What will the practice of law look like in the “gig” economy of the future and how will that impact legal business structures and ethical considerations? – Olayanju Phillips

Introduction

‘The time has come for lawyers to ask themselves the question, ‘What business are we in?’ As the year 2000 approaches, the answer to this question may no longer be a simple one for many lawyers and the firms in which they work. Many lawyers today might find that traditional definitions of ‘lawyering’ no longer fit either their own activities or the demands that their clients place upon them.’[3]

Until recently, the practice of law took place in law firms. Every firm had to have, as a basic necessity, a meeting or conference room for meetings with clients and a sturdy library for legal research. The practice of law was serious work. It was sacrilegious for non-lawyers to carry on the practice of law, or for lawyers to practice their profession through the internet. It was even more contemptible to the dignity of the profession to practice law as a “gig”.[4] The idea of describing the hallowed ministration in the temple of justice as a gig was despicable, at the very least.

However, the defiance of technology defiled the sacredness of the legal practice, creating cracks in the sturdy library and meeting rooms, and enabling flexibility in the practice of law. Consequently, this created a new economic order in legal practice known as the “gig economy”.[5] This new model has challenged the existing legal business structures that sustained the traditional practice, but like every rose with a thorn, it has also come with ethical considerations.

In light of these, the pressing question this essay seeks to answer is: What will the practice of law look like in the gig economy of the future and how will that impact legal business structures and ethical considerations?

In approaching this topic, this essay is divided into three sections. The first section examines the traditional practice of law in an attempt to highlight the dissatisfying intrinsic features of the traditional legal business structures that created an inroad for the disruption of legal practice by the gig economy. The second section describes what the practice of law will look like in the gig economy of the future and the impact of this on existing legal business structures. The third section considers the ethical considerations of this impact in selected jurisdictions, and recommends amendments to the existing ethical regulatory framework.

The essay concludes with an argument that the gig economy is here to stay and further disruptions of the practice of law are expected. It argues that regulatory laws will need to be revised to meet the growing demands of the legal profession.

Section One

The Traditional Practice of Law[6]

The traditional image of a law firm has, over the years, transmuted from a one-man sole proprietorship to a partnership model[7] led by one or more Partners.[8] Traditionally, partnership carries with it seven distinct attributes: equity participation, tenure, autonomy, participation in policy-making, income, internal status and recognition, and external status and recognition.[9]

Partners are legally entitled to share in the profits of an organization and are equally liable for all the debts of the organization. In a law firm, there is no hierarchy among partners, only between partners and associates (non-partners).[10] Thus, an associate usually joins the firm and puts in long hours of work to rise through the ranks to become a partner.[11]

A significant characteristic of the partnership model of traditional law firms is the loyalty of lawyers to their firms, which is mirrored by the loyalty and fidelity of clients, many of whom trust one firm to cater for all of their legal needs and valued stability over cost-effectiveness.[12]

It is not uncommon to see a lawyer join a firm and remain there for years in exchange for a regular income and added benefits, such as insurance and pension annuities. Conversely, long, billable hours, a poor work-life balance and general dissatisfaction with one’s career are also common traits of the traditional legal practice.[13]

A major source of profit for traditional law firms is the associates who are paid a salary equal to only a fraction of the revenues they generate[14] For a firm to grow, it has to hire new associates and keep them busy. Each time an associate is promoted to partnership level, two or three new associates would need to be hired to provide additional income for the firm since the firm’s profit will now be shared among a greater number of people.[15] To produce more legal services while reducing the competition for admission into partnership, traditional firms employ paralegals and “legal temps”.[16]

Furthermore, once employed, associates had nothing to do with competitor firms. Their loyalty was to their firm alone; they could not work for more than one firm at a time. They were also controlled as employees by their firm, and had no independence in choosing the structures for delivering legal services; this important decision was left to the partners of the firm. These traits were also shared by lawyers working as in-house counsel within private companies. Consequently, lawyers in traditional practice had lesser control over their lives.

However, the changing demand of clients – the consumers of legal services – and the emergence of technology and globalization are challenging the traditional legal business structures. Clients increasingly demand a greater speed of delivery of legal services, specialized knowledge of their business and industry, flexibility and more efficient delivery of affordable legal services. These demands have placed pressure on the traditional law firms, which are infamous for their inflexibility, over-head cost, and consequently over-priced legal services. It has also created cracks in the obsolete traditional model and paved the way for the incursion of the gig economy into traditional legal practice.

Additionally, the desire for a flexible working environment, especially among millennials, has hastened the gradual unravelling of the traditional practice of law.[17] A large number of lawyers are increasingly growing dissatisfied with the billable hours and desire to build lives outside the office. Moreover, there is no longer a clear path to the top of the pyramid and the security a job in a law firm once offered is not as certain as it once was.

The gig economy or sharing economy[18] has been touted to upend the traditional model of work. However, what appears to be the traditional model of work did not exist until industrialisation in the 19th century. Before then, it was not uncommon for a person to professionally serve as a barber, and also act temporarily as a book dealer and auctioneer.[19] With industrialisation came job security and the desire to keep one’s job.[20]

The so-called ‘third-industrial revolution’ which brought along the internet and consequently global connectivity introduced the prospect of working remotely and birthed the gig economy. The gig economy provides a solution to most of the challenges bedevilling the traditional partnership model. However, it does not come without its own unique challenges.

Section Two

The Practice of Law in the Gig Economy of the Future

The incursion of the gig economy into traditional legal practice has manifested in two main forms: the practice of law through sharing platforms, which are not law firms but legal marketplaces,[21] and the practice of law by law firms/private organizations either partly running the traditional model of legal business and using gig lawyers to supplement staff strength or fully running a gig practice with gig lawyers.

While the practice of law as a gig is still developing, the full practice of law in the gig economy of the future will completely disrupt the pyramid structure firmly erected in many traditional law firms. A major disruption will be the re-modelling of the business structures for the supply of legal services. As earlier stated, law firms have historically been structured as partnerships, although many lawyers still engage in solo practice. The practice of law in the gig economy may occasion the final demise of the traditional partnership model.

Lawyers will have direct interaction with clients without the shield or restraint of a firm and will sell their expertise to as many clients as they can take.[22] Consequently, freelance lawyers practicing in the gig economy will have the potential to earn a significantly higher amount of income than they did at law firms where their income was fixed and not proportional to the profits they earned for the firm. In the gig economy, lawyers will determine their rates and be assured that their efforts are directly proportional to their income.

In addition, lawyers will dictate their pace of work and lead more balanced and enriching lives. They will take as much work as they want, do the work whenever they want, and be able to take a break whenever they want. They will also be more flexible with their schedule to meet the needs of clients.

Without the cost of renting an office space and other costs associated with running a traditional law office, the cost of legal services offered in the gig economy will be significantly reduced. When contracted by firms, gig lawyers are unlikely to be paid as much as full-time associates, since they owe no loyalty to the firm, are not regarded as employees and are only contracted for a specific task. This will significantly reduce the legal fees spent by clients. However, it may lead to gig lawyers cutting costs for their services in order to attract more clients, and a race to the bottom among gig lawyers.

The practice of law in the gig economy will also give clients increased access to specialized legal talent. Clients will only be willing to contract the services of lawyers with specific skills-set to meet their legal needs. Higher demand for specialization will make lawyers develop specialized skills and make the practice of law highly specialized.

Section Three

Ethical Considerations of the Practice of Law in the Gig Economy

The practice of law in the gig economy raises the ethical questions of confidentiality, conflict of interest, the classification of gig lawyers under employment laws, and the possibility of lawyers engaging in other businesses or professions simultaneously with the practice of law. In examining these ethical questions, the regulatory framework of selected jurisdictions with a fast growing gig economy laying down ethical standards for the legal profession needs to be analysed.

Where a lawyer is working simultaneously for two or more firms or in-house for two or more companies on a contract basis, the confidential information of clients is put at risk. A lawyer may also be placed in a conflict of interest, where his or two or more clients’ interest clash with each other. A gig lawyer may also be asked to leak one of his clients’ trade secret to competitors.

The Solicitors Regulation Authority Standards and Regulations (SRA Standards and Regulations) of the United Kingdom require Solicitors to keep the affairs of current and former clients confidential unless disclosure is required or permitted by law or the client’s consent.[23] A similar provision is also contained in the Hong Kong Solicitors’ Guide to Professional Conduct (Hong Kong Solicitors’ Guide).[24]

Furthermore, under the SRA Standards and Regulations, Solicitors are prohibited from acting in relation to a matter or an aspect of it if there is a significant likelihood of conflict of interest in relation to that matter or an aspect of it,[25] unless the clients have a substantially common interest or are competing for the same objective and have given informed consent to the Solicitor.[26] Similarly, a solicitor, under the Hong Kong Solicitors’ Guide has a duty to avoid conflict.[27] Therefore, a solicitor must not continue to act for two or more joint clients when a conflict of interest arises between those joint clients.[28]

When there is a breach of confidentiality, the question of who bears liability rests upon the designation of gig lawyers as either employees or independent contractors. If they are employees, and therefore, agents of their clients, the clients will be vicariously liable for the breach of confidentiality. However, if they are independent contractors, they will be exclusively liable.

The temporary nature of legal work in the gig economy blurs the line between employment and contracting. When a lawyer connects with a client (an individual, a company or a law firm) through a freelance platform, is the lawyer an employee of the platform, an employee of the client or an independent contractor?[29]

In the United States, the various lawsuits instituted to determine the status of gig workers have ended up in settlements, leaving the issue unresolved.[30] In the UK, however, a third class of ‘workers’ exist in addition to the normal classification as self-employed and employee.[31] The European Union’s test for a worker is whether a person has a contract for work in return for a wage.[32]

In Aslam and Others v Uber BV and Others,[33] the Employment Tribunal of the UK held that Uber drivers were ‘workers’, and therefore entitled to minimum wage under the National Minimum Wage Act 1998 and annual leave under the Working Time Regulations 1998. In reaching this decision, the Court considered several factors including the degree of control exercised by the employer, the exclusivity of engagement and its typical duration, the method of payment, and the level of risk.[34] The Court of Appeal also upheld the decision of the Employment Appeal Tribunal.[35] Although this decision does not specifically determine the employment classification of gig lawyers, it indicates how the UK Courts consider the employment rights of gig workers.

In Spain, gig workers are classified into three broad classifications: independent contractors, economically-dependent self-employed workers (trabajadores autónomos ecónomicamente dependientes, TRADEs),[36] and employees.[37] While there is no specific legislation on the employment classification of gig workers in Spain, the trend leans towards classifying gig workers as employees.[38]

In Australia, a worker is either an employee or independent contractor. A gig worker is generally classified as an independent contractor and is not protected by the National Employment Standards[39] under the Fair Work Act 2009.[40]

In Nigeria, a person may either be an employee or an independent contractor. In SS Co Ltd v Afropak (Nig) Ltd.,[41] the Supreme Court prescribed the following criteria to provide guidance in making this determination: the mode of payment; ownership of the equipment, tools or instruments used in providing the services; the ability to delegate duty; the hours of work; the place where the work is carried out; and the provision of office accommodation and a secretary. Using these criteria, one may conclude that gig lawyers are more likely to be classified as independent contractors in Nigeria.

However, since each platform offers varying degrees of control, the status of a gig worker will be decided on a case-by-case basis until a unifying guideline is established at the international, regional or national level. In the absence of this, the position of the gig worker relative to work entitlement and employment benefits is uncertain.

Finally, the gig economy gives lawyers the opportunity to practice law simultaneously with another profession or business. Under the Nigerian Rules of Professional Conduct, a lawyer shall not practice as a legal practitioner while being engaged in the business of buying and selling commodities[42] or the business of a commission agent.[43]

Conclusion

In light of the growing global trend of the practice of law through sharing platforms and the increasing demands on the practice law in the gig economy, this essay has sought to examine the practice of law in the gig economy of the future and its ethical considerations. It argues that the gig economy will completely displace the partnership model, which has become synonymous with legal practice and the concept of in-house counsel. It also raises certain ethical considerations, which will have to be considered by stakeholders when regulations are made for the practice of law in the gig economy.

It is recommended that a unified policy be developed at the international or continental level to regulate the practice of law in the gig economy. This will serve as a guide for countries to develop their national policies. However, such regulations must balance the interest of lawyers to practice law in a flexible environment with the interest of clients to access affordable legal services and the interest of the legal profession to maintain its ethical standards.

 

 

 

_______________________________________________________________________

Olayanju Phillips[1]

 

WHAT WILL THE PRACTICE OF LAW LOOK LIKE IN THE “GIG” ECONOMY

OF THE FUTURE AND HOW WILL THAT IMPACT LEGAL BUSINESS

STRUCTURES AND ETHICAL CONSIDERATIONS?[2]

 

For further information on this article and area of law, please contact

Olayanju Phillips at: S. P. A. Ajibade & Co., Lagos by Telephone

(+234 1 472 9890), fax (+234 1 4605092)

Mobile (+234.814.468.3333) or

Email (ophillips@spaajibade.com).

www.spaajibade.com

[1]       Olayanju Phillips, NYSC Intern, SPA Ajibade & Co., Abuja Office, Nigeria.

[2]     Essay submitted for the International Bar Association’s Professional Ethics Committee and Alternative and New Law Business Committee Joint 2019 Annual Conference Scholarship.

[3]     JW Jones, “The Challenge of Change: The Practice of Law in the Year 2000” (1988) 41 Vanderbilt Law Review 683, 689.

[4]     A ‘gig’ refers to a temporary task or a job for a specific period of time.

[5]     The gig economy is also known as the “sharing economy” or the “concierge economy”. “In a gig economy, temporary, flexible jobs are commonplace and companies tend toward hiring independent contractors and freelancers instead of full-time employees. A gig economy undermines the traditional economy of full-time workers who rarely change positions and instead focus on a lifetime career”. See Will Kenton, ‘Gig Economy’ (Investopedia, 24 May 2018) www.investopedia.com/terms/gig-economy.asp accessed 15 April 2019. According to a poll by Time Magazine, global public relations firm Burston-Marsteller and the Aspen Institute Future of Work Initiative, 44% of U.S. adults (more than 90 million people) have participated in the gig economy. See Katy Steinmetz, ‘Exclusive: See How Big the Gig Economy Really is’ (Time, 6 January 2016) http://time.com/4169532/sharing-economy-poll accessed 10th April 2019. It is noteworthy that Seoul, South Korea’s capital was the first city to comprehensively adopt the sharing economy through its Sharing City Seoul Project. The government provided administrative support and financial aid to the city’s sharing economy. See ‘Governments Finally Embrace the Sharing Economy’ (Ozy, 30 September 2018) www.ozy.com/fast-forward/governments-finally-embrace-the-sharing-economy/89688 (accessed 20 April 2019).

[6]     The traditional practice of law includes practice within law firms as associates and as in-house counsel within private organizations.

[7]     A partnership is a voluntary association of two or more persons who jointly own and carry on a business for profit. BA Garner, Black’s Law Dictionary (7th ed, West Group 1999) 1142.

[8]     In structuring an organization, the first step is to understand the purpose and nature of services to be rendered by the organization. To this end, law firms have historically been structured as partnerships, and still are, for the most part. See SS Samuelson, “The Organizational Structure of Law Firms: Lessons from Management Theory” (1990) 51(3) Ohio State Journal 645, 650.

[9]     Maister, On the Meaning of the Partnership, (AM Law, Oct 1983) 65.

[10]    Samuelson (n 6) 651.

[11]    This may take between 10 to 15 years.

[12]    Jones (n 1).

[13]    A recent study showed that improving work-life balance was an important factor behind lawyers choosing to work flexibly. Matthew Kay, ‘Contract lawyering – the global gig economy for lawyers’ (Asia Law Portal, 20 October 2017). https://asialawportal.com/2017/10/20/contract-lawyering-the-global-gig-economy-for-lawyers accessed 15 April 2019.

[14]    Samuelson (n 6) 654.

[15]    Samuelson (n 6) 654.

[16]    Samuelson (n 6) 656.

[17]     A survey conducted by Eversheds Sutherland as part of its 21st Century Law Firm series revealed that “a majority of young lawyers aged 23-40 years consider the traditional law firm model as out of tune with the 21st Century and they would embrace technology to revolutionize what they consider to be out-dated working practices. See ‘Eversheds 21st Century Law Firm: Inheriting a new world (Eversheds Sutherland)

www.eversheds‑sutherland.com/global/en/what/publications/21stclawyers/index.page, accessed 10 April 2019.

[18]    See Georgina GÖrÖg, “The Definitions of Sharing Economy: A Systematic Literature Review” (2018) 13(2) University of Primorska, Faculty of Management Koper 175, 180.

[19]    Craig Horner (ed), The Diary of Edmund Harrold, Wigmaker of Manchester 1712-15, (Ashgate Publishing Limited 2008).

[20]    S Edgell, The Sociology of Work: Continuity and Change in Paid and Unpaid Work, (2nd Edition, Sage Publications 2011) 15-19.

[21]    Some examples are Vario, Excello Law, Keystone Law, and Gunnercooke.

[22]    Although a group of freelance lawyers may also form a company or business organization for the practice of law, it is unlikely to be structured like the traditional model. The lawyers are likely to offer expertise in various areas of law and come together for the sole purpose of attracting more legal work and sharing profits equally.

 

[23]    Solicitors Regulation Authority Standards and Regulations 2019, para 6.3.

[24]    Hong Kong Solicitors’ Guide to Professional Conduct, volume 1, chapter 8, para 8.01.

[25]    Hong Kong Solicitors’ Guide (n 22) para 6.2.

[26]    Hong Kong Solicitors’ Guide (n 22) para 6.2(a) and (b).

[27]    Hong Kong Solicitors’ Guide volume 1, chapter 9, para 9.01, 9.02, 9.03.

[28]    Hong Kong Solicitors’ Guide volume 1, chapter 9, para 9.04.

[29]    Council of Europe: Committee of Ministers, Recommendation No. R(2000)21 of the Committee of Ministers to Member States on the Freedom of Exercise of the Profession of Lawyer defines a lawyer as “a person qualified and authorised according to the national law to plead and act on behalf of his or her client, to engage in the practice of law, to appear before the courts or advise and represent his or her client in legal matters.” At best, this definition indicates that a lawyer is an agent acting on behalf of his client. However, it does not address the question of employment classification, and whether gig lawyers are entitled to benefits, such as insurance, annual leave and pension under the various employment laws.

[30]    B Balaram, J Warden and F Wallace-Stephens, Good Gigs: A fairer future for the UK’s gig economy (April 2017) 37. See also Cotter v Lyft 3:13-cv-04065-VC (ND Cal), O’Conner v Uber 3:13-cv-03826-EMC (ND Cal).

[31]    It is noteworthy that the ‘worker’ category emerged in the mid-1990s in response to a shift in the labour market from full-time employment to a flexible working relationship, sometimes with multiple employers. See B Balaram (n 28) 37.

[32]    Lawrie-Blum v Land Baden Württemberg (1986) Case 66/85, Steymann v Staatssecretaris van Justitie (1988) Case 196/87.

[33]    [2016] EW Misc B68 (ET) (28 October 2016).

[34]    B Balaram (n 28) 37.

[35]    Uber BV, Uber London Limited, Uber Britannia Limited v Yaseen Aslam, James Farrar, Robert Dawson and others [2018] EWCA Civ 2748.

[36]    Self-Employed Workers’ Statute (Act 20/2007), s 11.

[37]    Workers’ Statute (Royal Legislative-decree 2/2015), s 1.

[38]    BS Corujo, ‘The Sharing Economy: The Emerging Debate in Spain’ (2017) 6(1) Spanish Labour Law and Employment Relations Journal 30, 38.

[39]    The Senate, Select Committee on the Future of Work and Workers, Commonwealth of Australia, September 2018, 73-81.

[40]    Fair Work Act 2009.

[41]    (2008) 18 NWLR 77 at 82.

[42]    Rules of Professional Conduct for Legal Practitioners 2007, s 7(2)(a).

[43]    ibid s 7(2)(b).

 

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