3/10/11

NC Law Firms Becoming Businesses?

On Monday I blogged about “UK Law Firms Becoming Businesses.” The thrust of that post was on how the UK is enabling their law firms to compete globally by removing the restrictions on non-lawyer ownership in law firms.
Apparently North Carolina (NC) is considering a similar path. A Senate Bill introduced recently proposes they “Allow Nonattorney Ownership of PC Law Firms. … (S)ubject to certain requirements.”
Unlike the UK Legal Services Act, NC limits nonattorney (is that really a word?) ownership to 49%. I assume this is meant to insure that “nonattornies” don’t put undue pressure on lawyers to make money without regard for ethics. This is evidenced by the language: “The duty to the client shall prevail over the duty to shareholders.”
Even with the 49% restriction - I gotta say I am impressed with NC. This idea was floated in Utah 15 or so years ago and went down in flames. So it’s good to see someone willing to pick up the ball and run with it. I’m not sure how likely it is the NC bill will pass, but if it does it may be bellwether for other states.
US law firms may have a chance to compete after all.

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2 comments:

Richard S. Granat said...

This is an unusual development, but does not go far enough.
49% ownership doesn't leave much room for innovation on the financial side in terms of creating a structure that could attract substantial capital. Ownership of a law firm, or law firm network is still prohibited, unlike the UK model. With access to capital and modern management technologies, solos and small law firms will remain a cottage industry with no efficiencies of scale.

Dr. Craham said...

My feeling is that this will be a very slippery slope and should not be allowed. Legal services are bound to such high ethical standards, that it must fall upon individuals to be personally and professionally responsible, not corporations.

 

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