A very cool piece in the Times about how Brits can now gain access to legal services in department stores–that is law firms that are not bound by the ethical requirement that only lawyers can run them, and have access to the capital markets–as a result of the new Legal Services Act.
Now, with calls increasing for a similar model in the United States, the country’s chief legal ethics authority intends to propose a plan to permit law practices to have limited outside ownership.
Such a move could upend the industry’s stiff adherence to the partnership system in favor of full-fledged corporations that have access to the capital markets.
Some legal experts envision a marketplace that would become more customer-friendly, affordable and accessible for the average consumer: one-stop shops on street corners that bundle, for instance, legal, banking, accounting and real estate services; drive-through-style law firms with numerous branches across the country, similar to accounting shops like H&R Block; more complex legal services offered online; and, of course, retail stores with a legal unit.
Allowing access to the capital markets will provide incentives to operate more efficiently, and invest in technology!
Regulators hope giving law practices access to private capital will allow them to invest in technology and other resources that could help them operate more efficiently and at cheaper rates.
“That surely expands the pool of individuals and organizations that have access to effective legal services,” said Mark Ross, the vice president of legal services at Integreon, an international legal process outsourcing company.
I find interesting the arguments of legal ethicists that non-lawyers would not be bound by the ethical code, and act unethically.
“The idea is that nonlawyers might not have the same codes of ethics,” said Andrew M. Perlman, a legal ethics professor at Suffolk University Law School and the chief reporter for the American Bar Association’s Ethics 20/20 commission, which is preparing the draft recommendation. “They might not be bound by the same sense of professional responsibility and might push the lawyers to do things that they should not be doing to chase the dollar rather than abiding by the rules of professional conduct.”
One ethical concern is about lawyer-client privilege, as shareholders would have an interest in knowing who the firm’s clients were and the specifics of their cases. Another is that lawyers might feel pressured, for example, to settle a lawsuit to make shareholders happy, no matter what the best interest of their client was.
Is this really much different from the incentives that currently face lawyers? Do lawyers not act unethically?
But such thinking derives from the naïve assumption that the lawyers “who currently own law firms are not motivated by profit,” said Ken Fowlie, the executive director of Slater & Gordon, an Australian law firm that was the first in the world to become a publicly traded company.
If anything, going public has increased transparency, Mr. Fowlie said, and has separated the ownership from the lawyers, giving the lawyers more distance from business side pressures than in traditional partnerships.
Don’t look here folks. Nothing to see. Keep moving on.