“Law is too important to be left to lawyers alone.” Eddie Hartman, Cofounder of LegalZoom stated this past weekend at Stanford CodeX Future Law Conference as he made a compelling case for non-attonrey ownership for law firms in the U.S. The ABA Model Rules of Professional Conduct 5.4 versions of which have been enacted in most states. Under these rules:
“Non-lawyers are prohibited from creating, owning or managing law firms, either alone or in partnership with lawyers. (Only the District of Columbia allows minority-nonlawyer ownership of U.S. law firms.)”
The LegalZoom cofounder believes that if non-lawyers had a seat on the firm’s equity table, quality would go up, and errors would go down. As lawyers would be able to practice law, non-lawyers would be able to provide business operations and make innovative investments, and technology people will provide technology. “If business professionals don’t have a seat at the table, there is lack of incentive to innovate.”
While comparing the health and legal professions, Eddie argued without non-doctor contributions to healthcare, millions would have been “dead” and then went on to cite all of the innovative contributions in the healthcare industry as an result of non-doctor ownership. He also cited the U.K. Legal Services Act—adopted in 2007, which radically overhauled the regulation of legal services in England and Wales allowing nonlawyers to hold ownership and management positions in law firms and allowing creation of multidisciplinary practices.
This much needed discussion came a little too late as the ABA’s House of Delegates needed to see a formal proposal on so-called “alternative business structures,” which allow non-lawyer ownership, by May 10 and the Commission on the Future of the Legal Profession, the ABA group in charge of the debate over ABS, allowed the deadline to pass without submitting anything.