Nonlawyer Ownership of Law Firms

A financial planner, a CPA, and a lawyer walk into a bar … to form a law firm. A joke, right? Two years from now, some version of this could be happening for real in California.

A state task force headed by a former law professor is expected to produce proposals in 2019. Presently, Rule of Professional Conduct 5.4 prohibits nonlawyers from acting as partners, corporate officers, or directors of a law firm. The same rule strictly regulates fee sharing and forbids nonlawyers from directing or controlling a lawyer’s professional judgment.

Why consider nonlawyer ownership?

Some view nonlawyer ownership as a means of boosting productivity, reducing costs, and improving access to justice. Others herald the benefits of outside investment and potential for greater innovation in the corporate legal market.

What we can expect from California

Your opinion may differ, but I believe the State Bar of California is ready to make this change. The purpose of the Task Force is to work out the issues.  I predict:

  • California will be the first state to allow nonlawyer ownership of a law firm.
  • Nonlawyer owners will be prohibited from controlling or directing the professional judgment of a lawyer in the course of providing professional services to a client.
  • Nonlawyer owners will be allowed to control or direct business affairs of the firm.
  • Fee sharing will be authorized, provided: (a) clients give informed consent in writing; and (b) the sharing of legal fees does not affect the lawyer’s professional judgment.
  • Receiving referral fees from nonlawyers will be permissible.
  • Disclaimers or disclosures may be required in firm advertising, marketing, engagement agreements, websites, etc.
  • Lawyers will be permitted to reveal confidential client information to nonlawyer owners and their staff in order to carry out representation.
  • Conflict of interest rules will expand to include nonlawyers as “members” of the firm – a conflict for one is a conflict for all.

Operational concerns

Anyone pondering formation of a future lawyer/nonlawyer union should think long and hard about all the issues involved in business formation. A business plan, mission statement, and written ownership agreement will be an absolute must. Thorough insurance coverage, including professional liability, will be a necessity.  Prepare to integrate office systems, record retention, and nonlawyer staff. This includes training!  If nonlawyer partners are beholden to regulatory agencies, know the ins and outs for your sake, but don’t fall into the trap of advising nonlawyer owners. Lastly, have a plan for departure. When a law partner leaves you high and dry, the repercussions aren’t pretty. But at least you can temporarily cover your partner’s legal cases. This isn’t likely to be true with a nonlawyer partner who has an area of expertise (and perhaps licensure) that you lack.

All Rights Reserved – Beverly Michaelis – 2018

Rural Law Practice – An Essential Need

The day after Christmas the following headline caught my eye on Twitter: Lawyer Shortage In Some Rural Areas Reaches Epic Proportions.

neighborhood

As it turns out, the tweet was about a report on NPR that profiled a lawyer in Nebraska who travels 500+ miles a week visiting clients.

But this isn’t just a Nebraska problem, and it didn’t begin in 2016.

The lack of rural lawyers has been highlighted right here in the Pacific Northwest:

How are states addressing this unmet need?

The lack of rural lawyers has real access to justice implications, as reported in April of last year.  (Legal Aid holds Oregon’s first virtual legal aid clinic to help address the disproportionate ratio between legal aid needs and available legal aid attorneys in the state’s rural areas.)

The NPR piece points out that some states, like North Dakota, Iowa and others, send law students to rural firms for summer internships. South Dakota gives a stipend to lawyers working in under-served areas. Nebraska (the home state of the lawyer featured in the piece) is recruiting high school kids to become rural lawyers.  Each year, 15 high schoolers get a tuition scholarship and future admission to the University of Nebraska Law School.  Utah, Colorado, Texas, Vermont, and Wisconsin are trying to tackle the problem too.

Back here in Oregon

Oregon is working to draw attention to this need and offers the Rural Opportunities Fellowship Program through the OSB Diversity and Inclusion Department.  The fellowship allows continuing law students to explore summer legal opportunities with public employers and non-profit organizations in rural Oregon (defined as anywhere along the Oregon coast, anywhere east of the Cascade Mountains, or anywhere south of Roseburg. Other areas of Oregon are considered on a case-by-case basis).

Ask Any Practice Management Expert

And ask any (aged? experienced?) practice management expert – we have been telling young lawyers to consider rural law practices for over 20 years.  The suggestion began with my excellent colleague, Carol Wilson, and was carried forward by myself and Dee Crocker.  If you don’t want to listen to us, then consider this: legal marketing trends show that 71% of people looking for a lawyer think it is important to have a local attorney.  If you want clients, put the Tim Brouillette’s of the world out of business.  (Tim is the Nebraska lawyer who travels 500+ miles each week to visit clients.  No offense Tim, but if we can get lawyers to set up shop closer to where the need is you won’t need to travel so much.)

Something tells me Tim won’t mind….

All Rights Reserved Beverly Michaelis 2017

Learning the Ropes 2013

Are you new to private practice? Then I have just the ticket for you!

Attend our three day conference – Learning the Ropes: A Practical Skills & Ethics Workshop – for a mere $65.  Attendance at the full program satisfies the MCLE requirements for new admittees’ first reporting period.

Choose from these concurrent sessions:

  • Domestic Relations or Criminal Law
  • Tort Litigation or Estate Planning
  • Civil Motion Practice or Bankruptcy
  • Creating a Firm or Joining a Firm

Can’t decide?  All tracks are recorded for later viewing at no charge.

Plenary sessions include:

  • How to Develop a Successful Practice and Avoid Legal Malpractice
  • Client Communication and Other Practice Management Survival Tips
  • Alternative Dispute Resolution
  • The Ethics of Practice Management
  • Recognizing Child Abuse and Fulfilling Your Duty to Report
  • Negotiation Tips, Tricks, Traps, and Tools
  • Courtroom Do’s and Don’ts
  • Employment Law and Conscientious Communication
  • Bridging the Cultural Gap

Day 1 includes a “Meet the Judges” luncheon.  Day 2 features a networking luncheon with bar leaders and respected practitioners in the fields of Appeals, Criminal Law, Employment Law, Intellectual Property, Business Litigation, Debtor/Creditor Law, Estate Planning, Litigation, Business Transactions, Elder Law, Family Law, and Real Estate.

All meals, including the luncheons, are included in your $65 workshop fee.  The program is at the Oregon Convention Center November 6-8, 2013.  Register here or visit the PLF Web site > Upcoming Seminars (under the heading Loss Prevention – CLE).  Sign up early.  Space is limited!

Copyright 2013 Beverly Michaelis

Learning the Ropes – Practical Skills & Ethics Workshop

Are you new to private practice? Then I have just the ticket for you!

Attend our three day conference – Learning the Ropes: A Practical Skills & Ethics Workshop – for a mere $65.  Attendance at the full program satisfies the MCLE requirements for new admittees’ first reporting period.

Choose from these concurrent sessions:

  • Creating a Firm (featuring yours truly) or Joining a Firm
  • Tort Litigation or Criminal Law
  • Domestic Relations or Estate Planning
  • Civil Motion Practice or Bankruptcy
  • Intellectual Property or Employment Law

Can’t decide?  All tracks are recorded for later viewing at no charge.

Plenary sessions include:

  • How to Develop a Succcessful Practice and Avoid Legal Malpractice
  • Communicating Consciously and Conscientiously
  • The Ethics of Practice Management
  • Alternative Dispute Resolution
  • Recognizing Child Abuse and Fulfilling Your Duty to Report
  • Courtroom Do’s and Don’ts
  • Negotiation Tips, Tricks, Traps, and Tools
  • Bridging the Cultural Gap

Day 1 includes a “Meet the Judges” luncheon.  Day 2 features a networking luncheon with bar leaders and respected practitioners in the fields of Appeals, Criminal Law, Employment Law, Intellectual Property, Business Litigation, Debtor/Creditor Law, Estate Planning, Litigation, Business Transactions, Elder Law, Family Law, and Real Estate.

All meals, including the luncheons, are included in your $65 workshop fee.  The program is at the Oregon Convention Center November 2, 3, and 4, 2011.  To register, visit the PLF Web site > Upcoming Seminars (under the heading Loss Prevention – CLE).  Sign up early.  Space is limited!

Copyright 2011 Beverly Michaelis