Can non-lawyers own a law firm?

Yes, say some.

Only a short time ago, we believed that non-lawyers would be able to participate in the ownership of American law firms. The pressure, so we believed, would come from the British Empire. Australia already allows this and it will soon be permitted in England. But, not the U.S. … until now.

The District of Columbia permits non-lawyer ownership to the extent of 25% interest in a law firm. And, now, North Carolina has a bill before its Senate that would allow 49% non-lawyer ownership.

One argument is that law firms have expanded and are now very large organizations. In order to grow, they need additional capital … and capital is best raised in the capital markets, not from individual partners of law firms … and that means non-lawyer ownership. While large law firms are looking more and more like their corporate clients, it is still a stretch to suggest that law firms should raise outside capital.

Do law firms need to grow? Why can’t corporate clients’ interests be served well by smaller regional law firms? Why does the corporate law firm have to be as large as the client? We saw unions grow in both size and power in response to corporate and management  growth and power. And we now see unions fighting to stay alive. Will that also happen to large law firms of the future? Will technology enable small groups of lawyers to be effective in large corporate representation? 

Some argue that the rules of professional conduct wouldn’t bind non-lawyers in matters of confidentiality and charging reasonable fees. Further, the very independence of lawyer’s judgment might come into question. But, the rules have been bent, if not changed or discarded entirely, when large firms’ economic interests were at stake. So, it will be fascinating to see who argues on which side and how this issue develops.

Is it possible that this issue will finally cause the break up of the mandatory (integrated) bar association into State licensing agencies on the one hand and voluntary bar associations on the other hand … with the latter being the home of sole and small firm practitioners banding together to serve their own economic interests?

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