Are ABSs coming to America? They may be in North Carolina

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By Legal Futures

10 March 2011

Over-hyped and over there? The US profession has opposed UK-style ABSs

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, introduced by Senator Fletcher Hartsell, a lawyer at Hartsell & Williams, would allow minority (up to 49%) non-lawyer ownership of legal practices, and external ownership of accountancy practices too.

It stipulates that non-lawyers would be prohibited from interfering “with the exercise of professional judgment by licensed attorneys in their representation of clients”. If there is an inconsistency or conflict between the duties to the court, to clients, and to shareholders, then it says the duty to the court “shall prevail over all other duties”, while the duty to the client would prevail over the duty to shareholders.

It also that says external shareholders who hold or control less than 5% of the voting stock would not, solely as the result of stock ownership, be relevant for a determination of conflict of interest.

A spokesman for the North Carolina State Bar Association told Legal Futures that the bill had just been introduced and the bar “has not had any chance yet to review the proposed bill or adopted any position on [it]”. Legal Futures tried to contact Senator Hartsell earlier this week but he has yet to respond.

In an article in The Lawyer, Professor Mitt Regan of Georgetown Law School – who has promoted much of the discussion in the US about Legal Services Act-style reforms there – is quoted as saying that even if North Carolina passes the bill, “lawyers in a firm that has offices in other states would be in violation of state laws unless there was structural change”.

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