of time, precedents become revered for their age and staying power, if not for their logic and wisdom.

To be sure, the professor continued, precedent can be disregarded, but only in rare circumstances. If a court today concludes that a precedent is clearly wrong, or immoral, or unjust, a new decision may be permitted. But precedent cannot be ignored merely because a better mousetrap has been built.

Thus begins a new learning process. Wide-eyed students, eager to learn, accept from the professor and other authority figures a decision-making formula with deep roots in history. The formula places enormous weight on how things were decided before, not on how we would prefer to decide things today. In no other field but law is the retrospective so important.

For lawyers, the retrospective begins on the first day of law school and continues throughout every year of a professional life. For example, we find in Rule 11(b)(2) of the Federal Rules of Civil Procedure a reminder that every paper, filed every day, in every federal court (many state courts have comparable rules, too), includes a certification that:

"The claims, defenses, and other contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law..." (Emphasis added.)

Sure, you can make an argument for extension, modification or reversal of existing law, or really go out on a limb and advocate establishing entirely new law -- as long as your argument is "nonfrivolous." But who decides whether it is nonfrivolous? The lawyer signing the paper? Of course not.

The ultimate decisionmaker enforcing Rule 11 is a judge, or a reviewing court composed of several judges, each of whom also attended a first day of law school and heard the lecture on stare decisis. Is it any surprise that most of a lawyer’s work product falls in the category of "warranted by existing law" rather than something more innovative and adventuresome?

What is the result of all this? It is continual reinforcement of a mindset which favors the way things have been done in the past. This is not an environment for innovation or change. People in the ministry may be more preoccupied with the need to observe existing law, no matter how ancient. But I suggest that one is hard pressed to find any other professions which cling to the past more faithfully than we lawyers do.

Lawyers Are Skeptical Of Everything New

This preoccupation with the past makes it harder for us to embrace the present, much less the future. Clinging to the way things have been deters us from seeing how things can be.

Take as an example the rule, found in the ABA’s Model Rules and in some form in the rules of every state, that "...a lawyer shall not, during or after termination of the professional relationship with the client, use or reveal a confidence or secret of the client known to the lawyer unless the client consents after full disclosure." A fine rule. A good rule.

At least two state ethics opinions say that because it is possible for Internet or other electronic mail services providers to intercept e-mail messages, lawyers should not use e-mail for sensitive client communications unless the messages are encrypted or the client expressly consents to "non-secure" communication. South Carolina Bar Advisory Opinion 94-27 (January 1995); Iowa Supreme Court Board of Professional Ethics and Conduct Opinion 96-1 (August 29, 1996).

Although South Carolina has subsequently rescinded its opinion, and now has recognized that there is a reasonable expectation of privacy when sending confidential information through electronic mail, Iowa persists in keeping technology at arm’s length for lawyers.

The fact is that, while interception of electronic messages is indeed possible, it is certainly no less difficult than intercepting an ordinary telephone call. Further, intercepting an e-mail message is illegal under the federal Electronic Communication Privacy Act, which was amended in 1986 to extend the criminal wiretapping laws to cover Internet transmissions. In the 1986 Amendments, Congress addressed the issue of attorney-client privilege:

"No otherwise privileged wire, oral or electronic communication intercepted in accordance with, or in violation of, the provisions of this chapter shall lose its privileged character." 18 USCA § 2517(4).

For this and other reasons, the Illinois State Bar Association rejected Iowa’s paranoia and recently issued an advisory opinion which more warmly embraces the new technology:

"...[T]he Committee concludes that because (1) the expectation of privacy for electronic mail is no less reasonable than the expectation of privacy for ordinary telephone calls, and (2) the unauthorized interception of an electronic message subject to the ECPA is illegal, a lawyer does not violate Rule 1.6 by communicating with a client using electronic mail services, including the Internet, without encryption. Nor is it necessary, as some commentators have suggested, to seek specific client consent to the use of unencrypted e-mail. The Committee recognizes that there may be unusual circumstances involving an extraordinarily sensitive matter that might require enhanced security measures like encryption. These situations would, however, be of the nature that ordinary telephones and other normal means of communication would also be deemed inadequate." ISBA Advisory Opinion on Professional Conduct No. 96-10 (May 16, 1997).

Halleluiah. One small step for man, etc.

Most states have not yet spoken on the issue. But once they do, let’s hope that they will repress the temptation to look in the rear view mirror for guidance on how to travel forward.

There Are New Ways To Match Lawyers With Clients

The Internet provides more technology than just e-mail, of course. Other features have the potential to make our work as lawyers enormously more efficient, if we will just take advantage of the opportunity. Other industries and professions are already doing so.

Consider, for example, the essential process of matching up clients in need of help, with lawyers suitable for their needs. There are millions of clients in need of counsel, and hundreds of thousands of lawyers. Each is somewhat different. For the garden variety problem, there are no doubt many lawyers who are suitable. But for many problems, finding the "right" lawyer can be difficult and time-consuming.

In a society as complex as ours, the old way of word-of-mouth referral is just plain inadequate. Moreover, annual publication of lawyer directories is cumbersome, costly, and constraining. Enter the Internet and lawyer Web pages.

Web pages have enormous potential to serve the public, by efficiently matching lawyers with clients. But some bar groups and others, living in the past, are skeptical and resistant to change. They see Web pages as just a new medium for advertising, which they never liked in the first place.

Advertising for legal services was rare, and generally prohibited, until 1977. In that year, after almost two centuries to get acquainted with the First Amendment, the United States Supreme Court applied the protection of commercial speech (which it had only recently identified) to the field of legal advertising. Bates v. State Bar of Arizona, 433 U.S. 350 (1977).

In Bates the Court held that lawyer advertising was a form of commercial speech and thus could not be completely prohibited. Specifically, the Court held that a state could not prohibit an attorney from listing the fees the attorney charged for routine legal services. Of course, like other commercial speech, the Court made it clear that the full protection of the First Amendment was not given to lawyer advertising. For example, the Court stated that advertising which was false, deceptive, or misleading could be prohibited.

In Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985), the Supreme Court later held that communications containing useful information are still advertisements, if they contain a solicitation for business. Though the court has not decided a case concerning Internet Web sites, the Zauderer definition of an advertisement would seem to encompass those Web sites which include brochure-like information, such as lawyer biographies, practice descriptions, contact information, etc. -- even though they contain very useful information.

Lower courts have held that communications intended to convey the mere information that a lawyer’s services are available are subject to state lawyer advertising rules. This supports the view that Web sites are subject to advertising regulations. Yet, Zauderer also held that as long as commercial speech is not "false or deceptive and does not concern unlawful activities," such speech may be restricted only where necessary to serve a substantial government interest.

So, let us assume that Web sites may be subject to advertising regulations imposed by the states. Given what we have already seen about the tendency of some lawyers to live in the past, what would be your prediction on how they would greet the Internet?

Parochial Attitudes Are Standing In The Way

While most statutes and rules do not specifically mention online communication, state bar associations and boards are starting to consider the question. For example, the Texas Bar’s Advertising Review Committee has made the initial decision that a Web site is indeed subject to regulation like any other advertisement (See "Eyes of Texas Are Upon Internet Ads," National Law Journal, November 6, 1995).

Shortly thereafter, Florida did likewise. The Florida Bar News, dated January 1, 1996, addressed the subject. What rules apply to Web sites and other computer ads? Some of the relevant rules are highlighted below:

•Ads may not be false or misleading, may not create unjustified expectations about results the lawyer can achieve, and may not contain testimonials.

•Ads may not contain dramatizations.

•Ads may not contain self-laudatory illustrations or statements that are merely self-laudatory.

•Ads may not compare the lawyer’s services with the services of other lawyers, unless the comparison can be factually substantiated.

•Ads must include the name of at least one lawyer responsible for the ad.

•Ads must disclose the geographic location, by city or town, of the office in which the advertising lawyer principally practices law.

•In the case of ads using audio, the information in the ad must be articulated by a single voice, with no background sound other than instrumental music. The voice may be that of a full-time employee of the firm, but shall not be that of a celebrity whose voice is recognizable.

•Importantly, an electronic media ad need not include the "hiring disclosure" language set forth in Rule 4-7.2(d) (i.e., "The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide to ask us to send you free written information about our qualifications and experience...").

•Electronic media ads, including computer ads, must be filed for review with the standing committee on advertising as provided in Rule 4-7.5. A computer ad is exempt from this filing requirement only if it contains no illustrations and nothing more than the limited, basic information specified in Rule 4-7.2(n) (e.g., name, address, telephone number, areas of practice, fee schedule, etc.).

"Exactly what must be filed for review? The advertising lawyer must include (1) a hard copy print-out of the ad, (2) a statement of when and where the ad will appear, and (3) a filing fee of $50 per ad. A lawyer who files an ad will receive an advisory opinion from the committee concerning the ad’s compliance with the advertising rules."

There is no doubt that there is a substantial government interest in prohibiting false or misleading advertisements, whether by lawyers or anyone else. But the Florida approach goes too far, because it frustrates entirely the use of the Internet, even for completely truthful communication.

Such rules were originally adopted to deal with TV and print advertising. Florida and other regulators, conditioned by the ancient doctrine of stare decisis to look for some precedent in dealing with the Internet, looked first to the rules for TV and print advertising, and tried to make them fit.

These restrictions pose a number of problems and unduly restrict the benefits which the Internet could bring to the public.

In many states, not just Florida, firms must submit to the state regulatory body a copy of any advertisement before, or within a few days after, it runs. While this may be practical in print or broadcast media, where ads do not change frequently, it is not practical where Web sites change on a daily basis. Indeed, one of the principal advantages of the Internet is the ability to rapidly change and improve content. This benefit will be frustrated entirely if state advertising rules make Web content static and boring.

Moreover, the Florida rule would penalize firms by not only having to submit a hard copy of the Web site every time it changes, but also having to pay $50.00 every time.

Many states have ethical prohibitions against advertising in a jurisdiction where none of the firm’s lawyers is licensed. This can present a problem for many Web sites, which reach a global audience. No firm, even the largest international firm, is likely to have partners licensed in every jurisdiction on earth.

These rules, born of a provincial mindset, are not really about protecting the public from false or misleading advertising. Rather, a purpose is to protect the local bar from innovative lawyers.

Iowa (remember Iowa, the state with the phobia about e-mail security?), has also rendered an ethics ruling as to the propriety of an Iowa law firm or an out-of-state law firm with an office in Iowa, having a Web site on the Internet.

Significantly, Iowa only permits electronic media ads in the geographic area in which the lawyer maintains offices or in which a significant part of the lawyer's clients reside. The critical and unresolved question is how will Iowa view a neighboring state law firm's Web page that services Iowa clients, but pulls such clients into the neighboring state?

Florida has given a preliminary clue how it might deal with that situation, however. In the ABA/BNA Lawyers’ Manual, John Breweton, who chairs The Florida Bar’s Standing Committee on Advertising, is quoted as saying that while his committee has not yet addressed the issue of Web sites maintained by lawyers licensed in other jurisdictions, he believes the issue could arise if a Florida lawyer loses a major client to an out-of-state law firm that obtained the client through a Web site but did not comply with Florida’s advertising rules.

Almost all relationships between attorney and client involve one of three different methods of compensation: (1) a contingency fee, most common in representing individual plaintiffs suing for personal injury; (2) a flat fee, most common in routinized matters which do not involve large sums, like individual real estate transactions, uncontested divorces, and so on; and (3) the billable hour, multiplied by an hourly rate, for almost all other work done by lawyers.

The vast majority of work done for corporate clients is in the third category.

It is a compensation method which has been in place for generations. It is conventional. It is ordinary. It is accepted. It is also the worst conceivable environment in which to encourage improvements in efficiency.

So, although we have learned to accept it, we must un-learn it if we are to benefit from new technologies. Here is why.

A hypothetical firm with a blue chip corporate clientele is presented with the opportunity to invest in a state of the art document management system. It is a computer system which will dramatically reduce the time required for lawyers and paralegals to find essential documents. All work product of the firm, when it is created, is coded so it will later be searchable and retrievable by every employee. Thus, all research memos on a point of law can be re-used, without reinventing any wheels. All contract provisions for comparable transactions are instantly re-usable.

The hitch is that additional computer hardware, software, and infrastructure is required, to the tune of about one million dollars.

This is one million dollars for a capital expenditure out of the partners’ pockets, and the result is expected to be fewer billable hours by all employees.

Is the point becoming obvious? Revenue in the coming year will be less, but costs will be more. Chances are, no client has even asked the firm to make such an expenditure.

Although the client will benefit from the expenditure, it is entirely unclear whether it will recognize the benefit. Even if it does, it is entirely unclear whether the firm’s improved efficiency will attract sufficient new business to defray the cost.

What is needed? Two things. First, we must un-learn our reliance on the sacred billable hour. Alternative billing methods need to be implemented. A fixed fee for an engagement which the lawyer figures out a way to perform more efficiently results in the lawyer benefitting from the investment in technology. The client benefits too, but now the benefit is shared. There is suddenly an incentive to innovate.

Second, we must learn to explore technology joint ventures between clients and their law firms. There is no reason why all parties in the relationship can’t benefit from the innovations. The point is that without incentives to pursue the improvements, few firms will pursue them.

Lessons We Must Un-Learn

If we are to benefit from new technologies, we must un-learn many lessons, some of which began our first day of law school.

We must un-learn our heavy reliance on precedent. Stare decisis will not help us decide on innovations which our ancestors could not have dreamed.

We must un-learn our ancient biases against advertising. These have led to provincial and parochial obstacles, interfering with use of the Internet in the public interest.

Finally, we must un-learn our dependence on the hourly rate to compensate law firms working for corporations. Arrangements like that provide limited incentives to innovate and improve efficiency.

© Michael D. Freeborn, 1997

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