Non-Lawyer Investment in Law Firms?

While the ABA has, in recent years, tentatively nosed around the idea of allowing some form of non-lawyer investment in law firms, it’s a concept that continues to be met largely with cries of “BURN THE WITCH” rather than any meaningful engagement.

Arguments against are of the “lawyer exceptionalism” variety, which I addressed in a piece that Vermont Bar Counsel Michael Kennedy reminded me I wrote 5 years ago:

The idea that the law is an exceptional case, that it is a profession that “often mandates conduct and practices that are not profit maximizing or optimizing” such that non-lawyer ownership cannot happen is hogwash. The same argument can be made for business writ large – Sarbanes-Oxley, charitable giving, employee benefits, community involvement and the accounting profession (kidding!) – are all examples of conduct and practices common in business that are not profit maximizing. Or on a more specific level, with medicine, where doctors make daily non-profit-maximizing decisions in the service of patients, despite non-MD ownership of most large medical groups.

What’s more, so many of the problems that our prized ethics rules are designed to prevent could be more effectively solved by letting people who know something about running a business be involved in law firms:

Ineffective marketing, lackadaisical client development, poor internal controls, shoddy accounting practices – all can lead to cash crunches, blown deadlines, drawing from client trust accounts and the litany of ills that end in attorney discipline and malpractice lawsuits.

The concept is back in the news this week, thanks to the spectacularly-poorly-lawyered efforts of Jacoby & Meyers in pressing for a First Amendment right of lawyers to non-lawyer investment. It’s not a great argument, but they surely could have done a better job with it.

In any event, the advent of non-lawyer investment in firms will happen – if it ever does happen – through the wisdom of lawyers rather than judgments from tribunals. I’m hopeful that one day enough attorneys will realize that our profession CAN bring in professionals from other disciplines, allow them to be invested in our work, and improve the quality of the services we offer across the board.

But it might also take a little shaming:

 

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