Larry Ribstein links to a WSJ piece about Jacoby & Meyers challenging state laws that prohibit non-lawyers from owning stakes in a law firm. Ribstein alludes to several arguments he made in his article, the Death of Big Law with respect to ownership of firms.
The real problem is with lawyer licensing, which is what gives professional rules like the ban on outside capital their bite. An antitrust challenge might eventually work, but I doubt it. More potent in the long run is the combination of consumers rising up en masse against the high price of legal services and upstarts like J & M seeking to make money by challenging the satus quo. As I say inDeath of Big Law (footnote omitted):
“Ethical rules are unstable to the extent that they pit the legal profession’s collective interest against individual lawyers’ self-interest. Those who incur the highest costs from these rules will take the lead in changing them. Change is particularly likely to come from smaller firms operating on the edges of conventional professional norms that seek to offer lower-cost services without costly large-firm baggage.”
In any event, the end game here isn’t J & M. As discussed in the Death of Big Law (footnote omitted)
“Law may be just one of several lines of products or services sold directly to consumers. For example, chains like Wal-Mart or Tesco can sell wills and other legal advice along with tax services and eyeglasses. An established retailer can leverage its brand by extending the firm’s scope to embrace a different type of service. * ** Mass retailers can compete with small independent law offices because they have more established reputations and can cross-sell legal and other types of services.”
I also note:
“Instead of having to trust a worker cooperative with a tenuous future or a sole practitioner recommended by a relative or a subway advertisement, clients could rely on a large retailer’s reputation for service that supports all of its profit-making activities, including law practice.”
I chat more with Ribstein about his article, the Death of Big Law in this JoshCast.