Should we allow nonlawyers to own, manage, and invest in law firms?

With only a few exceptions, U.S. jurisdictions prohibit:

  • nonlawyer ownership of law firms;
  • nonlawyer management of law firms; and,
  • lawyers from sharing fees with nonlawyers.

Vermont does so through Rule 5.4.

In the lingo, “alternative business structures” are prohibited.

Last year, I posted a series of blogs related to Rule 5.4 and alternative business structures (“ABS.”)  Among them:

Here’s a summary of oft-cited arguments for & against allowing nonlawyers to own, manage, and invest in law firms:

Arguments for ABS

  • Increased Access to Legal Services
  • Enhanced Financial Flexibility for Law Firms
  • Enhanced Operational Flexibility for Law Firms
  • Improved Cost Effectiveness & Quality of Services

Arguments against ABS

  • Threat to Lawyers’ Core Values & Professional Independence
  • Will Lead to Less Pro Bono Work
  • Threatens the Attorney-Client Privilege
  • Promised Benefits Not Likely to Happen

The idea didn’t gain much traction in Vermont.  Today, the ABA Journal reports that the State Bar of California has formed a task force to study nonlawyer ownership.  Per the ABA Journal, California commissioned a report that indicated that amending the rules to allow ABS would:

  • “(1) drive down costs; (2) improve access; (3) increase predictability and transparency of legal services; (4) aid the growth of new businesses; and (5) elevate the reputation of the legal profession.”

It’s an interesting concept.  At the very least, I think it’s one worth studying, as Vermont continues to struggle with acccess to affordable legal services.

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