TAX TALK

Perhaps the most pressing issue discussed at the retreat was the threat of "commoditization" of the legal profession. Commoditization is the transformation of products and services, which have traditionally been considered legal work, into commodities available for sale or at no cost to the public over the Internet or from other non-legal sources. For example, the preparation of a simple will, a lease, or a contract might become a commodity. In fact, many of these services are already commodities. Today, the consumer can log on to a number of websites and, for no cost, download a will form, fill in the blanks, and print the will, all without the assistance of an attorney. At this same website, the consumer can chat with an advisor who dispenses what is referred to as "non-legal advice."

The question is, how do we, as attorneys, respond to the transformation of our legal work into commodities provided free to the consumer on the Internet? Do we follow the example of the accountants, who, when challenged by the commoditization of their "bread and butter" work, such as tax return preparation, responded by forming alliances with other professionals to create "one-stop shopping"? The experts tell us that we must not attempt to protect our practices from the threat of commoditization, but must instead find a way to create "value" for the consumer beyond the product to keep legal services viable in the computer age. We are told that we should be willing to give up those areas of our practices which may become commodities and concentrate rather on the more complex legal matters.

How do we feel about abandoning areas of our practice and allowing them to become commodities? Would I be willing to give up writing simple wills to concentrate on more sophisticated estate tax planning? From an economic perspective, yes! Simple wills are not a lucrative part of my practice, and with the current economic trends creating more wealth for my clients, simple wills are not the bread and butter of my practice. However, is abandoning this part of my practice the best way to serve the public? Does the consumer who downloaded and completed that simple will form know that the POD bank account he owns will pass to his mother regardless of the provisions in his will? Does he know that he failed to name a beneficiary on his IRA so that at his death the entire balance will be subject to immediate income taxation? Does he know that the joint account he set up with his on-line brokerage will pass to his son, disinheriting his daughter? Undoubtedly, the Internet provided this consumer with the information necessary to prepare a simple will, but did it provide him with the knowledge he needed to assure that the will carried out his intentions?

As we all know, the Internet is not the only provider of these commodities. MDP’s (or multidisciplinary practices) are already providing clients with estate planning, business planning, and tax planning. A recent article recounted the story of a discount brokerage house that failed to properly complete, at the client’s request, a beneficiary designation form for a qualified plan, resulting in disastrous tax effects for the client. When confronted with the error, the broker responded that they "are not attorneys." I find it interesting that attorneys are being asked to relinquish entire areas of their practices, such as title work, preparation of deeds, leases, wills, and contracts, on the theory that this is not the practice of law. And yet, when the non-lawyer makes a gross error while providing these products and services, he claims that he is not responsible because he is not a lawyer. Where does this leave the client?

I fully agree with the concept of attorneys creating value in their practices, but I believe that, in most cases, the value is already there. Most of us already add value to the preparation of legal documents by advising our clients about the consequences of their actions and the choices available to them. And yet, the challenge of commoditization still exists. How will we respond? Should we change our ethical rules to allow attorneys to practice with other professionals in MDP’s? Will we allow the market to determine what are legal services and who should be providing them? Could we better educate the consumer about the services that attorneys provide, so that the Internet can be used as a tool to assist the attorney in serving the client rather than as the end product?