The concept may not be that far-fetched.
England began this month to allow groups other than lawyers to own and control law practices, and some of the country’s major retailers have begun offering legal services in their stores and online. Other countries, most notably Australia, already allow someone other than a lawyer to own a practice.
Now, with calls increasing for a similar model in the United States, the country’s chief legal ethics authority intends to propose a plan to permit law practices to have limited outside ownership.
Such a move could upend the industry’s stiff adherence to the partnership system in favor of full-fledged corporations that have access to the capital markets.
Some legal experts envision a marketplace that would become more customer-friendly, affordable and accessible for the average consumer: one-stop shops on street corners that bundle, for instance, legal, banking, accounting and real estate services; drive-through-style law firms with numerous branches across the country, similar to accounting shops like HR Block; more complex legal services offered online; and, of course, retail stores with a legal unit.
Although Australia’s legal landscape has not shifted in this direction since it began allowing outside ownership of law firms in 2007, analysts are eagerly watching to see what will become of the legal market in England, which has more global prominence.
Regulators hope giving law practices access to private capital will allow them to invest in technology and other resources that could help them operate more efficiently and at cheaper rates.
“That surely expands the pool of individuals and organizations that have access to effective legal services,” said Mark Ross, the vice president of legal services at Integreon, an international legal process outsourcing company.
An ethics commission of the American Bar Association is expected to circulate by early November a draft proposal recommending that ethics rules be amended to allow other professional service providers — like accountants, economists and social workers — to partner with lawyers and own up to 25 percent of a law firm.
The current rules say that only lawyers may share directly in legal fees.
Individual states have the final say on whether to allow ownership by someone other than a lawyer. Washington is now the only jurisdiction in the United States that allows it. A bill to allow investments in law firms was introduced this year in North Carolina. One New York firm, Jacoby Meyers, has sued the state’s court system to allow it to receive capital from outside investors.
Despite these efforts, many lawyers and legal analysts remain skeptical about the need for outside investors and are concerned about the ethical implications.
“The idea is that nonlawyers might not have the same codes of ethics,” said Andrew M. Perlman, a legal ethics professor at Suffolk University Law School and the chief reporter for the American Bar Association’s Ethics 20/20 commission, which is preparing the draft recommendation. “They might not be bound by the same sense of professional responsibility and might push the lawyers to do things that they should not be doing to chase the dollar rather than abiding by the rules of professional conduct.”
One ethical concern is about lawyer-client privilege, as shareholders would have an interest in knowing who the firm’s clients were and the specifics of their cases. Another is that lawyers might feel pressured, for example, to settle a lawsuit to make shareholders happy, no matter what the best interest of their client was.
But such thinking derives from the naïve assumption that the lawyers “who currently own law firms are not motivated by profit,” said Ken Fowlie, the executive director of Slater Gordon, an Australian law firm that was the first in the world to become a publicly traded company.
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