Sunday, May 22, 2011

Ownership of Law Firms by Non-Lawyers? Jacoby & Meyers Sues to Oveturn Bans on Non-Lawyer Ownership: A Question of Money or Ethics?

Mark Hamblett at the New York law Journal in Suit Challenges N.Y. Prohibition of Non-Lawyer Firm Ownership and Debra Cassens Weiss at the ABA Journal in Jacoby & Meyers Sues to Overturn Bans on Nonlawyer Ownership of Law Firms report on class action suits brought by the personal injury law firm Jacoby & Meyers in New York, New Jersey and Connecticut to overturn bans on non-lawyer ownership of law firms, claiming such bans violate the United States Constitution as regards the Commerce Clause, the Due Process Clause, the Takings Clause, the Equal Protection Clause and the First Amendment.

Such bans are found as rules for attorneys e.g. in New York State in so-called Rules of Professional Conduct "promulgated as Joint Rules of the Appellate Divisions of the Supreme Court [of New York State], effective April 1, 2009, which superseded the former part 1200 (Disciplinary Rules of the Code of Professional Responsibility)."

Richard S. Granat at the eLawyering Blog in Should law firms be owned by non-lawyer investors? points out that outside ownership of law firms is already permitted in Australia and will be permitted in the United Kingdom in England and Wales as so-called Alternative Business Structures (ABS) after October 6, 2011, pursuant to the UK Legal Services Act of 2007.

As written by the Solicitors Regulation Authority:
"3. On 6 October 2011 the SRA expects to be licensing the first Alternative Business Structures (ABS) to provide legal services to the public in England and Wales. Part 5 of the Legal Services Act 2007, permits ABS which will allow participation by a larger proportion of individual non-lawyers in a firm than currently permitted, as well as allowing external ownership or part ownership of law firms."
In this regard, James Podgers at the ABA Law Journal in Ethics 20/20 Commission Seeks Input on Alternative Business Structures for Law Firms reports that the ABA has already been seeking comment prior to this suit on the question of whether lawyers and non-lawyers should be allowed to team up in the United States in multi-discipline "entities" to provide legal and related services.

However, the odds that the Jacoby & Meyers suit will be successful in court is minimal as the U.S. Supreme Court has traditionally granted deference in attorney regluation to the individual States.

Of course, the fact of the suit itself reflects legal systems in a process of change in the modern world, where more inter-disciplinary co-mingling of professions will be the rule rather than the exception down the road.

Even if Jacoby & Meyers lose this litigation, work-arounds of existing laws and rules are already in progress in adapting legal and related services to the market. See e.g. Legal Entrepreneur Forms DC Law Firm that Shuns Office Face Time and Lawyer Rainmaking.

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