Nonlawyers in the Business of Law: Does the One Who Has the Gold Really Make the Rules?

For at least sixty years nonlawyers have been prohibited from offering their nonlegal talents in a business combination with lawyers practicing law. Moreover, when the ABA\u27s new model rules were adopted in 1983, the ABA considered carefully but rejected a proposal that would have lifted the traditional ban on nonlawyer ownership of a law business. Nonetheless, the point of each article was that the relevant restrictions in the ethical rules are on their way out. Commentators have given considerable attention to the unauthorized practice of law by nonlawyers, and to the offering of legal services by nonprofit institutions. The focus of this Article differs: it is the practice of law by lawyers for profit in a business partially owned or controlled by nonlawyers. The difference is important. For even if it is agreed that lawyers should be licensed, and that those who cannot meet the licensing requirements should be prohibited from practicing law, it does not follow intuitively or necessarily that nonlawyers should be prohibited from offering their nonlegal resources and talents in a business combination with lawyers practicing law. In section I the Article discusses the content and history of rules prohibiting the combination of nonlawyers with lawyers in a partnership. Section II then examines the arguments that traditionally have been advanced in support of these prohibitions. The section concludes that the prohibitions cannot be justified as necessary for protection of legal services because less restrictive alternatives are available. Indeed, the existing rules seem to owe their surprising tenacity more to the fact that they serve the profession\u27s economic self-interest than to any public purpose. In section III the Article argues that the prohibitions are no longer justified, if they ever were. Moreover, the section shows that there is a need and demand for innovative arrangements between lawyers and nonlawyers that would provide multidisciplinary services to the public, and that would provide infusions of capital to serve the public better and more efficiently. The existing prohibitions, however, inhibit such arrangements. Finally, section IV examines alternative approaches to reform at the state and federal level