Washington Lawyer - May 2020 - 16

FEATURE
"The genie is out of the bottle," says Jan L. Jacobowitz, lecturer in law and
director of the Professional Responsibility & Ethics Program at the
University of Miami School of Law and co-chair of the APRL Future of
Lawyering Committee. "You can't put the genie back in the bottle. This is
happening. The question I like to ask is, do you want to participate and
have a voice in it or do you just want to have everything done to you?"
As regulators consider the best route to transform their professional
conduct rules, one issue they are grappling with is the shift from regulating individual attorneys to regulating individual attorneys and the
entities where they practice. By licensing and regulating entities, state and
local bars can require firms to hire compliance officers or adopt special
ethics rules to reinforce the importance of ethics for the entire hybrid firm.
This has been the go-to option overseas, and most observers expect it
will find its way into most if not all U.S. reforms.

The revised rule turned the District into a place for experimentation
where alternative business models could be tested and evaluated. The
most high-profile adopter of the D.C. rule was Howrey & Simon, which
designated its chief financial officer as a partner soon after the rule was
adopted. At the time, it was the first law firm in the nation to name a nonlawyer partner. Howrey closed in 2011, but a number of law firms and
corporations have taken advantage of the D.C. exemption to remake their
ownership.
Talisman of the D.C. Bar Global Legal Practice Committee believes part
of the challenge in determining how to apply the ethical rules is distinguishing between those related to the provision of legal services and
those targeting the economic structure of business entities. What is clear
is that if the District is to maintain its leadership, it will have to reconsider
its rules.

"A lot of American law is provided by very big businesses that happen to
be law firms," says IAALS's Bales, who established Arizona's task force
when he was Arizona Supreme Court chief justice. "There are always challenges in having multijurisdiction businesses in terms of meeting the
ethical requirements. Those already exist with respect to Big Law firms.
This just expands those issues."

"The D.C. Bar is the only [jurisdiction] that currently allows any kind
of profit-sharing with nonlawyers under limited circumstances," says
Talisman. "We would need to broaden that to be competitive. We would
also need to ensure lawyers' ethical requirements are not watered down
and that any other nonlawyer professionals we might license are subject
to ethical constraints."

A D.C. ADVANTAGE

Talisman says his committee has been looking at the effects of rule
changes, even the potential impact of enlarging the competitive field for
law firms by opening the door to the Big Four accounting firms. "The
larger accounting firms, if they were permitted to merge with law firms,
would bring a vast infrastructure. One could certainly see that could
create more pressure on the law firm community."

Over nearly three decades, the District of Columbia has followed a different path than its peers when it comes to law firm ownership. In fact, it
has been the only jurisdiction in the country where nonlawyers can be
partners in law firms, under certain conditions.

Courtesy of Squire Patton Boggs

In 1991 the D.C. Bar adopted its version of Rule 5.4 as part of the D.C. Rules
of Professional Conduct. It allows for lawyer-nonlawyer partnerships, as
long as firms meet a number of conditions. For example, the sole objective of the partnership must be to provide legal services. Typical nonlawyer partners could include accountants, lobbyists, public affairs
professionals, and data specialists.

We would need to broaden [profit-sharing with
nonlawyers] to be competitive. We would also need to
ensure lawyers' ethical requirements are not watered
down and that any other nonlawyer professionals we
might license are subject to ethical constraints.
RICK TALISMAN
Squire Patton Boggs

WASHINGTON LAWYER

CONTINUING PUSH FOR INNOVATION
States and cities aren't searching for regulatory solutions on their own.
The Conference of Chief Justices, which represents the country's state
court leaders, urged its membership in a February resolution to "consider
regulatory innovations that have the potential to improve the accessibility,
affordability and quality of civil legal services, while ensuring necessary
and appropriate protections for the public."
Also in February, the ABA House of Delegates approved Resolution 115 at
its midyear meeting, encouraging jurisdictions to consider regulatory
innovations to increase access to legal representation while always
enshrining ethics protections.
The original version of ABA Resolution 115 sparked complaints from presidents of six state bars - New York, New Jersey, Ohio, Pennsylvania,
Delaware, and Illinois - who felt that it was a threat to the legal profession's values, arguing that it went too far in endorsing Rule 5.4 changes in
Arizona, California, and Utah.
In response to those criticisms, the resolution was altered. The revised
version states that "nothing in this Resolution should be construed as
altering any of the ABA Model Rules of Professional Conduct, including
Rule 5.4, as they relate to nonlawyer ownership of law firms, the unauthorized practice of law, or any other subject."
Today it's clear that the business model is being redefined because many
law firms, lawyers, and clients feel that it isn't working. And a fundamental
shift is required to ensure that law firms and lawyers are able to keep pace
with changes in society and the consumers of legal services.
Sarah Kellogg is a regular contributor to Washington Lawyer.

MAY 2020

Washington Lawyer - May 2020

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