The American Bar Association (ABA) has taken a first step towards introducing alternative business structures in response to rule changes on this side of the Atlantic.

A New York law firm’s decision to bring English barristers into its partnership via its City office has prompted the ABA to consult on relaxing law firm ownership rules.

It launched a consultation last week on non-lawyer ownership of US firms, saying the competitive environment in which US firms operate has changed since it last examined the issue in 2000.

The ABA cited the move by New York litigation firm Kobre & Kim to convert its London office to a legal disciplinary practice (LDP) last year.

Kobre & Kim’s move allowed its UK lawyers, including two barristers and a solicitor, to practise English law as partners in the firm.

The ABA has already said that, while it will consider non-lawyer ownership of law firms, it will not allow passive external investment by non-lawyers, such as private-equity investment.

‘The competitive environment in which US firms of all sizes now operate has changed,’ the ABA said in its consultation paper.

‘The economic challenges of the intervening period invite reconsideration of whether alternative business structures might serve to enhance access to legal services for those otherwise unable to afford them, and to provide new and varied opportunities for lawyers and firms, domestically, to better serve clients.

‘While the regulatory environment elsewhere may not directly map the regulatory structures in place in the United States, US firms and lawyers are already participating in ABSs abroad. The discussion is no longer simply theoretical.’

Under the UK’s Legal Services Act, firms can already convert to LDPs, which allow non-lawyers to comprise 25% of a legal business.

In the US, non-lawyer ownership of law firms is only permitted in the District of Columbia, where there is no cap on the percentage of the firm that can be owned by non-lawyers.

The firm in question cannot provide non-legal services.

North Carolina is currently introducing legislation along similar lines.

The ABA is considering three changes to its code of conduct: to allow capped non-lawyer ownership, such as in UK LDPs; to allow a regime as flexible as that in Columbia; or to go further by permitting firms to offer non-legal services as well as purely legal services.

ABA rules are usually adopted by state governing bars and judiciaries, without the need for legislative change.