Colorado Supreme Court
Office of Attorney Regulation Counsel
Promoting Professionalism. Protecting the Public.
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.