Vol. 39, No. 6

Unified bar update: Recent challenges, including ‘teeth whitening’ and LegalZoom cases

by Dan Kittay

Operating a bar association always has its challenges, as any bar leader will tell you. Membership, finances, and leadership are among the issues that come up for bars of any size. For unified state bars, you can throw in the occasional challenge to the very idea of a mandatory bar.

These days, such challenges to unified bars appear to be on the increase, and they have bar leaders and observers paying attention.

"There is a lot of activity around legal and legislative challenges to unified bars. Even voluntary bars are concerned about what's going on with the unified ones," says Ken Goldsmith, ABA legislative counsel and director for state legislation.

John Phelps, CEO/executive director of the State Bar of Arizona, believes part of the reason for the heightened activity is that there’s “a growing distrust of institutions generally, and we’re caught up in that … I’m always in support of a healthy dose of skepticism, but I think we’ve gotten to the point where cynicism has set in.”

Phelps has faced the issue firsthand, as the Arizona House of Representatives earlier this year considered legislation that would have moved attorney regulation from the bar to the state Supreme Court. It also would have made the SBA a voluntary bar. The bill was defeated in March.

Deunification bills seem to appear in the House every other year or so, although this one (HB 2629) may very well be back next year, Phelps says.

While there were some political motivations said to be behind HB 2629, Phelps says other factors may include “a number of folks in Arizona who are members of the bar that resent the mandatory nature of it, that don’t understand the whole concept of an integrated bar, or who maybe do understand it and don’t buy into the idea.” One of the lawyers who testified in support of the bill is a former member of the SBA’s board.

Phelps believes “there are reasonable arguments to be made about the mandatory bar,” and other models that are working well in other states.

“I think it’s a debate that’s probably overdue,” he says. “Many of our members [have a] certain amount of ambivalence about the mandatory bar. They don’t know any other model. It’s given us an opportunity to revisit the genesis of the integrated bar in Arizona.”

In fact, Phelps says he welcomes the challenge. “If we can’t answer the questions about why a mandatory bar is a better model for folks in Arizona,” he explains, “then we ought not to be a required bar.”

North Dakota lawsuit questions constitutionality of all mandatory bars

The challenge facing the unified State Bar Association of North Dakota is a pending federal lawsuit that ultimately seeks to have all mandatory bars declared unconstitutional.

Fleck v. McDonald et al grew out of a child custody measure on North Dakota’s 2014 ballot called Measure 6. The measure would have required that every such case start with a 50-50 presumption of shared parenting, as opposed to the 'best interests of the child' model that has been in place in North Dakota for years, says Tony Weiler, SBAND executive director.

The bar’s Family Law Section opposed the measure, and the Board of Governors voted unanimously to donate money to a group opposing it. Bar member Arnold Fleck, who supported Measure 6 (which was defeated in the election), objected to a portion of his dues supporting a cause with which he disagreed, and has sued the bar. He is represented by the Arizona-based Goldwater Institute.

The Institute believes that all unified bars are unconstitutional, says Jared Blanchard, lead attorney in the Fleck case. It also recognizes that Keller allows such bars to function as long as they take proper safeguards to prevent dues money from being used for political purposes. The bar’s actions regarding Measure 6 violated Keller’s provisions, according to Blanchard.

Weiler says the board discussed whether there were any potential Keller issues with its actions before taking them, and “they did not believe it to be a political matter.” He also noted that members who disagreed with the actions could apply for a refund of that portion of their dues associated with the activity. There were 96 requests for refunds. The Goldwater Institute says the system for identifying and deciding which activities qualify for a refund is flawed.

At the end of May, the institute and the bar reached a tentative settlement in which the bar was given 90 days to change its procedures for handling dues, and the institute will drop the lawsuit if it finds those changes to be satisfactory. The Goldwater Institute has said it is “optimistic” about these changes—and Weiler says he is, too.

“When you have something like this happen, it makes you look at your policies and procedures more closely,” he explains. “I really think that in the end, we’ll have better policies in place and will be a better bar association going forward.”

Weiler also points to a lack of consistency among unified bars across the country regarding how they address Keller. This has been discussed often at meetings of the National Association of Bar Executives and National Conference of Bar Presidents, he notes. In light of the lawsuit against his bar, the state Supreme Court’s action in Nebraska, and other recent challenges, all unified bars should take a closer look at their policies and procedures and make changes as needed, Weiler says.

Not a challenge, but a redefinition of roles

Some bar associations themselves are taking a serious look at what it means to be a unified bar association—and what role such an organization  should play in relation to nonlawyer providers of certain legal services.

That role—and its evolution—is on Paula Littlewood’s mind a lot these days. The executive director of the Washington State Bar Association spends a good deal of time traveling to other jurisdictions, talking about her state’s new and closely watched Limited License Legal Technician designation for nonlawyers with special training and certification—and about the future of the delivery of legal services.

Littlewood sees the emergence of LLLTs, which was mandated by the state’s Supreme Court, as part of a trend to find additional resources to meet the vast unmet legal needs of the public.  

“There’s a deeper, systemic understanding that the profession is changing,” Littlewood believes. “Clients are leaving us. They’re going to the LegalZooms and Rocket Lawyers. We’ve got to figure out some solutions to serve the public.”

Littlewood sees the likely outcome for the legal profession as similar to what happened earlier to the medical profession, with the advent of nurse practitioners and physicians’ assistants. There will need to be a clear definition of what constitutes the practice of law, she says, and who is allowed to deliver which services to clients.

The delineator, Littlewood believes, will be defining what constitutes legal advice. Those who can offer legal advice will need to be licensed and regulated, she explains, while those who can offer some legal services, such as document preparation, without offering advice will require less oversight.

Unified bars, or other authorities in voluntary bar states, will be at the center of answering these questions and providing oversight where needed, Littlewood says. What may emerge, she adds, is a scenario in which unified bars move from regulating lawyers to regulating the legal profession, of which lawyers will continue to be a large and important part.

Supreme Court ruling in ‘teeth-whitening’ case sparks another lawsuit

The issue of certain functions being performed by providers outside of the profession that traditionally performs and regulates them was raised in North Carolina, in the so-called “teeth-whitening” case. In North Carolina Board of Dental Examiners v. Federal Trade Commission, for which a number of bar associations submitted amicus briefs, the U.S. Supreme Court ruled in March that state licensing boards that are made up of “market participants” are not automatically immune from antitrust laws.

Because a unified bar with licensing authority does have a board made up of market participants—in this case, lawyers—many bar leaders watched this case with concern over its implications for their ability to regulate nonlawyers. One told Bar Leader on Twitter that all mandatory bars should now brace themselves for antitrust suits, especially if they operate with autonomy rather than under a court directive and with active supervision by their state supreme court.

In June, LegalZoom filed a lawsuit against the North Carolina State Bar, in which it contends that the unified bar engaged in “unauthorized and anticompetitive conduct that seeks to enrich its members—lawyers in private practice in North Carolina—at the expense of North Carolinians,” according to a company press release.

LegalZoom claims that NCSB illegally rejected two proposed LegalZoom services to be offered in the state, and cites the Dental Examiners decision as an example of how such conduct was illegal. “The era of state agencies illegally stifling competition in North Carolina needs to end,” the company says.

Near press time, NCSB issued a release in response. It said that it had not yet read the lawsuit and therefore did not have a position, but it “does intend to vigorously defend against this lawsuit and any other lawsuits that threaten its ability to protect the public of North Carolina by fulfilling its statutory obligations.”

The NCSB release included copies of letters the bar sent to LegalZoom when denying the company’s request to register the two plans. Citing state regulations, the bar said:

  • Legal services must be provided by “a North Carolina licensed lawyer.” LegalZoom’s documents are “provided by a business corporation, not by a North Carolina Attorney.”
  • Legal services plans “must be purchased in advance of any immediate need for the specified legal service.” LegalZoom allows customers to enroll in the plan if they want to review legal documents obtained elsewhere, according to NCSB.
  • Preparation or assisting in the preparation of legal documents for others by someone other than a licensed North Carolina attorney is considered unauthorized practice of law in the state.

(Note: If you are interested in these and other issues pertaining to unified bars and to state bars in general, plan to attend a program by the National Association of Bar Executives, and two programs by the National Conference of Bar Presidents, all at the organizations’ Annual Meeting in Chicago. The NABE program, “Can Function Lead Us toward Form?” on bar association structure, is on Wednesday, July 29, 1:00-2:00 p.m. Both NCBP programs are on Friday, July 31: “A Discussion of Unified Bar Issues,” 11:15 a.m.-12:15 p.m., and “State Bar Issues—Our Time to Talk,” 3:30-4:30 p.m. Consult the joint program book for the location of each program.)