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Any reason why there is a restriction disallowing non lawyers from owning law firms?

by dman 7y ago

wmeredith 7y ago
Strong state bar lobbies
rayiner 7y ago
State bars don't want outside investors or non-lawyer executives directing the conduct of lawyers. (Also, why would you want to allow non-lawyer ownership of law firms? The reason you have corporate structures is to be able to raise capital. Law firms require very little capital.)
- eldavido 7y ago
  Law as currently practiced, does not require much capital. You're correct about that. But legal services in general are an expensive, labor-intensive craft industry. Just like any craft industry, there's probably scope for low-touch industrialization alongside high-end bespoke craftmanship. Clothing is a good example of what I'm talking about--rich people have tailors, everyone else buys off the rack. What you have now in law and may other professions only works for the high-touch case. Atrium (google them) is trying to get around this by having a traditional high-touch law firm use a lot of software provided by a standard silicon valley-financed venture capital startup. They're basically laundering legal fees to the startup side via the law firm. I'm not sure of the exact legalities but we need more stuff like this. Access matters. A system that, for completely well-intentioned reasons, attempts to guarantee that everyone only gets the best, means the low end will never have access at affordable rates. It's simple economics. Until practitioners work for free (they won't), or there's some way to do things more cheaply, the bottom won't get served.
  - rayiner 7y ago
    The atrium model isn’t problematic at all. Law firms use software built by third parties all the time. (West Law, document review platforms, etc.) You don’t need to permit non lawyer ownership of law firms to have that.
- dman 7y ago
  Capital is only one of the things a founder brings in - a point of view and skills are others. The legal profession could be missing out on avenues of innovation by requiring a founder to be a lawyer.
- Ididntdothis 7y ago
  “Also, why would you want to allow non-lawyer ownership of law firms?” For the same reason or not-reason you can have any other company owned by people who are not experts in the company’s subject. This is probably good for lawyers but otherwise this restriction makes no sense.
  - rayiner 7y ago
    Hey remember how intel suffered for years under CEOs who were chip engineers? And then started doing really great when they moved away from that model and started hiring MBA CEOs?
    - Ididntdothis 7y ago
      I am not saying it’s a good idea but such restrictions shouldn’t be there in a “free market/capitalist” country like the US.
    - dman 7y ago
      If law firms run by lawyers run better, then why do they need a rule to enforce this? Shouldn't the market take care of this? ie Law Firms with Lawyer owners will simply out compete clueless Law Firms with owners who are not lawyers.
      - likpok 7y ago
        "Better" is a value judgement, and the specific value you've chosen is "makes more money". One concern, I think, is that a non-lawyer may push employees towards legally-unethical behavior. Since the non-lawyer can fire the lawyers, that gives them a big stick they can use to influence the employees.
        siegel 7y ago
        Lawyers are subject to ethical requirements that are not imposed on non-lawyers. And those ethical requirements are just that - requirements. If a lawyer breaks them, they jeopardize their entire careers. There's no equivalent for a professional CEO. Clients insist that their attorneys act in a fiduciary capacity. This is very different from the chip engineer scenario. It is the most important reason why non-lawyers are not allowed to own law firms. Because non-lawyers are not bound by rules that require them to put profit motives second in many circumstances.

Any reason why there is a restriction disallowing non lawyers from owning law firms?

by dman 7y ago

Any reason why there is a restriction disallowing non lawyers from owning law firms?

wmeredith 7y ago

Strong state bar lobbies

rayiner 7y ago

State bars don't want outside investors or non-lawyer executives directing the conduct of lawyers. (Also, why would you want to allow non-lawyer ownership of law firms? The reason you have corporate structures is to be able to raise capital. Law firms require very little capital.)

eldavido 7y ago
Law as currently practiced, does not require much capital. You're correct about that. But legal services in general are an expensive, labor-intensive craft industry. Just like any craft industry, there's probably scope for low-touch industrialization alongside high-end bespoke craftmanship. Clothing is a good example of what I'm talking about--rich people have tailors, everyone else buys off the rack. What you have now in law and may other professions only works for the high-touch case. Atrium (google them) is trying to get around this by having a traditional high-touch law firm use a lot of software provided by a standard silicon valley-financed venture capital startup. They're basically laundering legal fees to the startup side via the law firm. I'm not sure of the exact legalities but we need more stuff like this. Access matters. A system that, for completely well-intentioned reasons, attempts to guarantee that everyone only gets the best, means the low end will never have access at affordable rates. It's simple economics. Until practitioners work for free (they won't), or there's some way to do things more cheaply, the bottom won't get served.
- rayiner 7y ago
  The atrium model isn’t problematic at all. Law firms use software built by third parties all the time. (West Law, document review platforms, etc.) You don’t need to permit non lawyer ownership of law firms to have that.
dman 7y ago
Capital is only one of the things a founder brings in - a point of view and skills are others. The legal profession could be missing out on avenues of innovation by requiring a founder to be a lawyer.
Ididntdothis 7y ago
“Also, why would you want to allow non-lawyer ownership of law firms?” For the same reason or not-reason you can have any other company owned by people who are not experts in the company’s subject. This is probably good for lawyers but otherwise this restriction makes no sense.
- rayiner 7y ago
  Hey remember how intel suffered for years under CEOs who were chip engineers? And then started doing really great when they moved away from that model and started hiring MBA CEOs?
  - Ididntdothis 7y ago
    I am not saying it’s a good idea but such restrictions shouldn’t be there in a “free market/capitalist” country like the US.
  - dman 7y ago
    If law firms run by lawyers run better, then why do they need a rule to enforce this? Shouldn't the market take care of this? ie Law Firms with Lawyer owners will simply out compete clueless Law Firms with owners who are not lawyers.
    - likpok 7y ago
      "Better" is a value judgement, and the specific value you've chosen is "makes more money". One concern, I think, is that a non-lawyer may push employees towards legally-unethical behavior. Since the non-lawyer can fire the lawyers, that gives them a big stick they can use to influence the employees.
      - siegel 7y ago
        Lawyers are subject to ethical requirements that are not imposed on non-lawyers. And those ethical requirements are just that - requirements. If a lawyer breaks them, they jeopardize their entire careers. There's no equivalent for a professional CEO. Clients insist that their attorneys act in a fiduciary capacity. This is very different from the chip engineer scenario. It is the most important reason why non-lawyers are not allowed to own law firms. Because non-lawyers are not bound by rules that require them to put profit motives second in many circumstances.