Competition, innovation, and legal services

Share This Page

The legal services marketplace, like many sectors of the economy, is experiencing dynamic change. Among other things, clients have demanded more cost-effective and efficient services, and legal services providers increasingly use computer technologies to deliver their services. Dynamic changes in the legal services marketplace continue to raise questions about how to define the scope of the licensed practice of law.

The definition of what constitutes “the practice of law” has been a challenging question for the legal profession for many years. Traditionally, licensed attorneys have performed many legal services on behalf of clients. Non-lawyers have also historically performed many legal-related services on both the federal and state level that have not been deemed “the practice of law.” In addition, a variety of self-help options have been available to consumers in a number of jurisdictions, including informational books and pre-printed legal forms.

More recently, software companies, entrepreneurs, and law firms have created interactive software programs for generating legal documents, and many courts and government agencies now provide online forms and related self-help information for use in their jurisdiction.

The FTC and its staff have engaged in a variety of activities to promote a competitive legal marketplace and encourage innovation in legal services. Relevant topics have included the unbundling of legal services, the use of interactive software to address legal situations, online attorney-client matching services, programs for rating and reviewing attorneys, and the online advertising and marketing of legal services.

FTC staff and the U.S. Department of Justice Antitrust Division recently provided comments to Senator Bill Cook of the North Carolina General Assembly regarding a proposed bill on interactive websites that generate legal documents. These comments reflected the views of the FTC’s Office of Policy Planning, Bureau of Competition, Bureau of Consumer Protection, and Bureau of Economics.

The proposed legislation would exclude from North Carolina’s statutory definition of the practice of law the operation of interactive websites that generate legal documents based on a consumer’s answers to questions presented by the software, provided that certain conditions are met, including providing a disclosure that the forms do not substitute for attorney advice.

The FTC/DOJ comments recommend that “the practice of law” should mean only activities for which specialized legal knowledge and training is demonstrably necessary to protect consumers and an attorney-client relationship is present. As the Commission and its staff have similarly observed with regard to other occupational licensing frameworks, overbroad scope-of-practice and unauthorized-practice-of-law policies can restrict competition between licensed attorneys and non-attorney providers of legal services, which may increase the prices consumers must pay for legal services and reduce consumers’ choices among providers.

The comments recommend the North Carolina General Assembly consider the benefits of interactive websites for consumers and competition. Such websites may be more cost-effective for some consumers, may exert downward price pressure on licensed lawyer services, and may promote the more efficient and convenient provision of legal services among lawyers, non-lawyer legal services providers, and self-help efforts. Such products may also increase access to legal services by providing consumers additional options for addressing their legal situations. This may especially benefit consumers who may not have convenient access to a traditional law office during typical working hours, and may help address the well-known crisis in access to legal services that affects millions of low- and middle-income Americans. The comments also recognize that interactive software products may raise legitimate consumer protection issues.

Competition is at the heart of America’s economy. Vigorous competition among sellers in an open marketplace, along with appropriate consumer protections, can provide consumers the benefits of lower prices, higher quality products and services, and greater innovation. Innovation in the provision of legal services is just as important for consumers as are new forms of competition in other parts of our economy.

Add new comment

Comment Policy

Privacy Act Statement

It is your choice whether to submit a comment. If you do, you must create a user name, or we will not post your comment. The Federal Trade Commission Act authorizes this information collection for purposes of managing online comments. Comments and user names are part of the Federal Trade Commission’s (FTC) public records system (PDF), and user names also are part of the FTC’s computer user records system (PDF). We may routinely use these records as described in the FTC’s Privacy Act system notices. For more information on how the FTC handles information that we collect, please read our privacy policy.