If it ever will come to pass, the states will have to serve as the laboratories.

Two weeks ago, I offered some thoughts on the latest flare-up in the long-running off-and-on ABA exploration of the third-rail of the practice of law: potential non-lawyer ownership/investment in law firms.  This time around, before I could even manage to finish reading all of the comments and try to write some thoughts about the comments, the effort has already died.  The ultimate end is not really surprising, though the alacrity this time around is a bit surprising.

The overwhelming majority of the comments submitted were negative and antagonistic.  Many of the comments in opposition to considering the idea were long on rhetoric and short on efforts at making persuasive arguments.  Many others expressed outrage — these were particularly from state bar associations and entities within the ABA — at the fact that the issue had even been floated again so soon on the heels of past unsuccessful efforts.  A few of the comments in opposition were extremely thoughtful in the way they tackled the questions.

The two comments that I had found myself most wanting to explore in a written piece, however, all share one important aspect in common, an expressed familiarity with what consequences there have or have not been in D.C.  One of them were written by a lawyer with asserted substantial experience working with and advising law firms and other business entities in Washington, D.C., the one U.S. jurisdiction that permits some nonlawyer ownership in law firms.  One of them — on the opposing side — was written by someone [it is labeled at the Comment site as having been submitted anonymously] claiming to be very familiar with a problematic underbelly of D.C.’s approach.

If nothing else is clear from this latest unsuccessful trial balloon from the ABA Commission on the Future of Legal Services, it should be that if any change is going to occur on this front, it will be because one or more states take it upon themselves to expand the list of jurisdictions from just D.C. to some larger but still small number.  And, then either there will be very deleterious consequences for the profession, or there won’t be.  But, unless that happens, then probably about 5 years from now another ABA entity will float the idea and . . . lather, rinse, and repeat.

Any state that might be inclined to consider amending their RPC 5.4 to permit the kind of things that D.C. permits — whether out of a spirit of innovation or perhaps even a highly selfish economic interest to see if perhaps they could drive investment and business expansion into their jurisdiction — ought to give a thorough reading to this comment that was filed by a lawyer with the Zuckerman Spaeder firm about the lack of issues as a result of RPC 5.4 efforts in D.C.  But also ought to give a thorough read to this anonymous comment raising issues about what is claimed to be the problems stemming from D.C.’s provision, including a cottage injury of unsavory, shell-company like practices claimed to be going on in D.C. as well.

In the meantime, other things will continue to happen that aren’t much different in some respects from outside ownership as workarounds.  Things like this story about developments in litigation funding.  Though it is a bit misleading to call this a “new” focus, it may be a new focus for Burford Capital but there have been other companies out there that have engaged in contingent funding of lawyers and law firms, rather than individual cases, for nearly a decade on the plaintiffs’ side of the aisle.

And, people who continue to explore this topic ought to give some thought to trying to answer the following question:  is the legal profession trying to claim there is something unique about us or about the rules that govern us?  If it is the latter, then the follow up question I’d offer that is worth thinking about is why couldn’t the application of those same strictures to folks without a law degree as long as they have an ownership stake in a law firm serve to protect the public just as well?

One thought on “If it ever will come to pass, the states will have to serve as the laboratories.

Leave a Reply

Your email address will not be published. Required fields are marked *