In 2011 the U.K. took steps to make their legal system more liberal. At that time they introduced the Legal Services Act which allowed law firms to be able to offer shares on the stock market or take capital from external investors who are non-lawyers. The law firms would also be able to extend partnerships to professionals who are not lawyers. Needless to say, this has the potential to change the face of how law firms do business and compete with other firms on a global scale. Although this aggressive plan has many benefits, it recently suffered a major blow in influencing other countries to follow suit. In March of 2012, the New York State Bar Association banned New York based lawyers from working for firms that have non-lawyer owners no matter where in the world the firm is headquartered as a response to these new liberalized policies.
One possible solution to get around this new rule, proposed by Tony Williams, the founder of the law firm Jomati, is for the firms to structure themselves as a verien. This is where a brand would be shared but not profits. Mr. Williams however has no authority in the N.Y. Bar Association.
Recent events have pushed some sort of solution to be found because the Financial Times has reported that early next year, 3 very large law firms located in the United States, Europe and Canada will merge to form a top 15 firm with revenues of over $1.3 billion dollars. They will fall under the Denton banner and will be structured as a verien. Under this system they will not share one profit pool but will have one governance system and board. One can see where this huge merger is going and more mergers are sure to follow world wide. My questions are, how will this affect, not only N.Y. lawyers, but all United States lawyers when they find themselves technically in violation of the A.B.A. Model Rules of Professional Conduct when working for one of these newly huge merged firms? Should the A.B.A. fold and keep up with modern times to allow non lawyers as owners or partners of law firms? If we don’t, do we really risk falling that behind to competitors given the economic strength of the United States?
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The legal profession has been in an economic downturn for going on its fourth or fifth year. As a law student, I believe any opportunity to re-invigorate the profession is a welcome one, and I credit Mr. Rivera for highlighting this development.
The world has been moving toward-I hate the term “globalization” but it fits here- a globalized world for years. With the ability to use cutting edge telecommunication devices to have 5 different people in a meeting who are from 5 different parts of the world highlights this. It also provides a great impact on international law. It may be that new laws and ethics need to be drafted that take into account how these law firms operate, since they will be transnational. They also provide a great opportunity for these type of firms to develop a specialized international law practice since they will be bringing three different legal and cultural backgrounds together.
I understand NY’s apprehension in these types of firms considering the ethical and financial problems that may develop. However, I also think that being too cautious leaves us at a disadvantage going forward.