New York State Bar Association President Vincent E. Doyle III today announced he has created a task force to study whether nonlawyers should be allowed to own equity interest in law firms.
This concept has been advanced for discussion by the Commission on Ethics 20/20 of the American Bar Association (ABA).
Testifying in New Orleans before the commission, Doyle (Connors & Vilardo) of Buffalo said that historically, the New York State Bar Association has opposed nonlawyer ownership of law firms. Nonetheless, he added that as result of changes in the profession, and the growing globalization of the modern world, the idea "is worthy of serious consideration."
"The New York State Bar Association remains opposed to nonlawyer ownership of law firms," Doyle said. "Nevertheless, we recognize that Ethics 20/20 has given considerable thought to this topic and that its current proposal is in some respects different and more restricted than the proposal that was defeated in 2000. In addition, more than 10 years have passed since the ABA last considered this issue and those years have changed the legal profession in some ways."
In 1998, the ABA created the Commission on Multidisciplinary Practice, prompted in part by "Big 5" accounting firms seeking to "acquire" law firms in the United States as they had done in Europe. The commission recommended that nonlawyers be permitted to have ownership interests in law firms. The proposal would have authorized the formation of multi-practice firms that could provide legal and nonlegal services, such as accounting, financial planning and investment banking.
A special committee of the New York State Bar Association, chaired by Robert MacCrate-former president of the ABA and State Bar-studied and rejected the proposal, expressing concern that it would endanger core values of the legal profession, including "loyalty, independence and confidentiality," Doyle said.
In June 2000, the State Bar's House of Delegates adopted a resolution providing that: "Nonlawyer investment in entities practicing law should continue to be prohibited."
"Based on this resolution," Doyle said, "the New York State Bar Association joined with several other state bar associations to lead the effort within the American Bar Association to oppose the multiple-disciplinary practice proposals, including the proposal to allow nonlawyer ownership. In the end, these proposals were voted down by the ABA House of Delegates."
During the past two years Doyle has had countless discussions with attorneys across New York state. "Not once in these conversations did any lawyer suggest to me that nonlawyer ownership was what the profession really needed," he said.
In response to the ABA discussion paper on nonlawyer ownership, Doyle has appointed a Task Force on Nonlawyer Ownership to re-examine the State Bar's position in light of changes in the legal profession. Former State Bar President Stephen P. Younger (Patterson Belknap Webb & Tyler) of New York City chairs the task force. He is also an ABA delegate.
Doyle recognized the current proposal takes a more restrictive approach than the ABA's 2000 proposal, which would have permitted nonlawyers to own equity in a firm offering multi-disciplinary services (such as law and accounting). In contrast, the latest proposal would permit nonlawyers who work at a law firm to own a limited, noncontrolling share of the firm. Many law firms employ investigators, accountants, nurses, engineers, social workers and other professionals to assist attorneys.
Nonlawyer ownership of law firms is prohibited in all 50 states, but is permitted in the District of Columbia and some foreign countries, including the United Kingdom and Australia.
The Commission on Ethics 20/20 is gathering reactions to its December 2 discussion paper on nonlawyer ownership. Doyle's testimony is the first submitted by any state bar association on the issue of nonlawyer ownership. Any formal proposal would be considered by the ABA House of Delegates no sooner than February 2013.
To read Doyle's ABA testimony, see http://www.americanbar.org/content/dam/aba/administrative/ethics_2020/ethics_2020_public_hearing_schedule_and_written_testimony_feb_2_2012.authcheckdam.pdf
The 77,000-member New York State Bar Association is the largest voluntary state bar association in the nation. It was founded in 1876.
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