Disruption of the legal services – Are legal tech startups legal?

After many years in a large firm advising clients on business and tax laws, I have ‘jumped the fence’ to join the world of startups focusing on the digital disruption of professional services, building my own pathway to providing ethical and reliable online tax and legal advice, available to all. Having founded my own startup, Acutech, Australia’s first automated online tax and legal advisory app, I have been keen to stay on the right side of the strict regulatory rules governing the professions, particularly lawyers.

Enter the disruptors. With the advent of legal tech startups, new technologies and business models are beginning to eat into the relatively stable statutory monopoly enjoyed over many years by the legal profession.  The traditional boundaries are becoming more uncertain as legal tech startups make incursions into areas where qualified lawyers generally practice, both within a law practice (internal disruption) and by competing with the services provided to clients by a law practice (external disruption).  The root cause of this disruption is the client; their needs and their demand for value.

The legality of the services of legal tech startups brush up against several regulatory boundary lines, including:

  • The provision of legal services and advice by a qualified legal practitioner v’s unqualified practice of law (UPL).
  • Provision of legal advice v’s legal information by legal tech startups.
  • The use of technology and legal tech startups to facilitate the provision of legal advice by ‘robot lawyers’ (e.g. automated document generation and other machine intelligence functions) within a legal practice v’s human lawyers.

In conjunction with work I have been doing with the University of Sydney Business School, I have researched the regulatory landscape both in Australia and overseas.  Some key findings and recommendations from my research paper:g through a ‘NewLaw’ lens of disaggregation of the legal profession and the unbundling of legal services, the question now needs to be asked whether all the acts of “advising”, “assisting”, “drafting” and acting for a party are acts carried on in the practice of law?  Many tasks can be broken down and be performed by the client, a pre-programmed computer, other experts and legal tech startups which each in themselves do not necessarily require the provision of legal services.  Indeed, in Legal Services Commissioner v Walter, Daubney J found that it was the “combination” of services that contributed to his findings that the respondent unlawfully carried on the profession of law.

  1. There is a subtler distinction between qualified legal practice v’s unqualified practice of law (UPL) v’s legal information. As found in a number of cases, the provision of forms and agreements delivered through an online automated documentation generation function with instructions and merely abstract information as to legal rules to allow users to DIY and add their own details, including names of parties, subject matters, dates, etc, without advice as to the legal effectiveness and not purporting to address the individual circumstances of the customer, constitutes the delivery of legal information and should not constitute UPL.
  2. Clearly, unqualified legal tech startups need to tread carefully. Many legal tech startups use well crafted ‘non-reliance’ disclaimers, indemnities and website terms and conditions, limiting the service to the delivery of ‘legal information’ rather than legal advice or legal practice. Usually, the legal information is reviewed and ‘signed off’ by a qualified lawyer. However, if the service looks like advice from a solicitor or legal practice, then there is a good chance it must be provided by a qualified solicitor.
  3. Redefining the definition and practical boundaries of the age-old distinction between legal practice and UPL is where all the papers and commentators converge . A University of Melbourne paper finds that “it is not in the public interest that access to public legal information be circumscribed in support of professional monopoly privileges”.
  4. ‘Deconstruction’ of existing definitions and boundaries of qualified legal practice, through proactive regulatory reform, is vital for solicitors to remain relevant and to lead the delivery of legal solutions to benefit clients in the digital age, working constructively with non-lawyers and technology.
  5. Similar to the ABA Model Rules in the US, further rules need to be developed in Australia to provide legal practitioners with guidance and certainty on how they can ethically apply technology to automate a range of services utilising third party software providers and other non-lawyer experts. This should include requiring lawyers to be proficient in understanding relevant technologies.  This is critical to the survival of the profession.

How has Acutech resolved these challenges?  Our market research shows that users value a professional sign off that they can rely on.  We build the professional adviser into our solutions.  You receive a signed off solution under a professional services contract tailored to your particular circumstances to suit your needs.  Now that’s legal!