There is a bill pending in North Carolina that would allow non-lawyers to buy interests in law firms, up to 49% of the total. This violates the age old prohibition on sharing legal fees with non-lawyers, and is one hell of a lousy idea. First, read the short piece by Dan Fisher @ Forbes on the bill, then come back.
Welcome back. Now here is the problem from my perch in the personal injury field. If non-lawyers profit from the legal business then there is an incentive for them to “help” their investment by finding cases to refer to the firm. In other words, it is an invitation for private “investigators” to troll for clients. We have legalized ambulance chasing, bringing more disrespect to the profession and our justice system since the non-lawyers aren’t bound by the ethics rules. And the lawyers who get the cases may simply choose to turn a blind eye as to how the cases are coming to the firm, or worse, give equity in the firm to the investigators without asking the critical questions of how the clients were obtained.
When the disciplinary committee comes a callin’, they will profess to be shocked, just shocked, at how their firms’ names were given to potential clients.
Let me show you how this works in the real world. This past weekend there was a horrific bus crash in the Bronx that killed 15 people. And attorneys are prohibited under New York’s 30-day anti-solicitation rules from approaching any of the injured victims or next of kin.
So how can lawyers work around this? By using marketing firms to launder their ethics.
Other firms, such as this one and this one, run “blog” posts about the accident that merely regurgitate the facts from a news article and then follow up with a call to action (If you or someone you know…). I discussed this problem back in 2007 after the new anti-solicitiaton rules went into effect (see: Attorney Solicitation 2.0: Is it ethical?)
So what will happen if non-lawyers have a financial interest in the firm? You can bet your last dollar the situation will worsen.
Larry Ribstein asks why non-lawyers shouldn’t be allowed to own shares of firms, under the theory that the restrictions limit the market for legal skills in the business world. But I don’t think he has given enough thought on how that plays out among other fields of the law.
Legal Services Act comes to US (Legal Transformation: The Changing Legal Profession)
Are ABSs coming to America? They may be in North Carolina (Legal Futures)
Lay Ownership Share In Law Firms Proposed in North Carolina (Law Forward)