The American Bar Association's Commission on Ethics 20/20 has decided not to propose changes to ABA policy prohibiting nonlawyer ownership of law firms. It made the decision at a meeting earlier this month in Washington, D.C.
Co-Chairpeople Jamie S. Gorelick and Michael Traynor say, "Since its creation in 2009, the commission has undertaken a careful study of alternative law practice structures. Based on the commission's extensive outreach, research, consultation, and the response of the profession, there does not appear to be a sufficient basis for recommending a change to ABA policy on nonlawyer ownership of law firms."
In June 2011, the commission had rejected publicly certain forms of nonlawyer ownership that some other countries currently permit, including multidisciplinary practices, publicly traded law firms, and passive, outside nonlawyer investment or ownership in law firms.
After further study, the commission released for comment last December a discussion draft describing a limited form of court-regulated, nonlawyer ownership of law firms. It would have allowed nonlawyers who were employed by a law firm and assisted the firm's lawyers in providing legal services to have a minority financial interest in the firm and share in its profits. The discussion draft reflected an approach that was similar to but more restrictive than a structure that's been permitted in Washington, D.C.
"The commission considered the pros and cons, including thoughtful comments that the changes recommended in the discussion draft were both too modest and too expansive, and concluded that the case had not been made for proceeding even with a form of nonlawyer ownership that is more limited than the D.C. model," Gorelick and Traynor say.
Although it won't propose any changes to ABA policy on nonlawyer ownership of law firms, the commission said it will continue to consider how to provide practical guidance about choice-of-law problems that are arising because some jurisdictions permit nonlawyer ownership of law firms.
"These are current problems that need pragmatic attention," Gorelick and Traynor say. "The commission previously released draft proposals on these issues and will decide at its October 2012 meeting whether to submit formal proposals to the ABA House of Delegates for consideration in February 2013."
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