Maryland Bar Bulletin
Publications : Bar Bulletin : January 2013

|

John P. Kudel

John P. Kudel

While reading this month’s edition of the ABA Journal, an article drew my attention.

The article, “Closing Act: Ethics 20/20 proposals crack open the door for foreign lawyers to practice in the U.S.”, summarizes the latest recommendations to be made by the ABA’s Commission on Ethics 20/20, a group formed by the ABA in 2009 to study the impact of technology and globalization on the legal profession and to propose possible revisions to the Model Rules of Professional Conduct. These recommendations will be made to the ABA’s policymaking House of Delegates at its Midyear meeting in Dallas on February 11.

While the subtitle focused attention on the Commission’s recommendation to formulate a policy to make it easier for foreign lawyers to obtain limited authority to practice in U.S. jurisdictions, the article also disclosed that the Commission was not submitting a recommendation on another proposal described as “Choice of Law Issues Relating to Non-Lawyer Ownership Interests in Law Firms”.

The proposals would permit not only non-lawyers to own or have an ownership interest in law firms, but also permit fee sharing with non-lawyers.

These Model Rules of Professional Conduct rule changes were first discussed by the Commission in December, 2011. The first proposal offered by a working group, which would have allowed non-lawyers to own portions of law firms not to exceed twenty-five percent, was rejected by the Commission. However, a separate proposal was put forward that, according to the article, “would have revised a comment to Rule 1.5 of the ABA Model Rules of Professional Conduct to assert that – subject to provisions in Rule 5.4 (Professional Independence of a Lawyer) – it is permissible for a lawyer in a jurisdiction that prohibits non-lawyer ownership of law firms or sharing fees with non-lawyers to divide a fee with a lawyer at a firm in another jurisdiction that does permit law firms to have non-lawyer owners or that allows them to share fees with non-lawyers.”

That proposal drew the attention of and opposition by the Illinois State Bar Association and the ABA Senior Lawyers Division. With the unanimous support of its Board of Governors, the Illinois State Bar drafted the following resolution which sought to reaffirm policy originally adopted by the ABA in 2000, policy that prohibited non-lawyer ownership of law firms and the sharing of fees with non-lawyers:

“The sharing of legal fees with non-lawyers and the ownership or control of the practice of law by non-lawyers are inconsistent with the core values of the legal profession. The law governing lawyers that prohibits lawyers from sharing legal fees with non-lawyers and from directly or indirectly transferring to non-lawyers ownership or control over entities practicing law should not be revised.”

The Illinois Bar reached out to other bars, including MSBA, for support and a request to cosponsor the resolution. MSBA’s Board of Governors also voted unanimously to cosponsor the resolution. Bars in Indiana, Mississippi, North Carolina, New Jersey, Oregon, Nevada, Iowa, South Dakota, the Young Lawyers Division of the ABA, and the National Conference of the Women’s Bar Association joined the cause. The resolution, which became known as 10A, produced a lengthy and extremely contentious debate at the Annual Meeting in Chicago in August, 2012. The resolution was ultimately postponed on procedural grounds, but the message to the Commission was clear.

“A core value of our profession is the ability to be independent and free from influence. We are subject to the highest ethical standards, and we are held accountable when we do not meet them.”

In September, the Commission referred the fee division issue to the Standing Committee on Ethics and Professional Responsibility, which is empowered to write formal ethics opinions for the ABA. In November, the Commission voted not to develop any proposals to allow any form of non-lawyer ownership interest in U.S. law firms. In its final report to the ABA’s House of Delegates, the Commission said:

“We have used our best judgment as to which issues are worthy of debate and consideration in the House and capable of making a difference for the profession. Given the time and energy that will be appropriate for the House and the commissioners to spend on the important issues before the House in February, 2013, the commission decided not to proceed with proposed changes to Rule 1.5.”

(The Commission’s proposals can be reviewed in detail at www.abanet.org/ethics2020.)

The decision of the Commission is not only a victory for the Illinois State Bar, MSBA, and all of the other cosponsors, it is a reaffirmation of a principle that we as lawyers hold near and dear to our hearts.

A core value of our profession is the ability to be independent and free from influence. We are subject to the highest ethical standards, and we are held accountable when we do not meet them.

This is not true of non-lawyers. The ownership by non-lawyers of law firms may create situations where the duties to the client are compromised by certain duties to the shareholders. At a minimum, non-lawyer ownership may create unavoidable tension between the client and the law firm. In the end, we must remember that we are first and foremost a profession and not merely a business.

For now, the issues are resolved. We will continue to monitor this debate and we will not hesitate to speak out in support of maintaining the integrity and honor of our profession.

next next
Publications : Bar Bulletin : January 2013

back to top