The American Bar Association (ABA) Commission on the Future of Legal Services released an Issues Paper on November 3, 2014, which solicited public comment. In December I submitted my comments, which can be found on McKinley Irvin’s blog. While the Commission called for comment on a number of significant issues, my comments focused on alternative providers of legal services and regulatory innovations, including non-lawyer ownership interest in law firms.
My comments, focused on legal innovations, can be summarized as follows:
1. The ABA should consider the history of ethics rules, as many were promulgated in an effort to prevent change within the profession as society changed around it.
2. Rule 5.4 is intended to preserve the lawyer monopoly over financial interests related to the delivery of legal services, not to protect the independent judgment of lawyers.
3. Ironically, this same protectionism is actually stifling law firms from innovating and growing as it restricts law firms’ access to capital and multidisciplinary talent.
4. Private law practice is a business and lawyers are motivated by profit; the success of a law firm’s business often correlates with the success/quality of its law practice.
5. Non-lawyer investment in law firms and the independent professional judgment of lawyers are not mutually exclusive.
6. Reform of the rules should be considered carefully, as a “fail fast, fail often” mentality is not an appropriate approach to disruption and innovation within the legal system.
7. Change in regard to these rules is being modeled by Australia, the UK, and Canada without disastrous effects, at least not thus far.
8. It is time for modernization of the ethics rules, especially 5.4, to allow non-lawyers to have an ownership interest in law firms.