DC Bar Eyes Revamping Law Firm Ownership Rules
Washington, D.C., is already the sole jurisdiction in the U.S. that allows nonlawyers to partner in law firms. Now a bar committee will consider going even farther.
January 24, 2020 at 12:25 PM
3 minute read
As a growing number of states mull allowing nonlawyers to take ownership stakes in law firms, Washington, D.C., is ahead of the curve.
The nation's capital is already the sole U.S. jurisdiction to allow lawyers to partner with nonlawyers. While these partnerships are subject to certain limitations, a D.C. bar committee announced Thursday that it would look into an even less restrictive model.
To that end, the D.C. Bar Global Legal Practice Committee has announced it will be taking public comments on its current system and potential changes until March 9.
The announcement specifically mentions "alternative business structures" and "multidisciplinary practice" as areas of interest. The former refers to the model in place in the U.K. allowing businesses that provide legal services to receive licenses enabling outside ownership or nonlawyer investment. The latter references a type of Alternative Business Structures (ABS) firm that provides both legal and nonlegal services.
The current D.C. rule governing nonlawyer ownership, a modification of the American Bar Association's model rule 5.4(b), has been in place since 1991. It allows lawyers to practice law in a firm that has nonlawyer partners, provided the nonlawyers provide professional services in the firm, the firm solely offers clients legal services, and nonlawyers follow the rules of professional conduct.
The Global Legal Practice Committee wants to hear specifically from D.C. firms that already have nonlawyer partners to learn if its existing 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 committee is also curious about client demand for a wider range of professional services, and whether firms have lost business because of their inability to deliver these services.
It's also asking for input about how firms might be able to benefit from sharing fees with nonlawyers, and whether this sort of outside investment would allow greater innovation through technology use or increased financial stability.
Another line of inquiry is into how a rules change would impact firms that currently work with third-party litigation funders, or are curious about doing so.
The committee also wants to explore what type of regulatory structure would work best for non-lawyers working within law firms.
In California, Utah and Arizona, state bar task forces have all begun exploring similar changes to attorney regulation, and Chicago's bar association announced a task force of its own in the fall.
At its February midyear meeting in Austin, Texas, the American Bar Association's House of Delegates will also consider a resolution that would encourage jurisdictions across the U.S. to experiment with new regulatory models.
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