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Why Lawyers Reject Non-Attorney Firm Ownership

Sept. 30, 2022, 8:00 AM

When the American Bar Association voted this summer to reaffirm its longstanding policy that only lawyers should be allowed to own law firms, critics warned the decision thwarts innovation and keeps legal services out of reach for low- and middle-income consumers.

Nothing could be further from the truth.

Invested Interest

Accounting firms, investment companies, hedge funds, and software manufacturers that want to tap into lucrative legal services cast themselves as trailblazers that will reduce client costs.

In reality, it’s attorneys who are constantly innovating to expand access to justice. For-profit entities not owned by lawyers have no interest in investing in a law firm that provides legal services to the indigent.

“Innovation can be effectuated without abandoning core values that have strong implications for assuring that the practice of law remains a learned and independent profession that serves the public and defends justice,” the New York State Bar Association and bar associations in Illinois and New Jersey said in their report urging the ABA to reaffirm its policy.

No Recourse, Low Demand

The ABA House of Delegates agreed, deciding that non-lawyer ownership and fee-splitting with non-lawyers is at odds with the profession’s client-centric ethical standards. Proponents of the measure noted that lawyers who break the rules can be suspended or disbarred—a powerful consumer protection. But no such recourse exists in the case of non-lawyers who prioritize profits over the client interest.

It is, of course, paramount that the legal profession do all it can to expand access to justice. But turning to non-lawyers will not fill this need. We know this because it hasn’t worked in the states that have experimented with the concept.

In Arizona and Utah, which have opened their doors to non-lawyer providers, there hasn’t been a flurry of these entities flocking to provide free legal help to low-income clients as they try to fight off debt collectors, forestall foreclosure, avoid eviction, or divorce their spouses, according to Steve Younger, former president of the New York State Bar Association.

Younger, who is writing about non-lawyer involvement for the Yale Law Review, said these mundane civil matters generate the highest demand for low-cost legal services. But in Arizona and Utah, very few businesses have demonstrated a desire to take on these cases and there’s no way of verifying whether the advice clients receive is right for them.

The reality is that the non-lawyer-owned businesses are drawn to lucrative practice areas such as estate planning, wealth management, and personal injury. But these clients already have many lawyers to choose from.

Pro Bono Expertise

In contrast, bar associations across the country have found effective ways to ethically expand access to justice. For example, the New York State Bar Association has had success in advancing government-funded legal services programs and voluntary pro bono programs staffed by private practitioners. Other bars continue to explore and study new avenues for innovation in the legal profession to improve client service.

During the Covid-19 pandemic, volunteer attorneys advocated for New Yorkers who were denied unemployment insurance, represented the survivors of low-income residents who died of Covid-19, assisted veterans who received other than honorable discharges because of their sexual orientation, traumatic brain injuries, and other factors, and helped businesses facing eviction.

In its report, the ABA identified innovative lawyer-run programs to expand access to legal services. They include online dispute resolution, help for pro se litigants, expanded virtual court services, and streamlined litigation procedures. These programs prove that when lawyers innovate, they can solve the most difficult problems—and do so with the ethical underpinnings of the profession as their guide.

In 2017, for example, New York City passed the Right to Counsel law with the full support of the New York State Bar Association. Before the law, attorneys represented only 1% of tenants in housing court compared to 95% of landlords—putting landlords at a significant advantage. By 2021, when the right to counsel program expanded citywide, and that 1% jumped to a whopping 71%.

Role for Non-Lawyers

There is a role for non-lawyers to play in improving access to justice for all. The New York bar trains non-lawyers to assist unrepresented litigants who need help navigating the often-byzantine court system.

Similar navigator programs provide basic information on family law and housing problems, such as divorce, child custody, and eviction in Alaska and Hawaii. The key is that non-lawyers help litigants successfully navigate the court system, but do not and should not give legal advice.

The internet has also enabled attorneys to vastly expand their reach to assist those in need through virtual legal clinics such as the ABA free legal answers website. The ABA provides quality legal assistance to clients who need assistance with family, divorce, custody, housing, eviction, homelessness, consumer rights, financial assistance, employment, unemployment, health-and-disability, and civil rights issues.

While the progress so far has been substantial, the legal community is by no means done innovating. That is why I have made improving access to justice and the digital economy main focuses of my year-long presidency of the New York State Bar Association.

As lawyers, we are formally trained and sworn to perform ethically and to the best of our ability. That is a standard that non-attorney-owned businesses will never be able to meet.

This article does not necessarily reflect the opinion of The Bureau of National Affairs, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

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Author Information

Sherry Levin Wallach is the 125th president of the New York State Bar Association, the nation’s largest voluntary state bar association. She is the deputy executive director of the Legal Aid Society of Westchester County in White Plains, N.Y.