Washington Lawyer - May 2020 - 14

FEATURE
The D.C. Bar Global Legal Practice Committee has waded into the debate,
despite the fact that Washington, D.C., is the only jurisdiction in the nation
that allows lawyers to form partnerships with nonlawyers under limited
circumstances. Earlier this year, the committee sought feedback from Bar
members on the changing models for obtaining and delivering legal
services, including alternative business structures (ABS) and multidisciplinary practices, and whether the Bar's Rule 5.4 should be modified
further to permit new and broader ways of obtaining and delivering legal
services. It is expected to release its recommendations later this year.
"We're in the study phase, looking at what other jurisdictions are doing,
what jurisdictions overseas have done, and what the results have been
of both," says Charles E. "Rick" Talisman, assistant general counsel and
partner at Squire Patton Boggs, and chair of the D.C. Bar committee. "The
jurisdictions overseas that have tried some of these approaches have not
experienced the problems that everyone expected. There are advantages
to doing this and some disadvantages."
Most legal regulators admit that this has been a long time coming in the
United States. Many American lawyers and law firms have hewed to tradition and history, despite the costs and encroachment from abroad. Still,
they believe the moment has arrived when everyone is finally able to ask
the inauspicious but necessary question: What part of a lawyer's work can
be done effectively and economically by a nonlawyer?

THE GLOBAL INFLUENCE
While the United States has been slow to answer that question or adopt
broad business-model changes, the rest of the world has moved boldly
forward to open up the infrastructure of the traditional law firm. These
efforts have occurred most promisingly in Australia, Germany, New
Zealand, and the United Kingdom.
The leading fomenters of the global movement to rewrite regulatory
schemes have been the Big Four accounting and auditing firms -
Deloitte, Ernst & Young, KPMG, and PricewaterhouseCoopers. These firms
offer integrated legal services in countries that don't allow ownership by
or payments to nonlawyers.
"Because of their strong C-level relationships with many corporations, the
Big Four possess a unique strategic advantage," concluded the Alternative
Legal Service Providers 2019 survey conducted by Thomson Reuters Legal
Executive Institute and its partners, the Saïd Business School at Oxford
University, the Center on Ethics and the Legal Profession at Georgetown
Law, and the U.K. firm Acritas. "They are also able to integrate their legal
services with their other offerings, and they have expertise that stretches
around the world."
In fact, 20 percent of large law firms surveyed reported that they had
competed against a Big Four legal team, and 23 percent said a client had used
one of the Big Four to perform work the law firm expected to do itself. For
midsize firms, 21 percent said they lost legal business to one of the Big Four.

"In the long run, the fundamental choice
that most law firms face is to adjust to
the new realities of the marketplace
or face an increasing erosion of their
abilities to compete effectively."

acquiring more investment capital, linking legal services with other pro-client
services, and, most significantly, eliminating billable hours in some cases.
One of the emerging concerns about any new system is how it will
impact the public benefits associated with traditional law firms, such
as pro bono services and initiatives to improve the practice of law. In
addition, changes in the delivery model could alter the current system
used to assess the quality of legal services. The jury is still out on these
effects internationally.
"In the long run, the fundamental choice that most law firms face is
to adjust to the new realities of the marketplace or face an increasing
erosion of their abilities to compete effectively," notes the 2020 Report
on the State of the Legal Market published by Thomson Reuters's Legal
Executive Institute and Georgetown's Center on Ethics and the Legal
Profession. "The outcome may not be immediate; some law firms may
opt to make incremental improvements to the 'traditional way of doing
things' in the hopes of staving off the inevitable. But sooner or later, the
market will prevail."
At this point, the revision of regulatory strictures has proven to be remarkably successful in the United Kingdom and elsewhere. And the data on
complaints shows there has not been a corresponding or noteworthy
increase in disciplinary actions against lawyers in ABS firms, thus countering fears that the injection of new capital models would corrupt the
ethical underpinnings of the system.

MOVEMENT IN THE STATES
Armed with the good news from overseas, a number of nonprofits
around the country are working with state courts and local bars to
revise law firm ownership rules. The IAALS and its Unlocking Legal
Regulation project and the Association of Professional Responsibility
Lawyers (APRL), through its Future of Lawyering Committee, are two
of the most active.

In the United Kingdom, its Legal Services Act, which was approved in
2007 and took effect in 2011, has been effectively leveraged by the Big
Four. The statute opened the door to nonlawyers becoming partners, law
firms being publicly traded, lawyers selling their firms to nonlawyers, and
legal services being offered alongside nonlegal services.

"There is widespread recognition that the need for legal services is simply
not being met in this country," says Art Lachman, a Seattle ethics attorney
and co-chair of APRL's Future of Lawyering Committee. "Some of the
restrictions we have in place were based on good intentions, but they
tended to have a chilling effect. No one is served by the regulations'
inhibiting delivery and innovation in legal services today."

These new ABS frameworks in the United Kingdom have allowed firms to
revolutionize their management by promoting innovative partnerships,

Arizona, California, and Utah are leading the way in revolutionizing law firm
business models. In January 2020, the Arizona Task Force on the Delivery of

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