ABS – Arguments Against

A is for Alliteration.

Anyhow, this is part 4 in a series on whether Rule 5.4 should be amended (or rescinded) so as to permit:

  • nonlawyer ownership of law firms;
  • nonlawyer management of law firms; and
  • multidisciplinary practice.

The series summarizes an issues paper on Alternative Business Structures (“ABS”) issued last month by the ABA’s Commission on the Future of Legal Services

Previous entries in the series:

As noted by the Commission, those who oppose ABS offer four main arguments against:

  1. Threat to Lawyers’ Core Values
  2. Decreased Pro Bono Work
  3. Threat to the Attorney-Client Privilege
  4. Failure to Deliver Promised Benefits

Let’s look at each in turn.

Threat to Lawyers’ Core Values

Opponents argue that ABS will lead to a system in which lawyers focus on the bottom line at the expense of their clients’ best interests, sacrificing client loyalty and ceding professional judgment to untrained nonlawyers who are not subject to disciplinary rules.

Among other sources, the Commission’s issues paper cites Nick Robinson’s manuscript: When Lawyers Don’t Get All the Profits: Non-Lawyer Ownership of Legal Services, Access, and Professionalism, 29 GEO. J. L. ETHICS (forthcoming).  On page 14 of his manuscript, Robinson notes that “while some have claimed that non-lawyer ownership will lead to an increase in quality of legal services, it is not obvious this will be the result and pressure for investors for profits may actually undercut standards in the profession.”

There is no doubt that I’m less than qualified to debate ABS with those who study and write about the topic.

However,this is an argument that puts (what I hope is) a wry smile on my face. Implicit in the argument is that lawyers who own their own firms do not let the “bottom line” influence their work. I mean, it’s not like I’ve never heard “mike, once the retainer ran out, my lawyer dumped me.”

Decreased Pro Bono Work

The Commission points out that opponents also contend that ABS will lead to a decrease in pro bono work.  Again, the issues paper cites to Nick Robinson’s manuscript, specifically page 11 where he argues that nonlawyer ownership may “undermine the public-spirited ideals of the profession, making it less likely lawyers in these firms will engage in pro bono or take on riskier cases that may have a broader social benefit.”

Again, color me jade(d), but I’m not so sure that lawyers hold a monopoly on the “public-spirited ideals” traditionally (quaintly?) associated with the legal profession.

Threat to the Attorney-Client Privilege

Per the issues paper, ABS opponents argue that “[i|f nonlawyer partners are privy to privileged conversations between attorneys and clients, courts might refuse to uphold the attorney-client privilege.”  Issues Paper, p. 10, Section 4(B)(3).

As an aside, and as my readers know, the ethics rule is much broader than the privilege.  See, V.R.Pr.C 1.6, Comment 3.  For my thoughts on Rule 1.6 and the disclosure of information relating to a representation, check out these posts:

Failure to Deliver Promised Benefits

Finally, the Commission notes that ABS critics argue that ABS will not deliver the benefits its proponents promise.  For example,

  • THIS STUDY commissioned by the Ontario Trial Lawyers Association concludes that there is “no empirical data to support the argument that [nonlawyer ownership] has improved access to justice” in jurisdictions that have approved ABS.
  • Similarly, on page 14 of his manuscript, Nick Robinson argues that “many other areas of legal work may be difficult to scale or commoditize, meaning non-lawyer ownership will be less likely to occur in these areas or bring unclear access benefits.”
  • Finally, critics contend that firms can attract top, nonlawyer talent with generous salaries & compensation packages that do not include ownership/management interests.

That’s all for tonight.  Next up:  ABS has been permitted for quite some time in jurisdictions around the world.  Some have data.  So….what has been the impact of ABS in jurisdictions where it is allowed?