A Court of Appeal judge has issued a warning over the risk of external investment in law firms leading to “small, imperceptible steps” that could put business interests ahead of professional ethics.
The American Bar Association has dropped plans for any changes to its policy prohibiting the non-lawyer ownership of law firms. Having rejected more radical ideas such as ABSs, it had proposed a form of legal disciplinary practice.
Many of the lawyers who have only just woken up to the prospect of non-lawyer ownership of firms (a sizeable group, I’d wager) generally react with horror. The argument I hear all the time – exemplified by the letter signed by nine general counsel in the US – is that it will dilute the professionalism of lawyers, damage the lawyer-client relationship and lead to dastardly non-lawyers strong-arming lawyers to put profit before ethics.
New York lawyers are banned from running the Big Apple office of a UK alternative business structure with non-lawyer owners, the New York State Bar’s committee on professional ethics announced yesterday.
Non-lawyer investors in alternative business structures will have to disclose any previous convictions, even if spent, to pass the ‘fit and proper owner’ test, Legal Futures can reveal. It was the last major hurdle to the full adoption of ABSs.
The Solicitors Regulation Authority will not be able to start regulating alternative business structures on 6 October, Legal Futures can reveal. Further, the question of whether prospective non-lawyer investors in ABSs will have to reveal all convictions, even if they are spent, remains unresolved and could stop the SRA licensing ABSs with external ownership.
The first crack in the wall of American opposition to non-lawyer ownership of law firms has come in a bill laid before the North Carolina Senate. The bill would allow minority (up to 49%) non-lawyer ownership of legal practices.
The Solicitors Regulation Authority has outlined the steps that law firms are able to take under the current rules in preparing to become an alternative business structure. It has updated its July 2009 guidance that just highlighted what solicitors should not do.
The Law Society has begun laying down the red lines beyond which it will not be able to support alternative business structures (ABSs), Legal Futures can reveal. The society’s regulatory affairs board has highlighted a variety of issues that it expects to see addressed if it is to judge the arrangements for ABSs satisfactory, including effective controls on the fitness to own of prospective external owners.