ABA Resolution Stirs Fears of Non-Lawyer Firm Ownership - Law Blog - WSJ
by Jacob Gershman // Wall Street Journal
A proposed resolution working its way up the American Bar Association sounds innocuous enough, if not completely decipherable.
It calls for the adoption of “regulatory objectives for the provision of legal services” that would help “identify and implement regulations related to legal services beyond the traditional regulation of the legal profession.”
But those words are stirring alarm among some local bar groups, which say it poses a grave threat to their profession.
How’s that you may ask?
The context surrounding the controversy is the long-simmering debate among the legal establishment over allowing non-lawyers to own stakes in law firms.
With the exception of the District of Columbia, no jurisdiction in the country permits non-lawyer ownership of law firms. Those who favor lifting the restriction say it would expand consumers’ access to legal services, spur innovation and reduce the cost of legal help.
But whenever the idea has been floated within the ABA, it’s gotten strong push-back. Giving people who don’t have a law license the ability to share firm profits would undermine the profession’s ethical obligations of client loyalty and confidentiality, critics argue. They fear that decision-making within firms would be influenced by investors or shareholders who aren’t bound by the same rules of conduct as licensed lawyers.
The tensions around the issue reflect a broader concern within the industry over emerging competitive threats from do-it-yourself legal services, outsourcing and new technology.
So it’s against that backdrop that the ABA’s Commission on the Future of Legal Services has proposed that “regulatory objectives” resolution. The commission says it’s trying to develop a guide that local bar authorities could use “when they assess their existing regulatory framework and any other regulations they may choose to develop concerning non-traditional legal service providers.”