US bar sets 10-point checklist for non-lawyer ownership

Topics: Alternative business structures

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The influential American Bar Association has reluctantly paved the way for more non-lawyer ownership of firms in the US by setting out a checklist of aims for service providers to uphold.

A divided ABA House of Delegates resolved this week to adopt 10 model objectives for the provision of legal services, which should guide each state when it comes to assess regulations on ‘non-traditional legal service providers’.

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The guidance is intended for each state’s highest court when they consider legal services regulation and whether to relax rules about who provides advice services.

The ABA has stated in the past its opposition to non-lawyer ownership, and indeed a proposal to reaffirm that stance drew near-unanimous support at the delegates’ meeting in San Diego.

Resolution 105 stated that nothing contained within it ‘abrogates in any manner existing ABA policy prohibiting non-lawyer ownership’.

But in the face of increasing interest from US states in some degree of liberalisation - as well as unmet need for tens of millions of Americans - demands for new legal services models have grown louder, and the ABA has decided to offer guidance for those who do embrace a new model.

‘We must embrace change in terms of how it will help the public that we are sworn to serve,’ said Judy Perry Martinez, who chairs the ABA Commission on the Future of Legal Services.

Stephen A Saltzburg, a member of the ABA commission on legal services, told Bloomberg the ‘reality’ is that traditional providers cannot provide enough lawyers to represent everyone who needs legal help.

The new objectives include protection of the public, advancement of the administration and the rule of law and ‘meaningful’ access to justice.

They also stipulate transparency regarding the nature and scope of legal services to be provided, the credentials of those who provide them, and the availability of regulatory protections.

There must be ‘accessible civil remedies’ for negligence and breach of other duties, disciplinary sanctions for misconduct, and advancement of ‘appropriate preventative or wellness programs’.

Washington State has already made amendments to allow lawyers and non-lawyers to jointly own a law firm. It is understood the state of California is also considering changes to liberalise its legal market.

The strength of feeling was clear at the ABA mid-year meeting, with 45 requests to speak on behalf of the resolution and another 35 against it.

David P Miranda, president of the New York State Bar Association, said the resolution ‘opens the door to tacit approval’ of non-lawyer services and was a ‘step backwards’.

A statement after the meeting said the association will ‘continue to act to protect the public by working to ensure that lawyers retain their ability to exercise independent judgement free of outside economic influence and that in New York, non-lawyers will not be permitted to provide legal services without being under the supervision of a lawyer’.

Readers' comments (5)

  • It is clear that the gravitational waves emanating from the home of Magna Carta, carrying news of the various ABS failures, have not yet reached our American cousins.

    Sober reflection this side of the pond by English lawyers must make most conclude, that huge damage has been done to the fabric of the UK legal system, in all its manifestations.

    So I hope that USA jurisprudence can survive the turbulence of the fabric of justice being slowly unstitched by pressure from politicians, with little understanding of the laws of unintended consequences.

    With reduced judicial discretion contemplated here, mass court closures, virtual courts and privatisation of our priceless land registry, UK solicitors know all too well the devasting effects of these consequences.

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  • Exactly Stephen. And New labour was told and told and told again before the introduction of the Legal Services Act not to do it. But it seems that the more you tell any MP not to do something, the more they become determined to do it. They are like naughty children. No, they are worse than naughty children. At least you can punish naughty children.

    There was a time when the maximum number of partners was 20 and that's not so long ago. Not quite Eastbourne in 1973, but almost!

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  • When this happens, it will be interesting to watch. The Yanks / (and the Southerners of course) are the the unchallenged world leaders in this. Just look at Enron.

    If that's what they want to do over there, all well and good. But the trouble will start when they look over here.

    When the first multi-national US-based ABS takes over in England and Wales and starts fabricating profits out of WIP, it will make Slater plus Gordon; Paribas and Quindell/Swindell/Swindle look like an A Level business studies coursework project.

    Of course all the work will actually be deemed to be the use of the brand name and the case management system, both of which will be based in Bermuda, with a remote facility headquartered between Ireland and Luxembourg. Consequently they'll pay zero tax.

    But no doubt we'll all have to foot the bill when the inevitable claims on the Compo fund come.

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  • "The Smartest Guys in The Room" should be compulsory viewing for everyone in business. My son bought it for me for Christmas and, I kid you not, it just shows how you can fool almost all of the people almost all of the time, even Arthur Andarson.

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  • Idiots.

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