9.1.1 The Rise of Associations and the Self-Regulation of Medicine

The very idea of what the medical profession is and who it includes was largely constructed by professional associations through efforts to shape regulation of the practice of medicine. The AMA, chief among medical professional associations for many decades, was founded in the 1840s when the profession was wholly unregulated.Footnote ⁹ The next decades brought increased reliance on doctors, who became more capable at helping patients.Footnote ¹⁰ A profession formed that, using legal tools, defined its own boundaries, sought self-protection, and set its own obligations and standards.

Physicians, represented by the AMA starting in the mid-nineteenth century and joined over the course of the twentieth century by specialty associations, led efforts to shape the face of medical regulation. Framed as necessary to protect patients and ensure good care, these efforts served also to insulate the profession from competition.Footnote ¹¹ Four primary efforts ultimately sought to bolster and protect physicians and their earnings. The first three – licensure laws, scope-of-practice restrictions, and medical education pipeline control – suppressed the size of the profession and reserved certain domains of practice only for physicians. The final one, corporate practice of medicine laws, attempted to limit nonphysician interference with medical practice. They all have close corollaries in law.

9.2.1 Medicare Fuels the Profession

The early to mid-twentieth century brought debates over the government’s role in financing health care, and the AMA resisted government-financed health care because of the fear that it would bring regulation along with the financing. Although the AMA contributed to the defeat of national health insurance, Medicare passed in 1965 over AMA resistance.Footnote ³⁷

Yet, instead of Medicare bringing professional regulation, the profession has since shaped the program for its benefit. Medicare has created a steady and reliable funding stream for inpatient and outpatient care. The Medicare Act provided that outpatient care would be compensated at rates that were “reasonable” or “customary,” terms that became defined based on the amounts that doctors billed for care.Footnote ³⁸ This squishy statutory language fanned the flames of medical inflation through the 1970s, and as doctors’ billed amounts increased, Medicare’s price tag ballooned.Footnote ³⁹

The Medicare Act also delivered an explicit promise not to interfere with the profession. In its very first section, the statute provides:

Although Medicare has undoubtedly deeply shaped health care delivery, this provision has cabined payment and quality reform. As just one example, the Affordable Care Act (ACA) created a body to study comparative cost effectiveness to pay more for higher-value care.Footnote ⁴¹ Although this Patient-Centered Outcomes Research Institute (PCORI) was formed, it was prohibited from considering the relative cost of treatments; rather it was only allowed to consider the effectiveness of treatments.Footnote ⁴² This means that if two treatments are both effective but they vary wildly in price, their relative prices are not allowed to factor into PCORI-funded analysis.Footnote ⁴³

Physicians also directly influence reimbursement rates in various ways. For example, in 1992 Medicare transitioned to paying doctors based on a relative scale of how much effort goes into different categories of care.Footnote ⁴⁴ Medicare sets the amount paid for a base unit, and a committee of the AMA called the RVS Update Committee (RUC) determines the multiplier for each type of encounter. The AMA Board of Trustees selects the RUC chair, and specialty societies nominate individual members. Of thirty-two current members, over two-thirds represent specialties, and in 2023 only four were women (practicing in pediatrics, geriatrics, osteopathy, and primary care).Footnote ⁴⁵ This means that regulators defer to doctors – and a skewed sample of doctors, at that – to determine how much Medicare pays for a therapy session versus a surgeon’s fee for a knee replacement versus a pediatric well visit.

Primary care doctors, whose work is relatively undervalued through this process, have also accreted power through policies including so-called value-based models of care. The ACA created a Center for Medicare & Medicaid Innovation (CMMI, now called the CMS Innovation Center) within CMS to test new payment models,Footnote ⁴⁶ which pay bonuses when patients achieve health outcomes within spending parameters. Primary care doctors are the lynchpin to success and profit in these models. This fact has drawn the attention of corporate investors in primary care. Over the past decade, corporate investors have begun to aggregate primary care doctors into formal or informal networks. These typically private-equity-backed entities (e.g., Oak Street Health, ChenMed, and One Medical) have, in turn, begun to change the nature of primary care practice, as discussed below.

9.2.2 Consolidation and Power over Private Insurers

The story of private insurance was much the same (until recently): Despite insurer efforts to manage cost inflation, the profession gained the upper hand by consolidating to preserve and enhance their rates. Initially, private fee-for-service insurance did not restrict the providers or medical care someone could use.Footnote ⁴⁷ During the 1980s–90s, managed care gained steam as an attempt at cost control. Insurance companies created limited networks and began to push back on prices with credible threats that they would exclude providers from their networks if their prices were too high.Footnote ⁴⁸

That period was short lived. Patients protested overly restrictive networks. Hospitals and doctors consolidated in ways that aggrandized their own power vis-à-vis insurers. Even when the Federal Trade Commission (FTC) attempted to slow provider consolidation, courts backed doctors and hospitals in their resistance of managed care.Footnote ⁴⁹ The end result has been high prices and insurers and employers who are price takers, unable to negotiate down rates. Even large employers increasingly express frustration at their inability to control prices in employee health plans.Footnote ⁵⁰

That said, the tides may be turning, as insurers like UnitedHealth Group have over the past decade sought to regain the upper hand by acquiring physician practices and steering patients toward doctors who are under their control.Footnote ⁵¹ This trend is beginning to shift the power dynamic between insurers and doctors, as discussed below.

9.3.1 Modern Professional Threats: Employment and Investment

9.3.2 Change Emerges: Possibly Too Little Too Late

In recent years, physicians and their priorities have noticeably shifted. Physicians are trying to regroup and regain control over their professional lives through labor efforts including unionization. And laws aimed at turf protection have begun to recede, hastened by the COVID-19 pandemic. These efforts may be too late, however, to redirect the trajectory of the profession.

So far, this chapter has portrayed doctors and the profession as monolithic, which was untrue even in the days when most doctors were male, white, politically conservative members of the AMA, and the AMA spoke on their behalf on policy. In recent decades, doctors have become much more heterogeneous.Footnote ⁸² Doctors are seeking more varied ends out of medical practice. They are more than ever prioritizing work-life balance more than or co-equal to other career goals.Footnote ⁸³ The AMA’s power and membership has declined, evident during ACA debates when new groups like Doctors for America spoke on behalf of an emerging progressive and public health-oriented wing of the profession.Footnote ⁸⁴ And even the AMA seeks to evolve. In June 2019, the AMA nearly passed a proposal to eschew opposition to single-payer health care reform.Footnote ⁸⁵

The COVID-19 pandemic hastened health policy reforms, undoing many of the overly restrictive laws that produced a glaring shortage of primary care doctors in many communities. For example, all fifty states temporarily waived in-state licensure requirements, which allowed providers to cross state boundaries to practice, and all but one applied this waiver to telehealth too.Footnote ⁸⁶ Most states with restrictive scope-of-practice laws allowed nonphysician providers to do increasingly more, practicing to the top of their training and ability, rather than to an artificially set boundary.Footnote ⁸⁷ Some, although a small minority of, states made these expansions to scope-of-practice permanent.Footnote ⁸⁸

The boundaries of medical practice continue to shift after the pandemic. In the first months of 2023, state lawmakers introduced 200 bills that would, for example, allow pharmacists to administer vaccines or prescribe hormonal contraceptives and that would allow optometrists to inject local anesthesia for minor procedures.Footnote ⁸⁹ Likewise, both the federal and the state governments relaxed laws on telemedicine.Footnote ⁹⁰ And some states, and Medicare, created parity rules for reimbursing telehealth and in-person visits the same amounts.Footnote ⁹¹

But rebuilding the profession with a more capacious vision of who is part of it may prove impossible after the effects of over a century of protectionism. Nurses are leaving the profession, and nursing shortages are increasingly acute.Footnote ⁹² In turn, private equity is buying up travel nursing agencies that place nurses in high-need areas across the country at a premium.Footnote ⁹³ It seems that current efforts to increase access to care and redefine the bounds of the profession may be limited by a path set in motion a century prior.

9.3.3 The Impact of the Fall of the Medical Profession on Patients

This chapter focuses on the medical profession and its regulation, but anyone who has been a patient knows who loses in the end when regulation is motivated by factors other than access to high-quality care. It has been evident for some time that the profession depressed supply and access to care in harmful ways, especially in low-income and rural areas, and efforts to turn the tide are likely insufficient to make up for a century of contraction.

What is more recently surfacing is that the increasing corporatization of health care delivery is also bad for our health. Physicians report pressure to provide more care by reducing the time with each patient, detracting from the quality of care in some cases.Footnote ⁹⁴ The rise of the corporatization of health care has led to providers feeling they must fit more “billable” patients into shorter increments of time, resulting in care that they feel is insufficient or even unethical and increasing cynicism among providers.Footnote ⁹⁵

Subjective patient experience suffers. Data from the Harris Poll indicates that more than 70 percent of adults feel the health care system is failing to meet their needs in at least one way.Footnote ⁹⁶ Examples of this failure include the length of waiting time to schedule an appointment, coordinating across several providers, and not understanding recommendations from health care providers.Footnote ⁹⁷

Meanwhile, the United States has fallen farther behind peers in common health metrics such as life expectancy at birth and infant mortality.Footnote ⁹⁸ Disease burden, which takes into account both premature death and years of living with disability, is higher in the United States than elsewhere.Footnote ⁹⁹ The United States also ranks last among its peer countries in measures of health access and quality, negatively impacting population health.Footnote ¹⁰⁰ The United States has among the lowest rates of physician visits and lowest number of hospital beds in the world, yet its health care spending is the world’s highest.Footnote ¹⁰¹

Specific evidence on corporate ownership is not encouraging either. Medicare Advantage plans are driving up the cost of Medicare without adding concomitant value. These private plans profited early on by enrolling healthier populations.Footnote ¹⁰² Most have been accused of fraud by whistleblowers and/or the government.Footnote ¹⁰³ They fail to serve patients with complex health needs,Footnote ¹⁰⁴ and their enrollees are more likely to enter lower-quality nursing home facilities.Footnote ¹⁰⁵ Evidence suggests that Medicare Advantage plans are wrongly denying care in as much as one-fifth of cases, threatening the viability of rural hospitals.Footnote ¹⁰⁶

As another example, early evidence on private equity investment in physician practices suggests that patients may end up paying more or getting unnecessary care. A Kaiser Health News investigation of private-equity-owned outpatient care reported $500 million in False Claims Act settlements for overbilling, and a series of articles uncovered stories of unnecessary and poor-quality care, including of a two-year-old who died after a private-equity-owned dental clinic performed unnecessary root canals and placed crowns on baby teeth.Footnote ¹⁰⁷ A study in JAMA of 578 private equity-acquired physician practices in dermatology, gastroenterology, and ophthalmology showed increases in health care spending and use.Footnote ¹⁰⁸ In the case of dermatology and ADCS, noted above, after private equity investment, dermatology practices refocused on the sale of retail skincare products and self-pay elective procedures, and employees reported that the company cut back on essential supplies and provided care with questionable value and safety.Footnote ¹⁰⁹ Research suggests that nursing homes with private equity ownership produce lower quality of care – including increased emergency department visits and hospitalizations for patients – at higher prices.Footnote ¹¹⁰ And a shocking recent study revealed a 25 percent increase in preventable hospital-acquired injuries – like falls and central line or surgical site infections – after private equity hospital acquisitions.Footnote ¹¹¹

In the end, patients suffer as medicine overly focuses on profits. When profit seeking is imposed through external controls and management, it becomes increasingly difficult for doctors and others to provide any counterbalance, regardless of their own intentions or motivations.

9.4.1 Who Can Practice? Questioning the Boundaries of the Profession

One hypothesis running through this chapter is that the medical profession was too restrictive when shaping the bounds of practice authority. Contraction of medical education and narrow practice rules might have rooted out some bad practices of medicine, but when people can’t see a doctor, it can quickly become a crisis.Footnote ¹¹²

To address shortages, the profession allowed “physician extenders,” assuming that they would never be a good substitute for a doctor and that physicians could control them. Yet, as evidence emerged that an advanced practice nurse can provide good care, independent of a doctor, justifications for control dissipated.

Maybe law has not yet found the tipping point of an access crisis, but if it hasn’t, it may be nearing one. The number of people who have unmet need for legal assistance has surged.Footnote ¹¹³ At this pivotal moment, the legal profession and the ABA can still help to shape a solution that thoughtfully considers the role of paraprofessionals, nonlawyer professionals, and technology including artificial intelligence, rather than being an impediment to it.

Medicine suggests that holding on too tight to the boundaries of practice might lead to a short-term boon but a long-term unraveling. So, a first reflection is: If the legal profession embraces a more capacious model of legal services, can broader practice authority be part of the solution, rather than an impediment to be overcome?

9.4.2 How to Fund Access to Legal Services

Even if more people could offer legal services in various forms, the harder challenge is an external one of how to fund legal services for people who cannot afford them (which is most people). And perhaps the lesson of medicine in this space is that there is no easy answer.

Legal aid societies have existed since the mid-nineteenth century, shifting through various models and funding sources over time.Footnote ¹¹⁴ By 1965, most major cities in the United States had some formal, local legal aid program.Footnote ¹¹⁵ Most adopted a traditional model of charitable, individualized, case-by-case assistance.Footnote ¹¹⁶

The Economic Opportunity Act of 1964 (EOA) marked the first time Congress provided federal funding for legal aid.Footnote ¹¹⁷ The Act created the Office of Economic Opportunity (OEO) to administer EOA funds,Footnote ¹¹⁸ which relied on local community action agencies to disburse these funds. Private attorneys opposed OEO models on several grounds, including that with federal funding might come the specter of greater regulation of the legal profession.Footnote ¹¹⁹

In 1971, an ABA committee recommended the creation of a private, nonprofit corporation that would replace OEO.Footnote ¹²⁰ And a 1974 law succeeded with the creation of the Legal Services Corporation (LSC), a nonprofit corporation headed by an independent, bipartisan board.Footnote ¹²¹ After a brief rise, however, Congress began to limit the use of LSC funding, culminating in the election of Ronald Reagan in 1980 who proposed its complete elimination.Footnote ¹²² President Reagan failed to achieve this vision, but LSC has been on a funding roller coaster since.Footnote ¹²³

Some bar associations endorsed an alternative, middle-ground proposal for federally funded legal aid: Judicare.Footnote ¹²⁴ Judicare would have used federal funds to pay for poor clients to seek private services, like Medicare and Medicaid.Footnote ¹²⁵ But John Robb, the then-Chairman of the Standing Committee on Legal Aid and Indigent Defendants of the American Bar Association, rejected following the path of medicine, arguing presciently in 1967 that doctors may “have paid too high a price for what may well prove to be a short lived prosperity.”Footnote ¹²⁶ Despite some testing of Judicare models, it never took hold in more than very limited ways.Footnote ¹²⁷

Instead of one, central funding model, various decentralized ones have emerged. On the criminal side, states and cities help to fund defense attorneys. On the civil side, for example, programs funded through interest on lawyers’ trust accounts (IOLTA), the second-largest source of legal aid funding after LSC, pay for legal services using interest accrued from trust accounts in which lawyers hold client funds.Footnote ¹²⁸ These programs were created by state rules of professional conduct, state legislatures, or state supreme courts, and have existed in every state and the District of Columbia since 1997.Footnote ¹²⁹

The United States spent over $4.5 trillion on health care in 2022, including over $1 trillion on professional services, such as physician and clinical services.Footnote ¹³⁰ In contrast, the entire legal services market is not even $400 billion. And total legal aid funding including LSC and IOLTA was just $2.8 billion in 2021, barely a drop in the bucket.Footnote ¹³¹

Although the lack of federal funding impedes access to justice, lessons from medicine suggest it also avoids traps. Medicare and Medicaid brought an infusion of federal money into health care and, with it, a host of problems including steep health care cost inflation, which regulators have lacked the reach and the will to curb. Instead, they turn to market competition with hopes that it will do so, handing over program administration to corporate participants in those markets. With some exceptions, these efforts have failed to save money or improve care quality; in fact, they’ve done the opposite.Footnote ¹³²

Maybe uniform federal funding would have avoided these traps. If, in 1965, Congress had passed a national health insurance system, we might see more coherent price regulation where the greatest friction occurs between regulators, on one hand, and doctors and hospitals, on the other, over reimbursement rates. The medical profession (ironically, considering the AMA’s deep resistance to such an approach) might have fared better in that alternative world. But a partial solution in health care has accelerated the undermining of the profession.

This lesson from medicine suggests that the challenge for the law is how to get to funding levels that approach the need for legal services while resisting the problems that powerful, yet fragmented federal programs can create. This challenge is obviously formidable.

9.4.3 Whether to Resist Corporatization

A related question is whether to allow corporate money to fill shortfalls. Here, medicine’s trajectory suggests the legal profession “proceed with caution.” Had corporate practice of medicine prohibitions stayed in place and been enforced, corporate interests likely wouldn’t have been excluded wholly, as evinced by the many workarounds of these laws. But at the same time, there likely would have been stronger legal teeth to resist dramatic corporatization.Footnote ¹³³

Prohibitions on corporate ownership in the law, in contrast, have been in place and effective for nearly a century. Every state bar association, except the District of Columbia, adopted ABA Rule 5.4, which prohibits nonlawyer ownership of law firms, despite having faced resistance among firms.Footnote ¹³⁴

Yet, recently, a few states have adopted reforms permitting nonlawyers to own law firms. Arizona eliminated Rule 5.4 on a permanent basis, whereas Utah began a two-year pilot period to experiment with allowing law firm ownership by nonlawyers.Footnote ¹³⁵ In their wake, California and North Carolina established committees to investigate similar reforms.Footnote ¹³⁶

Law firms see eliminating Rule 5.4 as enabling new ways for them to access capital, which under the rule is only possible if equity partners invest more in the firm or through a bank loan.Footnote ¹³⁷ Without Rule 5.4, external investors can buy equity in the firm, producing capital without debt.Footnote ¹³⁸ Eliminating Rule 5.4 could also institutionalize adjacent legal competencies outside of law firms,Footnote ¹³⁹ or allow marketing, tax planning, or wealth management entities to obtain ownership interest in legal services.Footnote ¹⁴⁰

Some thoughtful scholars and other stakeholders suggest that the elimination of Rule 5.4 could benefit lawyers and promote access to justice.Footnote ¹⁴¹ They highlight potential increases in consumer access to services and innovation in the legal market, and some early experimentation affirms this possibility.Footnote ¹⁴²

Yet, medicine offers a cautionary tale about lifting such barriers whole cloth, especially without monitoring which corporate interests can enter and how. Corporate investment in health care illustrates the unintended consequences that could follow if states are not careful about keeping a close eye on the precise form diversification takes. It might be that such reforms open the floodgates but, without sufficient consumer protections and regulations, do not meaningfully expand access to justice.

10.1.1 The Long History of Multiple Health Care Professions

In medicine, limited license medical specialists have long shared the health care field with physicians. These limited license professionals range from doctorate-level nonphysicians who have full authority to treat a limited range of maladies free from the supervision of a physician, like dentists and optometrists, to mid-level providers who can care for virtually all patients but can only provide a limited set of services, like registered and practical nurses. To handle even more discrete tasks, medicine has also created dozens of more limited allied health professions, like radiology techs and phlebotomists. This division of labor is a fundamental aspect of the delivery of modern medicine. Without it, health care would be much more expensive and much less accessible.

Medicine’s division of labor began over a century ago. At that time, the parameters of acceptable “medical” practice were not well defined. In the late nineteenth and early twentieth centuries, allopathic physicians (MDs) were fighting and defeating homeopaths, naturopaths, and, for a time, osteopaths for control over the practice of medicine.Footnote ³ All three forms of alternative medicine arose as a reaction against traditional medicine, which at that time was often harsh and sometimes harmful. The first, homeopathy, was created in the late eighteenth century around two key precepts: First, the Law of Similars dictated that patients be treated with remedies that would generate symptoms similar to those being experienced by the patient (“like cures like”) and, second, the Law of Infinitesimals called for prescriptions to be very, very highly diluted.Footnote ⁴ Naturopathy also arose in the 1890s. It sought to prevent and cure disease by stimulating the body’s natural healing abilities. One of the founders defined it as a broad discipline that included practices like hydrotherapy, herbal medicine, homeopathy, and a healthy diet.Footnote ⁵ To a large extent, naturopaths opposed surgery and prescription drugs.Footnote ⁶ Early osteopathy, for its part, was created in the 1890s around the belief that diagnosing and treating the musculoskeletal system could successfully treat most illnesses, including those involving internal organs and the brain.Footnote ⁷

Allopathic physicians argued that all three approaches were unproven, in some cases scientifically implausible, and likely to keep patients away from conventional care that could help them.Footnote ⁸ As a result, physicians successfully pushed homeopathy and naturopathy to the margins of the field. In the second half of the twentieth century, they abandoned their objections to osteopathy after it embraced evidence-based medicine.

While this fight was taking place in hospitals and state legislatures, other medical professions were cementing their own place in the health care marketplace. For example, nursing, optometry, and pharmacy all had their first state practice acts in place by 1903.Footnote ⁹ Podiatrists (foot doctors) began organizing as a profession in the early 1900s, and by 1923 at least twenty-three states had enacted practice acts that granted them the right to diagnose and treat diseases of the foot without physician supervision, thus eliminating the risk of prosecution for the unauthorized practice of medicine.Footnote ¹⁰

Physical therapists (PTs) and occupational therapists gained credibility during World War I when they were given status as “reconstruction aides” for badly injured soldiers.Footnote ¹¹ The arrival of polio cemented their roles. All these professions had limited licenses that overlapped with the general, unrestricted health care license of physicians.

Physicians did not campaign against nurses and PTs as they had against naturopaths and homeopaths, perhaps because nurses and PTs worked under the direction of a physician. Optometrists were not so lucky. They dueled with physicians in state courts and legislatures for decades over their right to exist as a separate profession (was refraction “the practice of medicine”?) and then over the scope of their practice.Footnote ¹² Those battles continued to rage throughout the twentieth century as the two professions battled over optometrists’ freedom to use new innovations such as diagnostic eye drops and therapeutic lasers.Footnote ¹³

Following World War II, new technologies quickly expanded the use of laboratory tests and diagnostic imaging. For each of these tasks, new staff were needed. Each staffing specialty eventually coalesced into a new limited license profession. Many fell into the category that universities now call the “allied health professions.” They include laboratory techs and techs for every major kind of imaging device, including diagnostic radiography, computed tomography (CT), magnetic resonance imaging (MRI), nuclear medicine, and ultrasound.Footnote ¹⁴ These licenses can be quite specialized; Arizona, for instance, licenses nine different kinds of radiologic technologists.Footnote ¹⁵

Emergency Medical Technicians (EMTs) and paramedics have a different origin story. Their professions arose in response to a 1966 national report on auto accident injuries. The report revealed that vehicle accidents in 1965 killed more Americans than were lost in the entire Korean War.Footnote ¹⁶ A seriously injured accident victim had a better chance of survival in a combat zone than on the side of the road. The report called for the standardization of training for emergency response personnel. Soon after, Congress passed the National Highway Traffic Safety Act of 1966, which standardized emergency medical service training and promoted state involvement.Footnote ¹⁷

Today, the number of limited license health care professions is vast. California now licenses acupuncturists, audiologists, chiropractors, clinical social workers, contact lens dispensers/spectacle lens dispensers, dental assistants, dental hygienists, dentists, educational psychologists, hearing aid dispensers, marriage and family therapists, midwives, naturopathic doctors, NPs, occupational therapists, opticians, optometrists, osteopathic physicians, pharmacists, pharmacy technicians, PTs, PAs, physicians, podiatric medical doctors, professional clinical counselors, psychiatric technicians, psychiatrists, psychologists, registered nurses, respiratory therapists, speech-language pathologists, and vocational nurses.Footnote ¹⁸ At any given time, one or more will be wrestling with physicians over the boundaries of their permitted scope of practice. But on the whole, the many health care professions have learned to accommodate one another.

In short, physicians have shared the field of medicine with other limited license professionals from the very earliest days of modern allopathic dominance. This sharing and specialization allow the delivery of higher-quality services in a more efficient manner. It delegates less complex and less remunerative tasks to less expensively trained providers, saving time for physicians to provide more complicated (and more highly remunerated) services. In medicine, the widespread sharing of duties from the top to the bottom has normalized it.

The story in law is markedly different. According to scholars Rebecca L. Sandefur and Matthew Burnett, “[b]y the middle of the 20th century, American lawyers had successfully captured most of the tasks of the practice of law, including negotiation and legal advice.”Footnote ¹⁹ Since then lawyers have kept the territory securely to themselves. While several formal and informal exceptions exist,Footnote ²⁰ they are only now emerging from the margins of the profession. In law, unlike medicine, their arrival constitutes an assault on normalcy.

10.1.2 The Spread of Health Insurance, the Emergence of Physician Scarcity, and the Growth of NPs and PAs

Two other historical factors were crucially important to the early acceptance of NPs and PAs. One was the emergence of widespread health insurance after World War II. The second was the shortage of primary care physicians that followed in its wake. NPs and PAs were viewed as part of the solution.

Both professions arose in the aftermath of World War II and the War on Poverty, the occurrence of both the events having changed medicine. During World War II, employers used health insurance coverage as a way to sidestep four years of wartime wage controls.Footnote ²¹ As a consequence, the percentage of the population with health insurance skyrocketed from 9 percent before World War II to nearly 70 percent by 1960.Footnote ²² Enrollment grew from 20,662,000 in 1940 to nearly 142,334,000 in 1950.Footnote ²³ The pool of insured Americans grew again in 1965 when President Lydon Johnson signed legislation creating Medicare and Medicaid. Nineteen million Americans signed up for Medicare in the first year alone.Footnote ²⁴

Yet, just as the ranks of the insured were swelling, the number of new primary care physicians was dropping; physicians were moving away from primary care toward specialties.Footnote ²⁵ As a result, America had far too few primary care providers to serve this growing pool of insurance-card-carrying patients.Footnote ²⁶

Facing this crisis in capacity, some individual physicians began training staff to provide routine care and office procedures.Footnote ²⁷ Delegation of routine care to nurses was also expanding. To finesse the unauthorized practice of medicine issues, nursing, physician, and hospital associations periodically published joint statements supporting this practice.Footnote ²⁸ But the arrangement was unstable. Then, the NP and PA professions were born.

The history of NPs begins in 1965 with the efforts of Loretta Ford, a former public health nurse and a professor of nursing. She teamed up with Henry Silver, a pediatrician, to create a post-registered nurse (RN) curriculum at the University of Colorado for advanced training in pediatric care. Motivating Ford was her awareness that rural public health nurses often visited new mothers and newborns who needed services that were outside the scope of their nursing licensure, such as the diagnosis and treatment of an infection. Yet, no rural physicians were available to legally provide these services.Footnote ²⁹ Ford believed that nurses could fill that need if provided with specialized training. In hindsight, her quest strongly resembles the desire of today’s law reformers to expand and legalize the help that nonlawyer community advocates can provide to clients who would otherwise have no legal assistance at all.

To some extent, Ford was building on past precedent. In 1925, Congress created the Frontier Nursing Service, which allowed trained nurses to serve as midwives.Footnote ³⁰ Then in 1930, the Federal Bureau of Prisons deployed former military corpsmen to provide health care in prisons.Footnote ³¹ California did the same in 1949.Footnote ³² And in the 1940s, Alaska started training community health workers to serve in remote areas.Footnote ³³ We see a similar phenomenon in law today as nonlawyer advocates are both formally and informally expanding their roles in several niches like domestic violence proceedings.Footnote ³⁴

From the outset, NPs had a substantially wider scope of practice than that of registered nurses. The licensing laws allowed NPs, unlike nurses, to diagnose and treat medical conditions in their area of training under the supervision of a physician. With physician oversight, they could admit patients, order imaging or lab tests, and later, write prescriptions.

At the same time, NPs were intended to complement and collaborate with physicians, not replace them.Footnote ³⁵ Ford was careful to use wording that would not anger physicians.Footnote ³⁶ Nearly all NPs were female, like the RN pool from which they were drawn, and nearly all MDs were male. Although many nursing schools did not welcome the new hybrid, they did not stand in the way of NP practice acts.Footnote ³⁷

The first PA program also started in 1965. Its student body consisted of four medics returning from the Vietnam War. Eugene A. Stead, an MD and the program’s creator, felt that the rapid training programs taken by these medics during the war could be adapted to train a cadre of quickly, but highly, trained medical assistants to help remedy the shortage of physicians. He used funding from the National Heart Institute to establish the first program at Duke in 1965.Footnote ³⁸

Although both professions require two years of additional coursework, their entry path and training are different. NP programs require that the applicant be an RN with some practice experience.Footnote ³⁹ Students take two years of classwork and clinical training in a specialty area, like pediatrics. By contrast, most PA programs accept any bachelor’s degree.Footnote ⁴⁰ Like medical schools, however, they have substantial science course prerequisites and require the taking of a competitive examination.Footnote ⁴¹ Some programs also require prior experience in health care such as being a paramedic or medical assistant.Footnote ⁴² PAs then take a two-year course of classes and clinical work that is essentially a condensed version of medical school.Footnote ⁴³ They do not specialize during this basic training. And because there is no medical residency, they can go directly to work after the two-year program, cutting six years off the training of an MD.

After graduation, PAs, like NPs, practice under the direction of a supervising physician. But unlike NPs, the supervising physician determines the PA’s legal scope of practice.Footnote ⁴⁴ If their supervising physician permits, they too can order tests, diagnose illnesses, and select treatments. In most cases, their practice is essentially identical to that of NPs, and, in clinical practice, PAs commonly work side-by-side with NPs doing identical work.Footnote ⁴⁵

Both fields are growing more rapidly than physicians. According to the Bureau of Labor Statistics, the growth rate between 2021 and 2031 is expected to be 3% for physicians,Footnote ⁴⁶ 28% for PAs,Footnote ⁴⁷ and 40% for NPs.Footnote ⁴⁸ Both NPs and PAs are regularly ranked at or near the top of the U.S. News and World Report rankings of the best jobs in health care and the best jobs overall.Footnote ⁴⁹ In 2021, NPs averaged $120,680 annually,Footnote ⁵⁰ and PAs averaged $121,530.Footnote ⁵¹

In the early years, neither NPs nor PAs faced opposition from organized medicine. Several factors may explain this acquiescence. First, as noted above, health care had a long tradition of utilizing trained and licensed mid-level providers to assist physicians. Second, physicians benefitted from the arrival of the new mid-level professionals (unlike the professionalization of optometry). They got better-trained assistants to whom they could delegate more complex tasks while still billing all the services in their own name. The new staff also freed them to undertake more lucrative procedures with their own time. Third, the new professionals were clearly subordinate to the physicians who supervised and directed their work. Physician primacy was not challenged. No patients were lost. Fourth, the health care marketplace had too few physicians, especially in primary care. Help was needed. Fifth, the field had an ample pool of insurance funds from which to pay the new mid-level providers.

10.1.3 The Political Winds Changed When NPs and PAs Sought Independence from Physician Direction

The honeymoon with physicians did not last. Today, NPs and PAs want full independence from physician oversight.Footnote ⁵² Faced with the prospect of NP and PA independence and the accompanying threat to physician income, organized medicine is fiercely fighting these state legislative proposals.

Of course, the objections expressed publicly by physicians do not focus on the protection of their turf. Instead, three other arguments are commonly voiced. The first is that quality will be impaired if NPs and PAs are given too much independence. Physicians don’t believe that mid-level providers deliver the same quality of care that physicians do, especially in complex cases.Footnote ⁵³ Second, physicians insist that mid-level providers are no more likely than physicians to serve low-income and underserved patients.Footnote ⁵⁴ These two contentions will be familiar to reformers who are trying to authorize mid-level legal practitioners. Third, physicians contend that NPs will overuse medical procedures like imaging and lab tests to protect against mistakes caused by their weaker education and training, driving up health care costs.Footnote ⁵⁵

The issue of quality is the most important of these objections. Here, NPs have benefited from a large and growing body of favorable outcomes data refuting physicians’ claims. The strong evidence that NPs and PAs provide high-quality care has enabled NPs to enlist the help of important allies like the American Enterprise Institute,Footnote ⁵⁶ the Brookings Institute,Footnote ⁵⁷ the Institute of Medicine,Footnote ⁵⁸ the Robert Wood Johnson Foundation,Footnote ⁵⁹ the American Association of Retired Persons (AARP),Footnote ⁶⁰ the Federal Trade Commission (FTC),Footnote ⁶¹ and the National Governors Association.Footnote ⁶² NPs have even enlisted some of the physician lobby’s usual allies, like health insurers, hospital associations, and chambers of commerce. Their supporters see the removal of NP scope-of-practice restrictions as a way to bring down costs and make access to health care more equitable.Footnote ⁶³ To this end, the Robert Wood Johnson Foundation allied with the AARP to launch The Future of Nursing: Campaign for Action, a nationwide initiative for state law reform.Footnote ⁶⁴

State by state, the fundraising and the recruitment of consumer groups by the National Association of Nurse Practitioners has been very sophisticated.Footnote ⁶⁵ The NP coalition in New Jersey, for example, included AARP New Jersey, the Chamber of Commerce, the Horizon Foundation of New Jersey (Blue Cross Blue Shield’s corporate foundation in New Jersey), and the New Jersey Hospital Association.Footnote ⁶⁶ In Texas, NPs enlisted individual nursing organizations, hospitals, health care systems, businesses, and educational institutions, along with the Texas Association of Business and the Texas Hospital Association.Footnote ⁶⁷

This combination of favorable outcomes, important allies, and polished campaigning convinced lawmakers in twenty-seven states to enact Full Practice Authority legislation for NPs.Footnote ⁶⁸ These laws empower NPs to diagnose conditions and to order and implement treatments without the need for a collaborative relationship with a physician.Footnote ⁶⁹ PAs are now working to enact similar legislation.

But physician groups have raised their game considerably since the first NP full-practice laws were passed. In the past few years, they have reached out more vigorously to physicians, residents, and medical students in each state where NP or PA scope-of-practice bills have been introduced. The American Medical Association (AMA) has prepared members-only talking points and posted them on its web page.Footnote ⁷⁰ State by state, the AMA is helping local medical societies fashion a strong response when scope-of-practice reform bills are introduced.Footnote ⁷¹ Going forward, both NPs and PAs will face stiffer opposition.Footnote ⁷²

10.1.4 Reviewing the Story

In the 1960s, NPs and PAs were accepted into medicine without organized resistance. In hindsight, this is surprising. Each profession was permitted, under supervision, to diagnose and treat patients. Physicians could easily have perceived the delegation of their core medical powers to be an unacceptable intrusion into the central work of physicians. But they did not. The explanations for this peaceful entry may provide useful clues for law reformers. So, too, will the very different reaction that physicians had when NPs later sought freedom from physician oversight.

When the first NP and PA programs were created, the appearance of new mid-level health care providers was a routine occurrence. No existential norms were threatened. More importantly, physicians benefited financially from the arrival of these highly trained assistants. At the same time, the new professionals did not challenge physician primacy. Crucially, the new mid-level professionals would not be taking patients away from physicians. With a chronic shortage of primary care providers, there were patients enough to go around. Lastly, the practice of medicine was blessed with an ample pool of insurance funds from which to pay the new mid-level providers without taking a slice of the pie from physicians.

Law reformers can duplicate some of these favorable conditions with careful crafting of boundaries, as discussed further in Section 10.3. But the absence of insurance, the lack of a tradition of sharing the legal ecosystem, and the oversupply of JDs are three environmental differences that pose unique challenges for law reformers. They, too, are discussed in Section 10.3.

NPs lost the support of physicians when they sought independence from physician oversight. Freed from physician oversight, NPs could set up their own practices, compete for patients, potentially lower prices, and acquire a status akin to a physician, at the top of the medical hierarchy. As NPs sought this greater independence and prestige, physicians began to view NPs as a financial threat, rather than a financial windfall. This new perspective caused a shift in physicians’ attitudes toward NPs – a shift that also offers lessons for law reform.

10.2.1 Quality of Care

The quality of care provided by NPs has been studied much more than care provided by PAs. The studies of NP quality of care use data from a variety of practice settings and contexts, including primary care, nursing homes, Veterans hospitals, Medicare recipients, and emergency departments, and they employ many methodological and statistical approaches. Yet, the findings have been surprisingly consistent and positive: The number of studies finding that NP care is equal to or better than the care provided by physicians vastly outnumber the unfavorable ones. As a result, the major literature reviews have consistently concluded that, on balance, NPs provide care that is equal to or better than care provided by physicians, though reservations are sometimes expressed about the most complex cases.Footnote ⁷³

These findings have been relied upon in several important public policy reports encouraging the growth of the NP supply and the expansion of their scope of practice, including reports from the Office of Technology Assessment,Footnote ⁷⁴ the Institute of Medicine,Footnote ⁷⁵ and the province of British Columbia.Footnote ⁷⁶

The only regular reservation is the desire for more research on complex cases.Footnote ⁷⁷ However, the research on tough cases is growing. For example, an important 2019 review of the studies on acute and critical care by Ruth Kleinpell and her colleagues found evidence of improved patient outcomes when supervised NPs and PAs deliver care. The positive metrics included:Footnote ⁷⁸

1. 1. Fewer complications

2. 2. Less time on ventilation

3. 3. More use of clinical practice guidelines

4. 4. Improved laboratory test use

5. 5. Increased palliative care consultations

6. 6. Reduced length of hospital stay

7. 7. Reduced readmissions

8. 8. Improved discharge time

9. 9. Longer ICU survival rates

10. 10. Better patient care management

The literature also has positive findings on many other metrics, including blood pressure, glucose outcomes, cholesterol,Footnote ⁷⁹ C-sections,Footnote ⁸⁰ mental-health-related mortality,Footnote ⁸¹ and mortality more generally.Footnote ⁸² A much smaller set of studies have yielded negative findings, often around drug prescribing.Footnote ⁸³ In addition, patients often prefer the care provided by NPs, feeling that NPs offer a more holistic approach than physicians.Footnote ⁸⁴ NPs score consistently higher on patient satisfaction.Footnote ⁸⁵

The least favorable review of NP care was published in 2019 by Erin Sarzynski and John Barry, both MDs. They concluded that the studies offer “mixed results.”Footnote ⁸⁶ On the one hand, NPs had positive findings on studies such as the retrospective study of twenty million community health center patients that found equal or better results for NPs on quality metrics like smoking cessation, depression treatment, statin therapy, physical exams, patient education, imaging, medication use, return visits, and referrals.Footnote ⁸⁷ On the other hand, other studies found that MDs ordered fewer unnecessary antibiotics for acute infectionsFootnote ⁸⁸ and made fewer specialist referrals for patients with diabetes.Footnote ⁸⁹ In the end, the authors conceded that “[p]hysicians’ arguments about quality are largely unfounded, at least for common health concerns.”Footnote ⁹⁰

Researchers have done much less research on PA outcomes. Most studies that include PAs have combined the outcomes of PAs and NPs and reached favorable results.Footnote ⁹¹ When analyzed separately, PA outcomes seem to be very similar to those of NPs.Footnote ⁹²

Two pairs of recent studies with large databases deserve individual mention. In the first set, Peter Buerhaus and his coauthors used a Medicare primary care database that they adjusted for patient severity and found that patients receiving primary care from NPs were less likely to have preventable hospital admissions, hospital readmissions within thirty days of being discharged, inappropriate emergency department visits, and low-value MRIs associated with low back pain.Footnote ⁹³ Physicians, however, had more positive findings for the number of cancer screenings (such as mammography screenings for breast cancer and colonoscopies for colorectal cancer).Footnote ⁹⁴ In a second study using the same data, the authors narrowed their inquiry to Medicare beneficiaries with a disability or a very low income and had virtually the same findings.Footnote ⁹⁵

The other set of studies looked at complex diabetes patients in the Veterans Affairs (VA) system and found that NP and PA team leaders achieved control equivalent to that of physicians for blood glucose, blood pressure, and cholesterol.Footnote ⁹⁶ The second study examining the same data set determined that patients of the NPs and PA team leaders were less likely to be hospitalized or to have an emergency room (ER) visit due to an ambulatory care-sensitive condition, even after adjusting for differences in patients’ medical and social complexity.Footnote ⁹⁷ In a third study, the authors extended their inquiry to less complex diabetes patients, finding that, here too, patients of NPs and PAs had fewer inpatient admissions and less emergency department use than patients of physicians.

The VA studies are especially useful because they minimize two of the most significant potential biases in this research. First, physician consultation is minimal in the VA system.Footnote ⁹⁸ Second, “incident to” billing is not applicable to VA patients. And because the authors investigated both routine and very complex patient care, the authors concluded that their studies provide “further evidence that NPs and PAs may be appropriately used as primary care providers, as opposed to being limited to supplement the care of physicians within primary care settings.”Footnote ⁹⁹

Recent studies have also found favorable NP outcomes in states where collaboration is no longer required. A study by Jennifer Perloff and her colleagues in 2017 found that NP independence had no effect on patient outcomes, including ambulatory care-sensitive hospital admissions.Footnote ¹⁰⁰ Another study by Jeffrey Traczynski and Victoria Udalova found that “allowing NPs to practice and prescribe drugs without physician oversight increases medical care for underserved populations and reduces ER use for conditions responsive to primary care.”Footnote ¹⁰¹ In a study using VA data, Chuan Fen Liu and associates found “comparable or better outcomes achieved at similar costs for patients [with chronic diseases, including diabetes, IHD, and hypertension] across differing levels of comorbidity, suggesting NPs as PCPs need not be limited to less complex patients.”Footnote ¹⁰² The only contrary findings deal with prescription practices,Footnote ¹⁰³ especially the overprescribing of controlled substances.Footnote ¹⁰⁴ More definitive studies on that issue are needed.

Concerns about quality of care have also led some critics to suggest that the use of mid-level providers will generate excessive medical malpractice claims.Footnote ¹⁰⁵ But the data show the opposite – NPs and PAs are far less likely to have a paid malpractice claim than physicians.Footnote ¹⁰⁶

Critics sometimes note that many studies, until quite recently, had any of three potential limitations.Footnote ¹⁰⁷ None of the potential shortcomings, however, warrant a different conclusion about NP or PA quality of care. The first limitation is that most of the studies used data that lacked information about the extent of physician consultation with the NPs.Footnote ¹⁰⁸ Thus, they did not provide information about the outcomes that would occur if NPs were acting independently. However, these studies firmly established that NPs provide equivalent quality of care when in a collaborative relationship with a physician. That finding alone was a major reaffirmation of the NP model. In addition, more recent studies have looked at the care provided by NPs and PAs when they are not working under physician supervision and their findings are equally favorable, as noted above in the discussion of the VA studies and studies from states where NPs can practice independently.

Second, some researchers worry about the potentially distorting effects of a current Medicare billing practice that permits the attribution of care provided primarily by NPs and PAs to MDs. In particular, “incident to” billing allows physicians who have participated in the care of a patient to submit claims in their own name even though a mid-level practitioner provided most of the services. Because services billed in the name of an NP or PA receive only 85 percent of the physician’s fee from Medicare, Medicaid, and private insurers, hospitals and practice groups have a financial incentive to bill in the physician’s name.Footnote ¹⁰⁹ And because the extent of this practice is unknown, researchers who use insurance claims databases will inevitably assign some patient care to MDs that was primarily provided by NPs or PAs. Fortunately, the policy will be tightened in 2024. Furthermore, the VA studies described above did not have this risk and still found that NPs and PAs provided equivalent quality of care.

Third, several studies have found that NPs see patients who, on average, are less complex and less acute than the patients seen by physicians.Footnote ¹¹⁰ As a result, some of the reviews expressing confidence in the care provided by NPs have also expressed caution about the body of research looking at NP care of complex or critical illnesses.Footnote ¹¹¹ But the recent series of VA studies and the two Buerhaus Medicare studies provide preliminary reassurance on this issue; both accounted for patient severity and had positive findings.Footnote ¹¹²

Overall, the existing research justifies the conclusion that NPs and PAs, in their areas of specialization, provide care that is the same or better than care provided by physicians. While individual studies often have weaknesses, they collectively present a strong case for NP and PA quality of care.

The positive patient outcomes generated by NPs and PAs strongly support the claim by law reformers that mid-level professionals can provide high-quality services in their area of specialization if given suitable education and experience.

10.2.2 Impact on Affordability and Access

A primary goal of mid-level legal licensure is to make legal representation for simple matters more affordable. As it stands now, many Americans cannot afford to hire a lawyer. Legal access reform seeks to create categories of mid-level legal providers who are trained more economically than lawyers and, as a result, can charge lower fees and work for lower salaries. But, some wonder, will it work? Will opening up a new breed of practitioner really promote access and reduce costs?

Here again, the story in medicine, and particularly the experience of NPs and PAs, is instructive. NPs and PAs earn roughly half the wages of primary care physicians. In May 2021, according to the Bureau of Labor Statistics, the median income for NPs was $123,780 annually,Footnote ¹¹³ and the median income for PAs was $121,530.Footnote ¹¹⁴ The median for family medicine physicians was $235,930Footnote ¹¹⁵ and for internal medicine doctors $242,190.Footnote ¹¹⁶ Thus, NPs generate substantially lower salaries per full-time-equivalent.

However, the savings in labor cost per patient are reduced because NPs and PAs have historically generated less revenue than physicians. In mixed provider groups, NPs commonly see fewer patients,Footnote ¹¹⁷ see patients with less complex ailments,Footnote ¹¹⁸ work fewer hours,Footnote ¹¹⁹ have longer visits,Footnote ¹²⁰ and generate costs for physician oversight.Footnote ¹²¹ These factors make it difficult to calculate the precise degree to which hiring NPs saves an employer money. The calculation is further complicated by the possibility that the longer visits associated with NPs save health care costs later by generating fewer hospitalizations and less unnecessary imaging down the road.Footnote ¹²²

Regardless, private practice physicians regularly employ NPs and PAs (rather than more physicians) to help keep their practices profitable.Footnote ¹²³ According to a 2009 survey for the National Center for Health Statistics, half of all office-based physicians employed advanced practice nurses or PAs.Footnote ¹²⁴ A report for the Physicians Foundation explains that physicians had been “[f]aced with declining reimbursement rates and the need to increase patient volume in order to keep their practices afloat.”Footnote ¹²⁵ Hiring NPs and PAs allows physician practices to increase their volume at lower cost.Footnote ¹²⁶ Hiring NPs and PAs also allows hospital-contracted groups, like hospitalists and ER groups, to offer the hospital lower terms.Footnote ¹²⁷

To the extent that these interpretations of recent events are correct, then NPs and PAs have helped hospitals and physician groups remain viable despite the price concessions demanded by insurance companies. Those concessions may, in turn, have tempered the rise in prices paid for health care services and the premiums paid for health insurance. If so, a marginal improvement in access to health insurance and, thus, health care may have resulted.

At present, the only concrete evidence of cost reduction is found in a 2016 study that found that prices for child well-care visits were lower by 3 to 16 percent in states with independent NPs,Footnote ¹²⁸ and another 2016 study finding that clinics with more nonphysicians had “lower prices for office visits.”Footnote ¹²⁹ The impact of NPs on prices is likely to grow as NPs begin setting up independent practices. This tempering of medical price increases improves access to medical care for uninsured middle-class patients, but it helps account for the strong political opposition of the AMA to NP independence.

NPs also increase access by providing crucial staffing for community health centers (CHCs). Community health centers’ reliance on NPs and PAs has increased in recent years,Footnote ¹³⁰ as these clinics have had difficulty recruiting and retaining physicians.Footnote ¹³¹ Today, over half of the primary care positions in CHCs are filled by NPs and PAs.Footnote ¹³² As a result, the rise of NPs and PAs has helped the clinics continue providing care to their uninsured and underinsured patients.

Urgent care clinics and retail clinics also rely heavily on mid-level health care providers. Urgent care clinics offer self-paying patients a lower-cost alternative to an ER visit.Footnote ¹³³ Average ER visits are four to ten times more expensive than urgent care clinics depending on the patient’s condition.Footnote ¹³⁴ Retail clinics also reduce ER visits and are primarily staffed by NPs.Footnote ¹³⁵ By staffing these two kinds of storefront clinics at lower salaries than those of physicians, mid-level medical providers may be keeping retail prices for routine medical care lower than they otherwise would be. To that extent, they are improving access to care for people who are uninsured or have extremely high deductibles. Unfortunately, the magnitude of that impact remains unmeasured.

In the field of law, mid-level legal practitioners have the same potential to generate lower prices for basic services, making those services more accessible to middle-class clients. As with NPs, this beneficial pricing effect can occur regardless of whether the nonlawyer advocates work within a law firm, set up their own practices, or work for a nonprofit.

NPs and PAs have also had a positive impact on the availability of medical care in rural areas. Many studies have found that NPs and PAs are more likely than all physicians except family medicine physicians to practice in rural areas and Health Professional Shortage Areas (HPSAs).Footnote ¹³⁶ Of course, the AMA vigorously denies that NPs are more likely than physicians to work in underserved areas. To prove its case, the AMA has created a geomapping computer program to demonstrate that NPs cluster in “the same geographic locations as physicians.”Footnote ¹³⁷ But the public cannot access this tool.

Finally, NPs are more likely to treat Medicaid beneficiaries.Footnote ¹³⁸ They even improve the willingness of physicians to accept new Medicaid patients.Footnote ¹³⁹

To summarize, NPs and PAs have had a positive impact on access to care for uninsured patients. They do this most dramatically by providing essential staffing for free clinics. They also staff the relatively low-cost urgent care and retail clinics visited by many uninsured and underinsured patients. Furthermore, there are signs that the availability of NPs and PAs is tempering price increases for primary care in general. NPs and PAs have also had a positive impact on the availability of medical care in rural areas. Licensed nonlawyer legal practitioners could have a similar tempering effect on prices for basic legal services. They could also provide a pool of lower-priced practitioners to staff new, innovative clinics in areas like eviction and debt collection where clients lack the funds to hire attorneys.

10.3.1 Practical and Political Barriers

The primary objections are summarized in the committee reports of three states that rejected or tabled proposals for limited license legal professionals – Montana,Footnote ¹⁴⁰ Illinois,Footnote ¹⁴¹ and Virginia.Footnote ¹⁴² My review of these reports shows that critics of nonlawyer licensure offer a few recurrent refrains:

1. 1. Legal representation by nonlawyers will be sloppy. A two-tier system of justice will result.

2. 2. For-profit nonlawyer advocates will not serve underserved or low-income people.

3. 3. Limited license legal practitioners will not be able to earn a living, even if they serve primarily middle-class clients.

4. 4. We already have an oversupply of lawyers. Mid-level licensees will threaten their livelihoods.

In this final section, I examine these concerns, against the factual template that medicine supplies.

The first and most important concern raised by opponents of limited license legal professions is the fear that nonlawyers will provide inferior representation.Footnote ¹⁴³ According to this view, even matters that appear simple can be complex. While the evidence about mid-level medical professionals is reassuring, we know much less about the effectiveness of nonlawyers.Footnote ¹⁴⁴ More research is badly needed.

The research proving that NPs and PAs had outcomes comparable to physicians literally opened doors across the country. It led directly to influential national reports from the Office of Technology Assessment in 1986 and the Institute of Medicine twice in the twentieth century. It even prompted the FTC to question the legality of limitations on medical practice. And it generated an unexpected array of allies across the health care sector.

If law reformers can produce similar proof of the quality of representation provided by nonlawyer advocates, the odds of legislative success will grow dramatically. But doing so will be difficult. Obtaining high-quality outcomes data in the context of small, state-specific nonlawyer programs is challenging.Footnote ¹⁴⁵ One obstacle is the absence of large data sets like the medical records kept by Medicare and the Veterans Administration. Another is the lack of standardization across state reform proposals.Footnote ¹⁴⁶ Innovative ideas will be needed, such as a multistate collaboration using a shared reform model.Footnote ¹⁴⁷ Or collaboration with a large state or federal agency like the Veterans Administration using, for example, specially trained nonlawyers to assist veterans with their claims for benefits. (My law school currently uses supervised student interns to do this work.)

While we wait, the preliminary clues are reassuring. Nonlawyers do nearly as well as lawyers on simple matters.Footnote ¹⁴⁸ Specialized training is crucially important – more even than generalized experience.Footnote ¹⁴⁹ These findings point toward narrowly focused training on routine matters accompanied by clear boundaries on the scope of practice that mirror the training.

Limited licensure advocates can also draft their proposals in ways designed to maximize the odds of good outcomes. At the front end, simplification of judicial forms and procedures would be a wonderful start. And at the tail end, nonlawyers could be required to have in place a preexisting relationship with a practicing lawyer for swift consultations when matters become unexpectedly complex. In medicine, NPs routinely turn to MDs in the most complex cases and internists who are stumped call-in other specialists like cardiologists or urologists. In fact, the NP licensing laws in some states expressly require as much. North Dakota, for example, requires that an NP “recognize individual limits of knowledge, skills, and abilities and plan for situations beyond the licensee’s expertise.”Footnote ¹⁵⁰ And New Hampshire’s statute governing advanced practice registered nurses (APRNs), including NPs, states:

Each APRN shall be accountable to clients and the board:

Lawyers do this, too, but new nonlawyer practitioners may not know the tradition or have the relationships needed to accomplish it. To cure this, establishment of a relationship with a lawyer could be built into clinical training. Adding protective features like these may influence the votes of open-minded judges and legislators.

Finally, law reformers can improve quality control and reassure critics by borrowing from medicine and giving lawyers an oversight role. To keep costs down, one lawyer could be permitted to supervise multiple mid-level providers. This oversight need not be too costly or intrusive; it could occur at the end of each day, much like attending physicians review the charts of residents, or each week just as some supervising physicians meet with collaborating NPs.

The second important objection to the licensure of nonlawyer advocates is the belief that for-profit, mid-level legal professionals will not serve low-income people.Footnote ¹⁵² Here, the absence of an analog to health insurance is crucially important. Fees will have to be paid, and critics fear that they will be too high for low-income clients. According to a dissenting judge on the Washington Supreme Court, Washington’s pilot program was “incompatible with meeting the needs of low-income individuals,” and had “shifted to becoming a moderate means effort.”Footnote ¹⁵³ For many law reformers, this is a major shortcoming.

The problem of retail cost has led some advocates to recommend that the length and cost of training for limited licenses be reduced. This shifts the best medical analogy away from the training of NPs and PAs and toward the training of EMTs and paramedics. Their education and training are much cheaper than that of MDs, NPs, and even RNs. And their entry prerequisites are less demanding. As a result, their pay is lower and their scope of practice more limited. This may align well with some nonlawyer niches being considered by reformers.

But this option faces a couple of obstacles. One is its tension with the goal of high-quality representation. To thread the needle, the training will have to be tightly aligned with the scope of practice, as is true for many mid-level medical professionals. A second problem is that these trained and licensed “legal paramedics” may make less money than an untrained and unlicensed paralegal. If their income drops to that of paralegals, as happened for some mid-level practitioners in Washington,Footnote ¹⁵⁴ then potential license applicants will have no financial incentive to pay the training costs associated with the limited license.Footnote ¹⁵⁵ But if their incomes settle higher, then low-income clients will not be able to afford their services. To serve low-income clients, subsidies will be needed.

Another strategy for surmounting the problem of retail cost is to recruit existing community advocates to become licensed mid-level legal professionals, and then to subsidize their training. This may already be happening informally in the federal agencies that allow nonlawyer representatives to assist claimants. And, in Chapter 1 of this volume, Sandefur and Burnett describe several similar state programs.Footnote ¹⁵⁶ In Delaware and Texas, for example, nonlawyers can represent tenants and landlords. Alaska allows nonlawyer Community Justice Workers to be trained and supervised by Alaska Legal Services Corporation. Most work in remote Alaska Native communities that have no lawyers. Arizona has a Licensed Legal Advocate program for domestic violence cases. In addition, Utah has a legal safe space that it calls a “sandbox.” Programs in the sandbox receive waivers from the unauthorized practice of law prohibitions. One potential advantage of these grassroots programs is their potential, not only to help underserved clients solve their legal problems but also to change their trust in, understanding of, and engagement with the law.Footnote ¹⁵⁷

A third objection raised by critics of limited licenses is that the holders will not be able to earn a living even if they serve primarily middle-class clients.Footnote ¹⁵⁸ This issue did not surface in medicine because that system largely serves patients who have insurance, including Medicaid and Medicare. Consequently, salaries for mid-level medical professionals are good, jobs are plentiful, and there are more applicants for mid-level career programs than there are slots, even though the educational costs are substantial.

Because legal practice lacks any equivalent to health insurance, the financial viability of mid-level practitioners is still an open question. The experience in Washington was an inauspicious start. One review concluded that “[m]ost LLLTs struggle to attract enough clients to sustain a viable business.”Footnote ¹⁵⁹ One barrier is that consumers may be confused about the services that limited license providers are authorized and qualified to perform.Footnote ¹⁶⁰ In addition, many people do not want to involve the formal legal system.Footnote ¹⁶¹ Others “do not understand their issues to be legal, and so do not see them as proper objects of legal action.”Footnote ¹⁶² In many instances, the amounts in dispute don’t warrant hiring a representative.Footnote ¹⁶³

Nevertheless, the universe of underserved middle-class Americans is so vast that the effort to serve them makes sense, even though some trial and error will be necessary to find models that work. The Institute for Advancement of the American Legal System at the University of Denver clearly thinks so.Footnote ¹⁶⁴ It released a report in June 2023 called “Allied Legal Professionals: A National Framework,” containing national recommendations to guide states considering programs to train and license a new tier of “allied legal professionals.”Footnote ¹⁶⁵ The Institute is working with three national paralegal organizations to create this national template. Its summary of the new profession closely resembles that of NPs, and they expressly make that analogy. The proposal contemplates a tier of licensed legal practitioners whose lower training costs (lower than Washington’s) will make their services affordable for middle-class Americans. They recommend independence from attorney oversight, even in court. Their plan targets clients with enough purchasing power to buy lower-cost legal services.Footnote ¹⁶⁶ Because it contemplates the recruitment of paying clients, this proposal will face intense opposition from the bar.

This prospect of competition for clients fuels the last and most incendiary objection to authorizing mid-level legal practitioners. Many members of the bar view the legalization of mid-level legal professionals as a threat to their livelihoods. For them, it is a zero-sum game.

In medicine, the reaction of physicians to the creation of mid-level professions has been dramatically different. In that field, the various tiers of licensed health care professions facilitate the work of physicians. Their presence frees physicians to devote time to services that are more remunerative. For example, PAs can handle post-op clinic visits while the supervising physicians perform more procedures. Hospital nurses can provide the continuous patient care that the admitting physicians require. And insurance pays for it all. In short, the widespread presence of health insurance and the shortage of physicians combine to produce a dramatically different climate for the deployment of mid-level professionals.Footnote ¹⁶⁷ That fabric of cooperation has only recently frayed as NPs and then PAs have begun to seek full independence from physicians and, thus, the ability to threaten the business of physicians.

In the debate over law reform, many members of the bar already see a threat to their business. And they are responding as many physicians have done to the call for full NP independence.

10.3.2 Lessons from the Successful Law Reform Efforts in Medicine

Justice reformers could potentially reduce the pushback from practicing lawyers by borrowing from the initial NP and PA profiles and designing plans that provide some benefit to practicing lawyers. This will be a controversial tactic. But the potential tactical value makes it worth consideration. For example, the practice act could mandate one supervising lawyer for every five community law workers. As noted above, this supervision need not be very expensive or intrusive.Footnote ¹⁶⁸

A second way to borrow from the successful experience in medicine is to create boundaries on the new profession’s scope of practice that reduce the perceived threat to practicing lawyers. Practicing lawyers can help identify the niches that they cannot afford to serve, and their acquiescence will materially improve the odds of legislative success.

Unfortunately, none of this is likely to soften the plight of most unemployed or underemployed lawyers. Indeed, some critics of limited licenses seem to be asking that we put young lawyers to work before adding to the supply of legal practitioners. But these lawyers could already be serving the needs of these clients if they felt they could make a living doing so. Legal services are simply too expensive for a self-pay market. There are no lessons in medicine for solving this dilemma. Some kind of financial assistance will be necessary.

Practicing lawyers and reformers will have their fiercest fights over those clients whose incomes place them near the border between those who can afford to hire a lawyer and those who can’t. The closer that a proposal for nonlawyer licensure comes to that border, the fiercer the opposition will be. And the less critical the new license will be. It would be very helpful to have more information about the characteristics of this boundary territory.

The legislative success of NPs over the past sixty years also suggests one additional tactic that has nothing to do with the merits of the proposal. That tactic is to nationalize the campaign for mid-level lawyer services. That means establishing one or more national organizations whose job it is to doggedly recruit allies, develop and promulgate a consistent narrative, and develop leaders. It can also draft model legislation. The Institute for Advancement of the American Legal System at the University of Denver may be angling for this role.

One of the organization’s jobs should be recruitment of allies in the federal agencies. This “federalizing” strategy proved very beneficial for NPs and PAs. In 1977, the American Nurses Association had its first success in Washington, D.C. Congress passed the Rural Health Clinic Act of 1977 providing funding to increase the use of NPs and PAs working in rural health centers. It required that 50 percent of services in these clinics come from NPs and PAs.Footnote ¹⁶⁹ Next, Elliott Richardson, the Secretary of Health, Education and Welfare, established the Committee to Study Extended Roles for Nurses to consider the feasibility of expanding nursing practice. In 1971, the committee recommended expanding the use of NPs.Footnote ¹⁷⁰ One result was increased federal funding for the training of NPs in areas such as family, adult, and emergency practice.Footnote ¹⁷¹ In 1986, the Office of Technology Assessment published a comprehensive literature review concluding that NPs and PAs in primary and ambulatory care provided care as good as the care provided by physicians “within their areas of competence.”Footnote ¹⁷²

In 1989, President George H. W. Bush signed the Omnibus Reconciliation Act authorizing federal reimbursement for NPs in rural areas outside of health clinics.Footnote ¹⁷³ A decade later, President Clinton signed the Budget Reconciliation Act of 1997, allowing Medicare to pay for NP services regardless of geographic location. In that same year, the Robert Wood Johnson Foundation began to fund Executive Nurse Health Policy Fellowships to place nurses in positions of policy leadership at the state and national levels.Footnote ¹⁷⁴

In 2010 the Institute of Medicine published an influential report called The Future of Nursing in which it recommended expanded NP scope of authority.Footnote ¹⁷⁵ In 2012, the National Governors Association concluded that NP care was comparable to physician care and called for loosening of restrictions on the practice.Footnote ¹⁷⁶ Two years later, the FTC concluded that restrictions on practice were no longer needed and could be anticompetitive.Footnote ¹⁷⁷

Following enactment of the Affordable Care Act of 2010 and the Future of Nursing, the Robert Wood Johnson Foundation allied with the AARP to launch The Future of Nursing: Campaign for Action, a nationwide initiative for state law reform.Footnote ¹⁷⁸ As noted above, NPs now have full practice authority in the majority of states.

In a similar vein, today’s law reformers can build on the federalizing efforts that others have already begun. Several federal agencies have welcomed nonlawyer representatives who assist beneficiaries who are very often overwhelmed by the bureaucratic process. Much more of that is possible.

Once the effort has allies, a narrative, and great outcomes, the prospects for further reform legislation will be much improved. So too will the odds of funding to subsidize low-income clients.

11.2.1 Right to Representation

As noted above, the ICRA extends to a criminal defendant in Tribal court only the right of counsel “at his own expense.”Footnote ⁵⁰ A Tribe may expand this guarantee in Tribal law to provide defendants with a right to an attorney in certain circumstances.Footnote ⁵¹ But some Tribes have used lay advocates to provide more representation to defendants. For example, the Nooksack Indian Tribe guarantees representation for criminal defendants at the expense of the Tribe, and this guarantee applies to non-attorney-appointed advocates.Footnote ⁵²

11.2.2 Qualifications for Lay Advocates

Tribal definitions for lay advocates vary. But generally, Tribal codes define a lay advocate as someone authorized to practice before the Tribal court but who did not graduate from an ABA-accredited law school.Footnote ⁵³ Many Tribal courts, however, require both attorneys and lay advocates to obtain a license to practice.Footnote ⁵⁴ For instance, the Hoopa Valley Tribal Court of Appeals confirmed that both attorneys and non-attorneys fall under the regulation of spokespersons, another term for lay advocate, who may appear before the Hoopa Valley Tribal Court.Footnote ⁵⁵

Some Tribal codes reference a Tribal bar, referencing the existence of a Tribal bar established outside of the code, while some specifically establish a Tribal bar and make membership in such bar its own criteria for lay advocates to appear before the Tribal court.Footnote ⁵⁶ The Citizen Potawatomi Nation clarifies that lay advocates are “[e]ntitled to the same rights, privileges, obligations, and duties, and [ ] accorded all the honors to the same extent as any attorney admitted to practice before the Courts of the Tribe within [the] reservation.”Footnote ⁵⁷

Crucially, Tribal codes tend to frame lay advocates as more than nonlawyers or attorney replacements. As explained further below, Tribal codes incorporate additional qualifications, such as tiered priorities for Tribal members and Native Americans who are close to the community and have familiarity with Tribal law. These added qualification criteria suggest that Tribes expect their lay advocates to possess expertise distinct from that of a lawyer.

11.2.3 Priority for Tribal Members

Many Tribal codes that provide for lay advocates have cabined and/or tiered their eligibility pool to give priority to Tribal members when authorizing individuals to appear before the Court as lay advocates.Footnote ⁵⁸ The Blue Lake Rancheria Code provides for appearances by “counsel” who must be admitted to the bar of any state,Footnote ⁵⁹ and for “spokesperson[s],” defined as “any person not admitted to a bar of any state who is a tribal member or a relative of a party and speaks for any party in a case filed in the Tribal Court.”Footnote ⁶⁰ The Fort McDowell Yavapai Nation extends lay advocate eligibility to any Indian person.Footnote ⁶¹ The White Mountain Apache Tribe permits non-Tribal members to be licensed as an advocate, but they must either be employed by the Tribe or a public defender organization approved by the Tribe and also must be licensed and in good standing with at least one other Tribal jurisdiction.Footnote ⁶² Among their enumerated methods for demonstrating competency, the Ho-Chunk Nation lists admission to practice before another Tribal court, or being a Ho-Chunk Tribal member representing another Tribal member.Footnote ⁶³

These Tribes appear to be actively engaged in negotiating the tradeoffs between attorneys and non-attorneys, as well as Tribal members or Natives and non-Natives, in the provision of legal representation. A Tribal member attorney offers the maximum potential for competence: legal training, accreditation, and professional accountability, coupled with a likelihood for community, cultural, custom, and linguistic familiarity. A Native non-Tribal member attorney offers at least a familiarity with Tribal communities broadly and an appreciation for Tribal law and how to navigate it. A non-Native attorney may lack cultural credibility but brings their legal training. Conversely, Tribal member lay advocates may lack formal legal training, but they are more likely to bring a familiarity with Tribal law, including customary law, as well as community norms and practices. Similarly, Native non-Tribal members, non-attorneys may lack specific familiarity with this Tribal community but offer a familiarity with Tribal law generally. By requiring lay advocates to be Tribal members, Tribes validate the notion that legal representatives are most effective when equipped with intimate knowledge of the community and culture in which the litigation takes place. Proximity to the Tribe is but one competency metric. The provisions below evince a different method for measuring Tribal law competence.

11.2.4 Tribal Law Training

Lay advocates may definitionally be distinguished from attorneys by their lack of law school training, but many Tribal codes require that lay advocates have some legal training, experience, and/or that they demonstrate legal skills. Those requirements suggest that Tribal law advocates are not “less-than-attorneys” but rather are customary law experts.

Consider Tribal codes that require a specific familiarity with the Tribe’s laws and federal Indian law generally, a requirement that is woefully lacking for state-barred attorneys.Footnote ⁶⁴ For example, the Cherokee Nation defines lay advocates as “[a]ny lay person demonstrating experience or education in Indian law and the laws of Cherokee Nation.”Footnote ⁶⁵ The Leech Lake Band of Ojibwe requires that lay advocates be familiar with “the Constitution of the Minnesota Chippewa Tribe, the by-laws of the Band, and the codes, statutes and ordinances of the Band.”Footnote ⁶⁶ The Bois Forte Band of Chippewa requires that lay persons attest that they will abide by the rules and principles of the Tribal court and code, and that they have an understanding of the law, but only as it pertains to their client’s case.Footnote ⁶⁷

Some Tribes require that lay advocates pass a Tribal law exam.Footnote ⁶⁸ Tribal law exams vary in scope and difficulty but tend to be administered by the Tribal court or the Tribal bar and test familiarity with Tribal law and court procedure. They can range from brief personal attestations to arduous multiday examinations.Footnote ⁶⁹

Other Tribes do not require that lay advocates pass a Tribal bar exam but impose other requirements to ensure that the advocate is familiar with Tribal law. The White Earth Nation, for instance, requires that lay advocates file an affidavit that they have studied and are familiar with Tribal law.Footnote ⁷⁰ The Pascua Yaqui Tribe requires that each attorney and lay advocate attend a four-hour class on Pascua Yaqui law and court procedure and complete a certification class every two years.Footnote ⁷¹ Similarly, the Iowa Tribe of Oklahoma has a Tribal practice program designed to familiarize applicants with practice before the Tribal court.Footnote ⁷² In contrast, the Hoh Tribe requires that lay advocates demonstrate “knowledge of the culture and traditions of the Hoh people,”Footnote ⁷³ potentially gesturing to the unique potential for lay advocates to use their cultural knowledge to supplement the building of customary law.Footnote ⁷⁴

To capture some of the basic legal skills that law school is credited with imparting, some lay advocate competency provisions require advocates to demonstrate certain skills. The Fort McDowell Yavapai Nation holds non-attorney advocates to the same standards of knowledge and ability as are expected of attorneys.Footnote ⁷⁵ The Seminole Tribe and the Sault Ste. Marie Tribe of Chippewa Indians require that lay advocates possess good communication skills, have legal work experience, and the ability to perform legal research.Footnote ⁷⁶ By contrast, the Mississippi Band of Choctaw Indians Tribal Code requires the Chief Justice to assess the competence of lay advocates prior to their admission to practice before the Choctaw courts.Footnote ⁷⁷

11.2.5 Ethical Advocacy

Once lay advocates are qualified, Tribal codes are primarily concerned with the substance of lay advocates’ work. Like competence, the Tribal codes seek to narrow the professional responsibility gap between attorneys and advocates by extending comparable expectations to attorneys and Tribal lay advocates. In doing so, Tribes are generating a novel body of ethical rules particular to lay advocates.

12.2.1 Transactional Harms

Transactional harms are harms that accrue from the “unsatisfactory engagement of legal services,”Footnote ⁵⁶ such as receiving inaccurate or inappropriate legal results, failing to exercise legal rights, or purchasing unnecessary or inappropriate legal services,Footnote ⁵⁷ which can lead to both economic and wider forms of detriment. The scope of the LSA 2007 resulted in the creation of a large unregulated sector of legal service providers. Research published by the Legal Services Board in 2022 suggests that unregulated businesses have up to a 9 percent share of the overall legal services market serving individual consumers.Footnote ⁵⁸ The same research found that while most people were satisfied with the service provided by all types of providers, those using unregulated providers were most likely to report dissatisfaction with the service they received. Limited data gathered from consumer rights charities and ombudsmen schemes suggests that issues with unregulated providers (such as receiving poor advice) have negative impacts on consumers including lost time, lost money, and worse health or well-being.Footnote ⁵⁹ The true scale of transactional harms experienced by users of the unregulated legal sector is arguably obscured by the fact that the limited data that does exist is derived from consumer complaints. The exclusion of consumers of unregulated legal services from access to the accessible, centralized redress schemes created by the LSA 2007 has created significant barriers to reporting harms in the very parts of the legal services market that are subject to the least ex ante quality assurance and regulatory oversight. In the absence of access to bodies like the Office for Legal Complaints and Legal Ombudsmen, individuals who purchase services from unregulated legal service providers must rely on remedies under consumer law or voluntary codes of practice, which are difficult to access. Excluding consumers of unregulated legal services from centralized complaint and redress mechanisms also undermines the ability of regulators and policymakers to gather data on the prevalence of harm. While the Office for Legal Complaints and the Legal Ombudsman are required to collect and publish data on the scale and nature of the complaints they receive, no such requirements exist in relation to consumer law or codes of practice.

The decision to affirm rather than review or replace the preexisting reserved activities has created gaps in oversight and redress that expose individual consumers to transactional harms. In particular, the failure to bring the provision of initial legal information and advice within the scope of the LSA 2007 exposes consumers to the risk that they may fail to exercise their legal rights or receive inappropriate legal services. Successive research studies have found that legal problem-resolution strategy is strongly correlated with accurate understanding of rights, awareness of legal services, and correct problem characterization.Footnote ⁶⁰ As such, access to accurate and appropriate initial information and advice is a fundamental prerequisite for securing effective legal services and outcomes. The fact that the provision of initial legal information and advice currently falls outside the scope of legal services regulation (unless provided by a legal professional) exposes consumers to risk particularly in the context of the shift to technology-assisted and online models of legal information and advice, which has been led by organizations and individuals not regulated under the LSA 2007. Research published by the Legal Services Board in 2022 found that unregulated firms are more likely than firms overall to use technology (e.g., apps, chatbots, and interactive websites) to deliver services to consumers.Footnote ⁶¹ As researchers have observed, the kinds of “one-to-many” models of legal information and advice facilitated by technology have the potential to damage more people, more quickly, than a single rogue human can.Footnote ⁶² This risk has been recognized by both the Legal Services Board and the Competition and Markets Authority (CMA), with the latter advocating for a wholesale review of the LSA 2007 as early as 2016.

12.2.2 Systemic Harms

In addition to exposing consumers to transactional harms, the LSA 2007 has failed to address the systemic harm created by the fact that the market is unable to supply: “[A]ny or enough providers of legal services who are competent, local, accessible, and affordable for the legal needs in question.”Footnote ⁶³ The LSA 2007 was introduced one year prior to the global financial crisis and three years before a change of government that ushered in a series of policies aimed at significantly reducing public spending on legal services for those on low incomes. In 2010 the incoming center-right government required the Ministry of Justice to find “budget cuts of around £2 billion from an overall budget of £9.8 billion.”Footnote ⁶⁴ In response, the then Lord Chancellor introduced legislation – the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) – with the intention of drastically reducing the amount of public funding available to support the provision of legal information, advice, and representation in relation to both civil and criminal law matters. Official figures demonstrate that following the enactment of LASPO, central government funding for civil legal advice and representation has fallen by one-third.Footnote ⁶⁵

In the face of this new funding landscape, measures introduced as part of the LSA 2007 intended to increase the number of consumer-focused legal service providers have proved inadequate. In the absence of public funding, the market has failed to respond effectively to the growing numbers of people experiencing unmet legal need. Research published by the Legal Services Board in 2020 demonstrates that every year, 3.6 million people across England and Wales have an unmet legal need involving a dispute.Footnote ⁶⁶ Far from encouraging more provision in areas of consumer law, “the ‘centre of gravity’ in private practice has shifted further toward the generally more lucrative areas of business, commercial and institutional law and away from the needs of individual consumers and their everyday legal problems.”Footnote ⁶⁷ The lack of accessible legal advice and representation has also increased pressure on the courts as more people attempt to represent themselves in legal proceedings.Footnote ⁶⁸ As one expert remarked, the reforms to regulation do “not appear to have revolutionized access to justice in the U.K.”Footnote ⁶⁹

12.6.1 Is the Market Capable of Delivering Digital Legal Information, Advice, and Dispute Resolution Services in the Areas of Law Where There Is the Most Significant Unmet Legal Need?

As noted above, reforms to the regulation of legal services introduced by the LSA 2007 have failed to encourage the development of new business modelsFootnote ¹¹⁰ that deliver effective services to low-income, high-need clients. As a consequence, the state has been forced to step in to fund the creation of high-quality, free, or low-cost online legal information – either by designing services themselves or by providing grants to charities to deliver and maintain these services. The fragility of existing providers was highlighted last year when the cessation of a government grant to a charitable provider of legal information threatened the continuing existence of the service.Footnote ¹¹¹ There are multiple recent examples of government being forced to step in to design, commission, or fund online legal information and signposting services where the market has failed to provide them, including the housing disrepair tool,Footnote ¹¹² the recently issued tender for an Online Support and Advice Grant to deliver a digital service capable of providing litigants in person with legal support and advice in relation to civil, family, and tribunal problems,Footnote ¹¹³ and the announcement in the spring budget of funding for a digital “one-stop shop” for people experiencing family law issues, described as “a new online information and guidance tool to support earlier resolution of family disputes and divert cases away from the family courts, where appropriate.”Footnote ¹¹⁴

Issues also exist with the willingness and capacity of the market to deliver online and digital dispute resolution services in the areas of law where unmet legal need is most persistent. While several ombudsmen schemes and providers of alternative dispute resolution do exist,Footnote ¹¹⁵ the extent to which their services are currently delivered online is unclear. Only 3 companies out of 365 listed on the government-funded LawTech UK ecosystem tracker are described as providing digital dispute resolution services to consumers.Footnote ¹¹⁶ These challenges are reflected in global studies exploring the development of private, as opposed to court-based ODR schemes. As researchers noted in 2021, “ODR has not been able to find a suitable business model to motivate ODR service providers to provide sustainable services.”Footnote ¹¹⁷ Further work is needed to understand why there has been such limited activity to date, and what support from regulators and government may be needed to develop the market further.

12.6.2 Are There Sufficient Incentives for Private Dispute Resolution Providers to Transfer Cases to the Courts?

The OPRC has the power to make rules that provide “for the transfer by electronic means of information held for the purposes of an online dispute resolution service to a court or tribunal.”Footnote ¹¹⁸ Widespread adoption of the data and technical standards set by the OPRC is critical to delivering a joined-up digital justice system and reducing barriers to access for individuals and businesses. However, under the existing framework, only those ODR services that wish to transfer cases to the courts will be required to abide by the data and technical standards specified by the OPRC. This may pose a challenge for the delivery of the new vision as it is unclear whether the existing business models adopted by private ODR and alternative dispute resolution (ADR) providers incentivize them to facilitate the “seamless transfer”Footnote ¹¹⁹ of cases to the courts.

To explain further, private ODR systems are “created by contract and rely on the agreement of the participants for their legitimacy.”Footnote ¹²⁰ Private ODR systems, particularly in the consumer or commercial space, are often funded by one of the parties, or one category party to a dispute (e.g., the Official Injury Claim portal, which is funded by the Motor Insurance Bureau). In many cases, businesses are able to choose which ADR or ODR provider they use; as a consequence, the marketing material produced by private ODR and ADR providers tends to emphasize their flexibility – in the sense that procedures need not always apply “strict rules of law” and their confidentiality – which enables firms to avoid the risk of “adverse publicity and reputational damage that could arise from a court case.”Footnote ¹²¹ Accordingly, the business model adopted by private ODR and ADR providers creates an incentive not to make the transfer of cases to the courts easier, threatening the viability of new proposals.

12.6.3 Will the Market Agree to Meet the Needs of the Public Justice System in Relation to Collecting Data to Monitor Fairness and Address Inequality of Access?

Even where ODR providers wish to support seamless transfer of cases to the courts, it is unclear whether they will be willing to adapt their data collection practices to meet the needs of the public justice system. As noted by researchers:

One way in which the courts in England and Wales have sought to demonstrate that reformed digital processes produce outcomes that are fair and just is by introducing new data collection practices to monitor the impact of digitized services on the experience of users with particular demographic and protected characteristics under the Equality Act 2010.Footnote ¹²³ Users of digitized services are asked to complete a short questionnaire about their demographic and protected characteristics at the point at which they make an application to the courts or respond to an existing case.Footnote ¹²⁴ This data is being used to undertake “access to justice impact assessments”Footnote ¹²⁵ designed to identify, fix, and monitor barriers to access to justice for users from different demographic groups. To date, access-to-justice impact assessments have been completed for digital services dealing with divorce, probate, social security and child support, and online civil money claims. These impact assessments have revealed that in relation to probate and divorce service cases filed by users from ethnic minority groups were more likely to experience delays or be stopped than those filed by white applicants.Footnote ¹²⁶ The findings of these impact assessments are now being used to improve services, demonstrating the importance and utility of the new data collection practices HMCTS have introduced. Private ODR providers are not required to collect or publish data on the fairness of their processes or monitor data on the demographic and protected characteristics of users. It is unclear whether they would be willing to amend their practices to support this data collection – particularly if doing so incurs additional costs. However, if they do not collect this data and are still permitted to “seamlessly transfer” cases to the courts, the opportunity to monitor fairness may be lost, undoing the significant recent progress that has been made to harness digital systems to improve the transparency, accountability, and fairness of the courts.

12.6.4 Does the OPRC Have the Mandate and Resources Needed to Deliver the New Holistic Digital Justice System? Lessons from UK Financial Services

Proposals to harness data and technical standards to deliver joined-up legal services and systems are unprecedented in the context of the justice system in England and Wales. However, initiatives of the kind described by the Master of the Rolls and Lord Justice Birss do exist and have been implemented in the context of the UK financial services industry as part of the UK Open Banking Initiative, which was created to make it easier for customers to compare and switch banks by supporting the secure sharing and transfer of personal data.

The UK Open Banking initiative was developed in response to concerns that there was too little competition in the banking sector and that this absence of competition was undermining innovation and harming consumers. An investigation led by the CMA found that across the United Kingdom, the “four largest banks account for over 70 percent of main Personal Current Accounts and collectively have lost less than 5% market share since 2005 – despite the fact that 90 percent of consumers would benefit from switching to a cheaper product.”Footnote ¹²⁷ To remedy this situation, in 2017 the CMA issued an order, the Retail Banking Market Investigation OrderFootnote ¹²⁸ (2017 Order) which compelled the UK’s nine biggest banks to open their data to third parties. The proposals contemplated the sharing of two different kinds of data in two different standardized formats. First, under the new UK Open Banking regime, the nine largest UK banks would be required to release as open data reference information about the location of their branches and ATMs, the details of their different products, and data on service quality, to an agreed data standard.Footnote ¹²⁹ Second, the UK Open Banking framework made it possible for customers to securely share limited transaction data with other banks and third parties through the use of APIs.

The aim of the CMA in passing the 2017 Order was to create the infrastructure to support the publication and sharing of a limited set of clearly defined data between organizations in a concentrated market.Footnote ¹³⁰ To achieve this aim, the CMA mandated the creation of an independent organization (the Open Banking Implementation Entity (“OBIE”)),Footnote ¹³¹ funded by industry, with an average FTE headcount of over 100 staff, and annual operating costs ranging between £32.7 million and £47 million.Footnote ¹³² The Open Banking Implementation Entity was given the power to mandate adoption of the data and technical standards developed by the nine largest UK banks with a combined market share of over 90 percent of the UK’s consumer and small business accounts.Footnote ¹³³ Additional regulatory oversight of the use of application program interfaces to guard against fraud and misuse was provided by the Financial Conduct Authority, an extremely well-resourced regulator, with support from the Information Commissioners Office. Even so, by the end of the implementation period in 2023, only six out of nine of the UK’s largest banks had adopted the standards required to implement Open Banking.

In contrast, the proposals outlined for the delivery of the new holistic digital justice system contemplate creating standards and Application Programme Interfaces to support the sharing of what could amount to a considerable volume of personal and case-level data, much of which is currently unstructured. The detail of the data to be shared has not been defined. Unlike the retail banking sector, the legal services sector is highly fragmented – with nearly 9,600 firms providing services for consumers and small corporates.Footnote ¹³⁴ This figure does not include not-for-profit providers and charities, or the eighty existing approved Alternative Dispute Resolution Providers and twenty Ombudsmen schemes. The body tasked with developing and specifying data and technical standards across this diffuse range of stakeholders is the Online Procedure Rule Committee, a committee comprising six members (three judicial members appointed by the Lord Chief Justice and three expert members appointed by the Lord Chancellor) supported by two sub-committeesFootnote ¹³⁵ staffed by volunteer members. The Ministry of Justice has allocated just £10,000 per year to pay for travel, subsistence, and publications. The impact statement published by the Ministry of Justice states that any additional costs associated with digitizing services or providing additional digital support will be funded by the HMCTS Court Reform Programme – it is not clear whether the creation and implementation of data and technical standards is included in this,Footnote ¹³⁶ or who will fund this work if resource is not made available by government. A timetable for implementation, or agreed definition of either the vision or goal, has not yet been published, and an explanation of how access to the APIs will be regulated and by whom has not yet been provided. These details may yet be forthcoming.

It is still early days, but the experience of Open Banking, an initiative that has been described as “ambitious, complex and world leading”Footnote ¹³⁷ despite its comparatively limited scope, when contrasted with the new vision articulated for the digital justice system of the future, demonstrates the importance of moving swiftly to provide.

12.6.5 What Changes to Regulation May Be Needed to Support the Adoption of Online Information, Advice, and Dispute Resolution Services?

The delivery of the new vision for the digital justice system relies on consumers adopting and using private online information, advice, and dispute resolution services. However, as described above in Section 12.2, many of these services fall outside of the scope of existing legal services regulation, exposing consumers to the risks of transactional harms for which there is little accessible or meaningful redress. Research published by the Legal Services Board shows both that consumers are “more dissatisfied with the service they receive from unregulated providers”Footnote ¹³⁸ and further that the absence of regulation and effective redress leaves unregulated businesses facing a “credibility gap” that may inhibit their growth.Footnote ¹³⁹ The UK government-funded Centre for Data, Ethics and Innovation has highlighted both that an absence of clear regulatory standards and quality assurance is a key driver of public distrust,Footnote ¹⁴⁰ and further that “in the absence of trust, consumers are unlikely to use new technologies or share the data needed to build them.”Footnote ¹⁴¹ The imperative to deliver the new vision for a digital justice system may therefore strengthen calls to review and extend the regulatory framework established by the LSA 2007.

13.2.1 The Lexfox I Judgment of the Federal Court of Justice

The Lexfox I judgment, rendered in 2019, revolved around a Berlin tenant who had used Lexfox’s online services to check whether his rent was in line with the German federal rent control scheme (the so-called rent brake).Footnote ³⁹ When Lexfox’s online rent calculator indicated that his rent was too high, he assigned all his rights and claims under his tenancy agreement (including any right to repayment of overpaid rent) to Lexfox, which promised to enforce the tenant’s rights and claims for a contingency fee. Lexfox reached out to the landlord, made a formal complaint about the rent brake violation, and asked for additional information in order to determine the permissible rent, to demand repayment of the overpaid rent, and to request that the landlord agree to charge only the permissible rent in the future. The landlord, however, refused to cooperate, and Lexfox took the case to court (along with the help of an attorney).Footnote ⁴⁰ Lexfox was successful before the local court (Amtsgericht – AG) of Berlin.Footnote ⁴¹ On appeal, however, the regional court (Landgericht – LG) of Berlin rejected Lexfox’s claim, holding that the assignment of rights and claims under the tenancy agreement had been invalid because the enforcement of the “rent brake” required the provision of fully fledged legal services – not those covered by the debt collection license under section 10(1) no. 1 of the Act on Out-of-Court Legal Services.Footnote ⁴² Lexfox appealed to the highest German civil court, the Federal Court of Justice (Bundesgerichtshof – BGH), teeing up a ruling on the appropriate reach of the debt collection license and, incidentally, on the permissibility of Lexfox’s business model.Footnote ⁴³

In its eighty-page judgment, the Federal Court of Justice reversed the regional court’s decision.Footnote ⁴⁴ It held that the services offered by Lexfox were covered by the debt collection license, and thus lawful, and also that the tenant’s assignment of rights and claims had been fully valid. According to the court, section 10(1) no. 1 of the Act on Out-of-Court Legal Services not only allowed for the classic collection of (undisputed) outstanding payments but also included more complex tasks, such as the collection of information about a claim and taking steps to meet the requirements to bring a formal claim, including through letters of complaint.Footnote ⁴⁵ Pointing out that the Act on Out-of-Court Legal Services was meant to liberalize and hence, to open, the market for out-of-court legal services to nonlawyers, the court held that the Act allowed nonlawyers with sufficient expertise in a certain area to offer legal services. For this reason – and in light of the basic right to freely choose a profession enshrined in Article 12 of the German ConstitutionFootnote ⁴⁶ – the Act’s exceptions, including the provisions encompassing debt collection in section 10(1) no. 1 had to be interpreted broadly, not narrowly, and with reference to the legislature’s intention to protect consumers from unqualified legal service providers.Footnote ⁴⁷ Since Lexfox possessed the required expertise, there was no reason to assume that it should not be allowed to offer its services. There was, in other words, no need to protect consumers from Lexfox.

13.2.2 Further Judgments of the Federal Court of Justice

With its Lexfox I judgment, the Federal Court of Justice established a very broad scope of debt collection under section 10(1) no. 1 and allowed substantial overlap between the services of legal tech companies and the services traditionally offered by attorneys. At the same time, the court interpreted the Act on Out-of-Court Legal Services in a very liberal way prohibiting the provision of legal services by nonlawyers only where such a prohibition is necessary to protect consumers.

In subsequent judgments, the court confirmed and applied an equally liberal approach to other legal tech companies.Footnote ⁴⁸ In July 2021, for example, the court held that the business model of Airdeal was covered by the debt collection license of section 10(1) no. 1 of the Act.Footnote ⁴⁹ Airdeal had collected claims by way of assignment from Air Berlin customers whose flights had been canceled as a result of the company’s insolvency.Footnote ⁵⁰ Airdeal’s detractors argued that this service exceeded Airdeal’s rights as a debt collection service, pointing out that Airdeal did not even attempt to collect the claims out of court, but instead sought court enforcement right away (with the help of an attorney).Footnote ⁵¹ The Federal Court of Justice, however, held that the debt collection license did not require debt collection services to enforce claims out of court first before seeking enforcement in court. Rather, the license also covered business models that primarily (or exclusively) envisioned court enforcement of claims (with the help of an attorney).Footnote ⁵² In a similar vein, the court decided, in June and October, 2022, that a debt collection license gives legal tech companies the right to collect damages claims from a large number of consumers (including claims that were subject to foreign law) in order to enforce them in court.Footnote ⁵³ It is, therefore, fair to conclude that legal tech companies enjoy great freedom to offer their services under the debt collection license of the Act on Out-of-Court Legal Services.Footnote ⁵⁴ In fact, as of today, every business model premised on a debt collection license and considered by the court has been upheld and considered to be in line with the Act.Footnote ⁵⁵

13.3.1 Main Thrusts and Noteworthy Changes

The Legal Tech Act has two main thrusts:Footnote ⁵⁷ First, it is meant to mitigate the earlier described imbalance between the regulation of attorneys, on the one hand, and the regulation of debt collection services, on the other, thus leveling the playing field between the two. Second, it is intended to provide consumers with better protection when they make use of debt collection services.

To reach these goals, the Legal Tech Act first loosens some of the traditional legal restrictions for attorneys. Most importantly, it allows lawyers to charge a contingency fee where three conditions are met: (1) where a plaintiff asserts a monetary claim up to a limit of €2,000;Footnote ⁵⁸ (2) where the attorney provides out-of-court debt collection services, typically in payment order or enforcement proceedings;Footnote ⁵⁹ and (3) where the client would otherwise be deterred from pursuing legal action.Footnote ⁶⁰ In addition, the Act allows attorneys to take over the costs associated with enforcing the client’s rights, notably the costs of litigation, where the attorney provides out-of-court debt collection services, provided that the attorney charges a contingency fee at the same time.Footnote ⁶¹ It follows that attorneys engaged in debt collection are largely put on par with legal tech companies.

True to its name, however, the Legal Tech Act does not just regulate attorneys. It also takes on the regulation relating to legal tech companies. To begin with, the Act tightens the requirements for admission as a debt collection service under section 10(1) no. 1 of the Act on Out-of-Court Legal Services. According to section 13(2) of the Legal Tech Act, applicants must now describe in their application for registration what they plan to do and in which legal areas they will operate. This requirement allows the competent registration agency to check the admissibility of the respective business model at the time of registration, thus avoiding the uncertainty that results if admissibility can only be checked later during civil proceedings (as in the Lexfox case).Footnote ⁶² The registration agency may also, at the time of registration, ask for proof of expertise in addition to participation in the previously mentioned 120-hour training course (Sachkundelehrgang).Footnote ⁶³ Finally, the Act establishes new disclosure obligations that debt collection services must fulfill toward consumer-clients. In particular, it requires debt collection services to inform consumers about (1) alternative options to ensure the consumer’s rights if the company wishes to charge a contingency fee; (2) the details of any agreement with a third-party litigation funder; and (3) the details of the legal tech company’s right to enter into settlement agreements.Footnote ⁶⁴ Additional disclosure obligations relate to situations where a debt collection service declines to enforce a particular claim, and require the debt collection service to inform the consumer why it declined to pursue their claim.Footnote ⁶⁵ The company must indicate whether it inquired into the legal legitimacy of their claim, and if so whether this has been done automatically, such as with algorithms. Consumers must be further informed that the decision not to enforce the claim does not affect other forms of enforcement, whether in-court or via alternative dispute resolution mechanisms.

13.3.2 Consequences for the Legal Services Market

As evident above, the Legal Tech Act has brought about some key changes to the regulatory landscape relating both to attorneys and to legal tech companies that offer their service under section 10(1) no. 1 of the Act on Out-of-Court Legal Services. Overall, however, the changes are rather limited.Footnote ⁶⁶ In the literature, they have rightly been described as a “small step”Footnote ⁶⁷ and mere “cosmetic correction.”Footnote ⁶⁸

To begin with, the Act loosens restrictions for attorneys only with regard to debt collection services – that is, with regard to the area where there is immediate competition from nonlawyers like Lexfox and Airdeal. It does not, however, loosen the restrictions for any other kinds of services attorneys offer – areas where competition from legal tech companies may emerge. In particular, the Legal Tech Act does not touch upon the “big” issues of lawyer regulation, notably the general ban on attorneys working on a contingency fee basis, the general bans regarding litigation funding, and, most importantly, the general ban on seeking outside financial investment from nonlawyers (fee-splitting). As a consequence, the Act essentially sidelines attorneys from any substantial use of legal technology beyond debt collection, and it prevents them from providing the same kind of consumer-friendly and efficient services that legal tech companies offer. Thus, it fails to actually create the intended level-playing field.Footnote ⁶⁹

The Legal Tech Act applies an equally cautious approach to the regulation of legal tech companies. In particular, it does not specifically say that legal tech companies may offer their services under the Act on Out-of-Court Legal Services. It leaves courts to decide the permissibility of other legal tech business models under the Act on a case-by-case basis.Footnote ⁷⁰ Thus, it fails to provide prospective legal tech companies with much-needed legal certainty.Footnote ⁷¹ In addition, the Act only requires debt collection services to make certain disclosures to consumers. While this may theoretically increase transparency it is more than likely that most consumers will fail to read or take note of the information provided.Footnote ⁷²

Against this background, the debate about the regulation of legal (and tech) services will have to go on. Among the issues to be considered is whether the above-mentioned restrictions that continue to apply to attorneys should be abandoned.Footnote ⁷³ In particular, the debate will consider whether attorneys should generally be allowed to work on a contingency fee basis, to fund litigation, and to take financial investors on board.Footnote ⁷⁴ In addition, the evolving legal tech scene will have to be monitored to determine whether further legislative action is needed, and in particular whether legal tech companies should be required to prove their legal competence beyond current requirements. To be sure, legal tech companies have – thus far – only improved the enforcement of consumer claims. However, since there is virtually no regulation in place that could ensure quality – for example in the form of regulation relating to legal expertise – there is a potential risk that the situation may change in the future.Footnote ⁷⁵ In the best interest of consumers, it is therefore necessary to remain careful and to react should regulation become necessary.