Header graphic for print
The Corporate Observer A Publication by Attorneys Devoted to Protecting Consumer Rights

Non-Lawyers Should Be Able to Own Law Firms

Posted in Consumer Protection

“If they say its not about the money, its about the money”

A debate has been simmering for some time in the legal profession about whether non-lawyers can be owners (or partners) in law firms.  The conventional wisdom: Partners must be lawyers.  It is the only way to regulate conduct.  The respective state bar associations will not have the authority to regulate and discipline non-lawyer partners and hence the conduct of the firm.  Non-lawyers can wreak havoc, tarnish the reputation of lawyers everywhere, while all the while being outside the reach of an effective disciplinary regime.

The more progressive approach: Providing legal services often requires the expertise of other professionals such as economists (in antitrust cases) or scientists (in intellectual property matters).  Why not allow these professionals to be partners in the firm?  It is ultimately in a client’s best interest to put the most talented team on the field.  To attract and retain the best economists and scientists, law firms should be allowed to make these professionals partners.  (Heck if the firm determines that its Director of Marketing or IT Services contributes on a level equivalent to a partner, why should there be an institutional bar to their inclusion in the partnership?)  Discipline can be meted out on a case-by-case basis.  A prophylactic rule is overkill and stymies competition and innovative arrangements.

Only the District of Columbia Bar Association allows for non-lawyers to be partners.  But the American Bar Association is considering a proposal that would allow 25% of a law firm to be owned by non-lawyers.  (While the ABA rule would not be binding on State Bar Associations it traditionally has swayed many state associations.)  As reported in the WSJ, the proposal is meeting stiff resistance.

The fear is losing power.  If non-lawyers can own law firms, it’s not going to be limited to a few tweed jacket professor types with PhDs in Economics or Statistical Biology.  No; far more worrisome to the old order are law firms owned by finance companies, hedge funds, and who knows what.  The old guard fears the profession will be sullied by money.

Nonsense; the practice of law is already about the money.  Wake up.  What do you think is behind all those recent defections at white shoe firm Dewey & LeBoef?  Money, pure and simple.  Partners are leaving in droves because they aren’t making enough money.  Litigation is a $100 billion dollar worldwide service market.  If you can keep the doors shut to non-lawyers for as long as possible, a monopoly of lawyers can maintain those seven figure profits per partners.  Open the door a crack (to non-lawyers) and who knows how much will be lost.

This debate has a long way to go.  I say it’s time to open the doors and let competition rule.