Not quite, but almost, three years ago, I wrote about a proposal by the Association of Professional Responsibility Lawyers urging the ABA to revise Model Rule 5.5 to make it easier for clients to retain the lawyer of their choice without being inhibited by state lines. Regrettably, while the ABA has not yet ultimately acted on that proposal, a potential for reform is still working its way through the ABA.
The length of time it can take to bring about change in the profession is not a reason to stop trying to make it happen, however. While that proposed reform is still a work-in-progress, APRL has once again stepped up to propose a long overdue reform to the rules of professional conduct.
This proposal asks the ABA to do something that is admittedly highly unlikely — revise Model Rule 5.4 to drop the prohibitions on fee sharing with people who are not lawyers and allow outside investment and ownership in law firms. The proposal is accompanied, again, by a thorough report explaining the justifications for the revision and the problems presented by the current regulatory approach.
You can download the full proposal and accompanying report by clicking below. If you are inclined immediately to think this is an idea that needs to be pursued, I would recommend you read it. If you are inclined immediately to reject this idea, I would insist you read it.
But the summary version of the rule proposal would be to allow fee-sharing as long as the client is made aware and doesn’t object. The proposal would also, as has been done in Arizona, completely end the prohibition on outside investment in law firms. In acknowledgment of the fact that some states have already taken the lead on similar revisions, the proposal would create room for law firms with third-party ownership to have to comply with whatever regulatory structure a state wishes to create. For those who will immediately cry out — “But what will happen to lawyer independence and professional judgment?” — the report reminds all of you (and everyone else) that Model Rule 2.1 already, independently, requires lawyers at all times to “exercise independent professional judgment and render candid advice” when representing a client.
Unlike the prior APRL proposal on Model Rule 5.5, this proposal declares in advance that APRL will also be taking this proposed regulatory reform directly to state jurisdictions rather than only asking, and waiting on, the ABA.
(And, for transparency purposes, yes, I am one of the members of the APRL Future of Lawyering Subcommittee and one of the co-authors of the report in support of this proposal.)