ABA proposes change in firm ownership rules

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By Patrick Thornton
Dolan Newswires

The American Bar Association’s Ethics 20/20 Commission has proposed changing the Rules of Professional Conduct to permit other service professionals, such as accountants, social workers and public relations professionals, to partner with attorneys to own up to 25 percent of a law firm.

Supporters claim hybrid, holistic practices will make legal services more affordable and accessible and benefit consumers the way big box retailers like Target and Walmart have changed the way we shop for televisions, prescription drugs and groceries. Clients could visit their accountants for tax help and their lawyers to draft a will and not have to find new parking spots. Allowing outside investors would also help small to medium-size law firms raise money to expand or invest in new technology in a down economy.

In Australia, nonlawyers can invest in law firms like a public corporation. In England, nonlawyers can now own law firms. In the U.S., the District of Columbia is the only jurisdiction that allows the practice, but a law firm in New York sued the state court system earlier this year for the right to solicit outside money and investors.

It would be up to the individual states to amend their rules to allow for outside investment or lawyer-nonlawyer partnerships.

The ABA calls the concept “Alternative Business Structures” and says the rules against lawyers sharing fees with nonlawyers might need to be loosened to allow U.S. firms to compete globally. The proposal says that any firm with nonlawyer owners must have “as its sole purpose providing legal services to clients.”