15 Aug Canadian Bar Group: Let Non-Lawyers Own Law Firms

According to Canada’s Globe and Mail, the Canadian Bar Association has recommended allowing non-lawyers to be owners of law firms. England has allowed it since 2007, and Australia also has firms owned by non-lawyers. In fact three Australian law firms are publicly held companies. This is not yet permitted in the US (but DC allows some non-lawyer ownership according to www.abovethelaw.com). What are the arguments pro and con?

Against non-lawyer ownership: Law is a profession not a business. Ethics must rule decision making, not profits. Being answerable to outside investors would impair judgment. For non-lawyer ownership: Firms now can only finance growth with bank loans. Many are effectively already controlled by these banks, and too many brought down by temporary cash flow problems leading to loans being called. Professional judgment already risks impairment because even lawyer owners want to make money. Allowing equity to be owned by long term investors caring about the health of the organization vs. repayment of a loan would enhance the longevity of firms. And lawyers always must exercise proper ethics and discretion regardless of profit, whether they own the firm or an outsider does.

You can tell where I’m going. It’s time to allow US law firms the option to have outside investors directly (strorefront legal chain Jacoby & Myers did it years ago indirectly through a separate service company but with the same effective results). If you think lawyers don’t already face the ethics vs. profit challenge every single day regardless of ownership, you may need to trade that dusty copy of Black’s Law Dictionary for the sleek online version.