Hello everyone and welcome to this Ethics Alert which will discuss a Washington D.C. Bar committee press release announcing a review regarding the potential relaxing of that jurisdiction’s non-lawyer law firm ownership rules, including potential fee sharing/splitting. The January 23, 2020 D.C. Bar press release announcing the review is here: https://www.dcbar.org/about-the-bar/news/DC-Bar-Global-Legal-Practice-Committee-Seeks-Public-Comment-on-Rule-of-Professional-Conduct-5-4.cfm
Washington D.C. is the only U.S. jurisdiction that allows lawyers to partner with nonlawyers and those partnerships are subject to certain restrictions; however, a D.C. Bar committee has announced that it will be exploring less restrictive rules. According to the D.C Bar press release, the D.C. Bar’s Global Legal Practice Committee will be taking public comments on its current system and potential changes until March 9, 2020.
The press release identifies “alternative business structures” and “multidisciplinary practice” as areas of interest. United Kingdom rules permit alternative business structures which authorize legal service providers to apply for licenses allowing outside ownership or non-lawyer investment. Multidisciplinary practice refers to a type of Alternative Business Structures (ABS) firm that provides both legal and non-legal services.
The current Washington D.C. Bar rule permitting non-lawyer ownership is a modification of the American Bar Association’s Model Rule 5.4(b) and was implemented in 1991. The rule permits lawyers to practice law in a with non-lawyer partners/owners if the non-lawyers provide professional services within the firm, the law firm solely offers only legal services, and non-lawyers follow the rules of professional conduct.
The press release states that the committee would like to receive responses from Washington D.C. law firms that have non-lawyer partners to determine if the current rules have made it easier to retain professionals including medical doctors or nurse practitioners, mental health experts, economists, lobbyists, accountants and law firm managers. The press release also states that it would like to know if there is any client demand for more types of professional services, and whether firms have lost business because of their inability to deliver these services.
The press release also requests comments regarding how law firms could benefit from sharing fees with non-lawyers, and whether this outside investment would allow greater innovation through technology use or increased financial stability. The committee is also considering how a rule change would impact firms that currently work with third-party litigation funders, or are interested in doing this and will be examining what type of regulatory structure would work best for non-lawyers working within law firms.
California, Utah and Arizona also have Bar task forces which are examining similar potential revisions and the Chicago Bar Association has announced the creation of a task force. The ABA’s House of Delegates will also consider a resolution that would encourage jurisdictions across the U.S. to experiment with new regulatory models at its February midyear meeting in Austin, Texas.
Bottom line: As I indicated, Washington D.C. is the only U.S. jurisdiction that currently allows lawyers to partner with nonlawyers and those partnerships are subject to certain restrictions; however, D.C. is considering relaxing its rules and other jurisdictions are considering new rules related to non-lawyer ownership of law firms.
I will keep you advised…and be careful out there.
Disclaimer: this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.
Joseph A. Corsmeier, Esquire
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