Over the past couple of weeks, there were a couple of developments that could—and I emphasize could—impact the business of law.
First, California has flirted off and on for a while now with changing the ownership rules for law firms and allowing nonlawyer ownership. Unlike regulators in Utah and Arizona, though, the good folks in California have never been able to bit the bullet and allow ownership by anyone but full-fledged lawyers. Recently, another California committee once again closed the door. The first was a report out of California.
An ownership proposal had been under review for several months by something called the Paraprofessional Program Working Group. According to reports, the Committee bowed to substantial “public” criticism. It thus decided not to recommend that nonlawyers be allowed to own a stake in law firms. The Committee also rejected a proposal for a new class of licensed nonlawyer professionals. These professionals could have provided limited legal services in California.
According to the Committee, there was overwhelming public opposition to the proposals. I’m reasonably sure, though, that those overwhelming comments came from lawyers and maybe judges. Those who the judicial system is supposed to serve—those who need more efficient, better, and less costly legal services—may not have been familiar with the proposal and its impact. Or, for that matter even how to comment.
It had long been thought that if a state like Californian or Flordia supported nonlawyer ownership of firms, the dam would break. And somewhat by necessity and pressure, similar proposals might gain traction elsewhere
It had long been thought that if a state like Californian or Flordia supported nonlawyer ownership of firms, the dam would break. And somewhat by necessity and pressure, similar proposals might gain traction elsewhere. Both states have rejected a change in ownership rules, which is discouraging and likely chills the chances for progress. And the fact that a nonlawyer professional program– that might reduce costs and spur A2J efforts– was also rejected means business as usual for lawyers in California and most other places.
The second development was encouraging but probably no more likely to go anywhere. The Association of Professional Responsibility Lawyers sent a letter to the ABA President that proposed a change to Model Rule 5.5 of the ABA Model Rules of Professional Conduct. Rule 5.5 governs the unauthorized practice of law and multijurisdictional practice.
The Association is a group of more than 400 lawyers and law professors who provide advice on legal ethics matters.
“Our proposal advocates that a lawyer admitted in any United States jurisdiction should be able to practice law and represent willing clients without regard to the geographic location of the lawyer or the client, without regard to the forum where the services are to be provided, and without regard to which jurisdiction’s rules apply at a given moment in time.”
The ABA’s current Model Rule 5.5 (and the rules of most states) provides that lawyer not admitted to practice in a particular jurisdiction shall not establish an office or continuous presence in that jurisdiction, except as authorized by the ethics rules or other law. In most cases, an out-of-state lawyer can temporarily practice in a particular jurisdiction by successfully filing a motion pro hoc vice in most circumstances. But many states and courts require the out of state lawyer have a local counsel admitted in the state. In most courts, a local lawyer must be present for court appearances and trials.
The upshot of this proposal, if accepted and adopted by a majority of states, might be to enhance the reach and prestige of national law firms.
The upshot of this proposal, if accepted and adopted by a majority of states, might be to enhance the reach and prestige of national law firms.
But, in part for that reason, I would be surprised in this proposal went anywhere. While most lawyers are competent to practice in various states even if not admitted or having passed that state’s bar, to allow them to do so would eviscerate local lawyer counsel. Many lawyers, especially in smaller cities and states, make a good living being local counsel. They aren’t going to be willing to give that up. And state bar associations would have to approve the proposal for their state for this proposal to have any real impact. It’s doubtful state bars will be willing to give up authority over lawyers practicing in their state.
So it’s likely to be the same old, same old, for the time being. Change is still fought tooth and nail by the legal profession.
(I should add that the views in this post are mine and mine alone. They do not reflect the position of any state bar or the ABA. Any rule change would have to be approved by the ABA House of Delegates. Typically, the ABA Standing Committee on Ethics and Professional Responsibility reviews possible rule changes and gathers input through a public hearing and written comments).