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:
- an introduction to ABS
- what is it and who allows it?
- arguments in favor
- arguments against
- how’s it doing so far?
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.
