Category Archives: Blog

Blog, World Justice Project Rule of Law Index

WJP Rule of Law Index: Rankings for Four Sub-Factors

Recently someone contacted me with questions about the World Justice Project Rule of Law Index. The questions were good ones, and they got me thinking that it’s a topic worth a blog post.

First, what is the World Justice Project (WJP)? It was created in 2006 as a presidential initiative of the American Bar Association (ABA). In 2009 it became an independent 501(c)(3) non-profit, with offices located in Washington, DC and Seattle, Washington. Former ABA President William Neukom is its CEO, and another former ABA President, William Hubbard, is its Chairman.

One of the principal activities of the WJP is the preparation of an annual (or nearly so) Rule of Law Index. The WJP’s website describes its Rule of Law Index as measuring “how the rule of law is experienced and perceived by the general public across the globe. It is the world’s leading source for original, independent data on the rule of law.”

The Index is prepared on the basis of polls of a country’s general population and of questionnaires submitted to in-country experts. The WJP’s process and criteria for assessing adherence to the rule of law have evolved since the organization’s founding. Today its process uses 47 indicators that are organized around nine wide-ranging themes, referred to as “factors:” constraints on government powers, absence of corruption, open government, fundamental rights, order and security, regulatory enforcement, civil justice, criminal justice, and informal justice. The 2009 Index assessed 35 countries; the 2016 Index (the most recent) assessed 113 countries.

The Index provides an overall score and ranking for each country based upon all of the factors, and also provides each country’s score for each specific sub-factor. Unfortunately, however, for most sub-factors the Index does not provide a ranking of each country by its score for that individual sub-factor. This is understandable in that it would make the already lengthy report unwieldy (the 2016 Index is already 209 pages plus a separate excel file) . At the same time, it is unfortunate as the sub-factor rankings reveal information about a country that is not evident on the basis of its overall score and rank.

Accessible and Affordable Civil Justice

Let’s take the United States, for example. In 2014, the United States’ overall rank (that is, based upon all sub-factors combined) was 19th out of 98 countries. In 2015, it again ranked 19th, this time out of 102 countries. In 2016 its overall ranking went up slightly, to 18th out of 113 countries. While those rankings are not stellar, they are respectable. But what if we dig deeper and look, most notably, at sub-factor 7.1: “people can access and afford civil justice?” This sub-factor appeared for the first time in the 2012-13 Index; that Index explains that this sub-factor combines what had previously been three different sub-factors, namely that: (i) people are aware of available civil remedies, (ii) people can access and afford legal advice and representation, and (iii) people can access and afford civil courts. In sum, the multi-component sub-factor 7.1 measures how easy (or difficult) it is for the average citizen of a country to assert and protect his/her rights and to understand his/her duties under civil (as opposed to criminal) law.

If we look at the rank of the United States specifically with respect to sub-factor 7.1, we see a very different picture as compared to the country’s overall ranking. With respect to this specific sub-factor, in both 2014 and 2015, the US ranked 65th. And in 2016 its ranking for this sub-factor plummeted to 94th. This ranking places the United States behind countries like Albania, Belarus, Bulgaria, Kazakhstan, Kyrgyzstan, Moldova, Myanmar, Russia, Venezuela and Zimbabwe. To be clear—this means that the persons living in those countries have better access to civil justice than Americans do. In most if not all aspects of their lives, they are better able to learn their rights and obligations, and better able to assure their rights and obligations are respected. Let’s repeat that list: Albania, Belarus, Bulgaria, Kazakhstan, Kyrgyzstan, Moldova, Myanmar, Russia, Venezuela and Zimbabwe all have better civil justice systems as compared to the United States.

This is not a respectable outcome. To the contrary, it is an unqualified disaster—for American citizens and for the country as a whole. Yet you’d never realize the full extent of this fundamental problem with the rule of law in the United States if you only considered the country’s overall score.

Freedom from Discrimination in Civil and Criminal Justice

Some of the other sub-factors also merit a closer look. Sub-factor 7.2 measures the extent to which a country’s “civil justice is free of discrimination.” With respect to this sub-factor, in 2014 the US ranked 69th of 99 countries, and in 2015 the US ranked 67th of 102 countries. In 2016, the US ranking also plummeted (albeit not as far as its rank for 7.1) falling to 84th of 113 countries. Some of the countries that rank higher than the US with respect to this sub-factor include Burkina Faso, Colombia, Romania, Sierra Leone, South Africa, and Uzbekistan. That means that the civil justice systems of those countries are less discriminatory than that of the United States.

Moving from civil to criminal justice, sub-factor 8.4 measures the extent to which a country’s “criminal system is impartial” and non-discriminatory. For this sub-factor, in 2012-13, the US ranked a low 76th out of 97 countries. In 2014, its rank jumped up to 47th out of 99 countries. However, in 2015 it fell again, to 64th out of 102 countries, and 2016 showed little improvement with a rank of 61st out of 113 countries. With respect to this sub-factor, the US ranks behind Albania, Belarus, Nigeria, Romania, South Africa, Ukraine and United Arab Emirates. That means that the criminal justice systems of those countries are less discriminatory than that of the United States.

Effective Guarantee of Labor Rights

A final sub-factor that merits attention is 4.8, which measures the extent to which a country’s “fundamental labor rights are effectively guaranteed.” The 2016 Index explains that this sub-factor includes the right to collective bargaining, the prohibition of forced and child labor, and the elimination of discrimination with respect to employment and occupation. For this sub-factor, in 2012-13 the US ranked 52nd out of 97 countries. In 2014 its rank shot up, to 32nd out of 99 countries, and its rank went higher still in 2015, to 28th out of 102 countries. However, in 2016 its rank for this sub-factor fell sharply, to 59th out of 113 countries. With respect to this sub-factor, the US ranks behind Côte d’Ivoire, Romania, Russia, Senegal, Ukraine and Uzbekistan. The US ranking behind Uzbekistan is particularly noteworthy given that the very government of Uzbekistan has implemented and strictly enforces over its own population a system of forced labor.

Download Rankings for Four Sub-Factors (All Countries Indexed)

Below you can view as well as download an excel file that contains the full rankings for these four sub-factors, from 2012-13 through 2016. The data in this excel file was obtained from the World Justice website “Current & Historical Data Download.” The file includes all the countries indexed by the WJP for the year in question. For ease of analysis and comparison, the file below highlights data for these five countries: United States, United Kingdom, Canada, Australia and France.

The next post will focus on sub-factor 7.1: “people can access and afford civil justice.” In particular, it will consider a newly proposed and highly intriguing explanation for why the United States as well as certain other wealthy countries face such challenges when it comes to accessible and affordable civil justice.

If you’d like to subscribe in order to receive notices of new posts, you can do so by scrolling to the bottom of this page — you’ll see the place in the bottom left corner. Thanks for subscribing!

Blog, Legal Education

Encouragement, Love and Professional Success

Recently I had the opportunity to speak with Kami Haeri, one of the authors of the Haeri Report (the other authors being Sophie Challan-Belval, Eleonore Hannezo and Bernard Lamon).

Our conversation covered a number of different areas: how the Haeri Report came about and why Haeri was selected to lead the commission that prepared it; what approach the commission decided to take in preparing the Report and why; how different members of the profession have received the Report; the challenges Haeri perceives with respect to the legal profession’s governing bodies in France; how legal education can be improved, the challenges new lawyers face when they begin their careers,…

Please don’t hesitate to consult the full redaction of our conversation here.

While Haeri made a number of very interesting and thought-provoking remarks, there is one that stood out for me in particular.

He said “If you gather five interns in your office, you will immediately see which ones have been encouraged and loved.” The way they will have been loved, he explains, is that they will have been encouraged to expand their knowledge, notably with recommended reading. Haeri threw out a couple of examples of what an adolescent could be encouraged to read: To Kill a Mockingbird and Camus’s L’Etranger. But I got the impression those were the first two things that came to his mind on the spot, and that had he taken the time to think further, he could have come up with a long list of works that, in his opinion, introduce new ideas to the reader and force the reader to think about the world in a different way.  Works that, in Haeri’s opinion, would be sufficiently challenging for an adolescent reader without being beyond their reach.

For Haeri, the fact that some new lawyers received this encouragement and love in childhood and some did not produces a “massive gap in equality” when they embark on their careers. This is because those who received it develop two characteristics essential to success as a lawyer: confidence in themselves as well as the ability to speak and behave in a manner that conveys this confidence. For Haeri, these characteristics are just as important as substantive knowledge of the law, if not even more important.

Haeri didn’t stop there. He explained that he thinks that legal education, if designed correctly, can help to close that gap. That is, he thinks that legal education can help the students who, as children, were not encouraged and loved in this manner to develop the soft skills that they need to succeed as lawyers. In particular, he proposes that a special continuing legal education program be developed and implemented—a program directed specifically to new lawyers just entering the profession. For each year in the six (or so) year program, the new lawyer would focus on the development of a specific soft skill.

And Haeri kept going. For Haeri, encouragement and love is needed not only during adolescence but also in early adulthood, and those who get it are, yet again, massively advantaged over those who do not. So, Haeri proposes that such a continuing legal education program would not only help new lawyers to develop the soft skills they need to succeed, but also be used to help them to understand how to forge their path in the profession. Specifically, it could be used to help new lawyers understand the career challenges they face and to make the right decisions to foster the successful development of their careers.

I found Haeri’s suggestions intriguing on a number of levels. Most intriguing is the direct link that Haeri makes between, on the one hand, parental (familial) support in the form of “encouragement and love” during childhood and, on the other hand, professional success as an adult.  For him, the link is so important, and effect is so profound, that when new lawyers arrive at his firm, he can immediately “see” which ones received such support and which ones did not.

Again, the full transcript of our conversation is available here.

If you’d like to subscribe in order to receive notices of new posts, you can do so by scrolling to the bottom of this page — you’ll see the place in the bottom left corner. Thanks for subscribing!

Related posts on this site:

France’s Haeri Report on the Future of the Legal Profession: Intro

France’s Haeri Report and Alternative Structures (1 of 2): Je t’aime un peu

France’s Haeri Report and Alternative Structures (2 of 2): Je t’aime, moi non plus

Blog, France

Alternative Structures: Why is France Succeeding While the US Continues to Fail?

Of course it’s impossible to do full justice to this question in a simple blog post. But I’ll try.

If you follow the question of alternative structures or ABS in the United States, you’ll know that since 1983 the ABA has considered them no fewer than four times, the most recent being in 2016. On each occasion they were rejected. The decisions to reject were not passive, unemotional affairs. To the contrary, the ABA’s rejection of them was almost visceral, with members seeming to scream on paper “WHAT PART OF ‘NO!’ DO YOU NOT UNDERSTAND?”

This is the last in a series of eight posts relating to France. Links to the other seven in the series are provided below.

While France’s Conseil National de Barreaux (CNB – National Bar Council) has perhaps not considered and rejected alternative structures as many times as the ABA, its rejection of them is no less visceral. On June 15, 2012, the General Assembly of the CNB unanimously adopted a resolution stating that ABSs “place in danger the core values of the profession and the interests of the public.” The CNB has never changed or otherwise reconsidered this resolution.

If that is the case, then how can it be that France is on the road to adopting alternative structures while the US is not?

There is more than one reason for this. This post will focus on just one: On paper, in most states it is the state supreme court that holds regulatory power over the legal profession, but for the most part they abdicate this power in deference to the ABA. As a result, while on paper the ABA has no regulatory power at all, in reality its regulatory power is immense, even being described as hegemonic. With this power, the ABA can block not only ABSs in their entirety, but also any attempts to take small steps towards their adoption – small steps of the kind we see today in France and that can also be seen in Canada. The ABA has effectively used its power for this purpose and there is no reason to believe it will take a different approach any time in the near or distant future.

In contrast, neither the CNB nor any other bar organization in France comes close to having so much power. That is not because they wouldn’t like to have it, but because the country’s executive and legislative branches have not, in contrast to US state supreme courts (as well as to US executive and legislative branches), abdicated their regulatory powers to the bar. The Macron Law was adopted over the strong objections of the CNB as well as other bar organizations. (The Macron Law was also “rammed through” under a highly unusual and controversial procedure that allowed the executive branch to override the legislature). The Haeri Report was commissioned not by any bar authority but by the Minister of Justice.

(On the other hand, the commission that prepared the Haeri Report was composed entirely of lawyers and the overwhelming majority of the persons with whom the commission consulted were lawyers, in-house counsel or law school instructors/administrators. This probably explains in part why the Report does not contain any recommendation nearly as radical as those contained, for example, in the Clementi Report, which was prepared by someone entirely outside the legal profession).

There is at least one more reason to explain the limits on the power of the CNB and other bar organizations as compared to the comparatively unlimited power of the ABA: Given that the US has essentially just one legal profession with essentially just one de facto governing body on a national level, this means the ABA overwhelmingly dominates all other bar organizations in the US. Any bar organization on a national or state level that sought to take an initiative perceived to be contrary to a position taken by the ABA would most likely have great difficulty gaining traction, let alone succeeding.

In contrast, and as mentioned in previous posts in this series, France has a number of regulated legal professions – lawyers (avocats), notaries (notaires) and bailiffs (huissiers de justice) are only three. Many of these professions have their own governing bodies comparable to the CNB for lawyers. This means that France has not only many different legal professions, but also many different governing bodies for each profession, on both the national and local levels. None has dominance in any manner that approaches the ABA’s dominance (hegemony) in the US.

Further, as regards Open Law and the ADIJ (the organizations responsible for the Charter of Ethics, as described in this post): participation in the activities of both of these organizations is entirely open – not only to members of the various legal professions, but also to members of the public at large and to companies and other kinds of organizations. Anyone who is interested can participate. It is easy to imagine that this diversity of participation results in very different discussions than those occurring in bar organizations whose participants consist of persons belonging to the same legal profession. Equally if not more importantly, it is easy to imagine that while organizations such as Open Law and ADIJ would not want to unnecessarily alienate bar organizations, nor would they feel obliged to only take initiatives of which bar organizations approved.

Seen in this light, it is easy to understand how organizations such as Open Law and the ADIJ could not only initiate but also see through to completion the development of the Charter of Ethics. By the same token, it is difficult to imagine that comparable organizations could do the same in the US, at either a national or a state level.

Let’s finish this series of eight posts with this additional comparison of France and the US:

The World Justice Rule of Law Index for 2016 ranks the US 18th out of 113 countries on an overall basis. France’s ranking is a close 21st. (The US’s score is 0.74 out of 1.0 while France’s is 0.72). This overall ranking is based upon nine factors, such as constraints on government powers, absence of corruption, and openness of government. These overall rankings for the US and France are not stellar but are respectable.

In contrast, when one element is singled out –– affordable and accessible civil justice –– the rank of the US falls to 94th (yes, 94th) of 113. This ranking is behind countries such as Albania, Belarus, Kyrgyzstan, Myanmar, Russia and Zimbabwe. In very stark contrast, France’s rank for the same element is 30th. (The US’s score is 0.41 out of 1.0 while France’s is 0.62).

France is by no means perfect. But when it comes to affordable and accessible civil justice, it is clear that France gets right many things that the US gets wrong.

If you’d like to subscribe in order to receive notices of new posts, you can do so by scrolling to the bottom of this page — you’ll see the place in the bottom left corner. Thanks for subscribing!

Related posts on this site:

Chapter 3: Alternative Structures Will Jeopardize Self-Regulation

Chapter 21: Abdication of Regulatory Power

Links to the other seven posts in this series:

  1. There’s Something About France
  2. A Big Happy (French) Family
  3. A Little More Liberté
  4. France’s Haeri Report on the Future of the Legal Profession: Intro
  5. France’s Haeri Report and Alternative Structures (1 of 2): Je t’taime un peu
  6. France’s Haeri Report and Alternative Structures (2 of 2): Je t’aime, moi non plus
  7. France and Alternative Structures: Putting the Pieces Together

All eight posts, regrouped, can be viewed at this link: Regroup of posts on France

Blog, France

France and Alternative Structures: Putting the Pieces Together

Let’s put together the pieces from the previous posts. Today in France:

  • Legaltech companies have worked together with representatives of the various legal professions to prepare a “Charter of Ethics.” Intended for signature by legaltech companies, this 7-page Charter describes the ethical principles that signatories will apply to their activities, the means by which they will maintain data security, and the service levels they will provide to their clients. Regardless of how “successful” the Charter ultimately proves to be (and however “success” might be defined), the document is a form of general recognition and acceptance of legaltech companies as well as first step in regulating them.
  • The members of the various legal professions will very soon be allowed to join together not only with each other but also with certified accountants (experts comptables) in order to practice from the same company (referred to as SPEs). These structures will allow such professionals to serve the needs of their clients in a more seamless and holistic manner. It is true that, today, the range of professionals allowed to form such companies is relatively limited. Nevertheless these companies are a first form of fully integrated multidisciplinary practices. Once a variety of questions regarding the coordination (if not eventual harmonization) of varying ethical rules are addressed, little will stand in the way of allowing the members of other regulated professions (such as doctors and architects) to join, as a next step, and then members of previously unregulated professions (IT, marketing, finance, social work,…) after that.
  • Lawyers are now allowed to form, be a shareholder of, and practice with almost any form of commercial company, not just the forms of company reserved for professional services. Further, they can form, be shareholders of, and practice with an unlimited number of any such commercial companies (including SPEs). Finally, lawyers as individuals as well as any of those companies can now carry out “commercial” activities (that is, offer non-legal goods and services together with legal ones), albeit within certain limits.
  • The February 2017 Haeri Report recommends that law firms be allowed to open their share capital to nonlawyers (specifically, to persons who are not members of one of France’s regulated legal professions), provided that nonlawyers remain minority shareholders.

This is the seventh in a series of eight posts relating to France. Links to the other seven in the series are provided below.

Some of these changes (perhaps for some readers, all of them), considered alone, might appear unremarkable. Legaltech companies can volunteer to conform to certain ethical and conduct rules, without any way to ascertain their conformity and without any established penalty if they fail to conform? That’s nice. Lawyers and other legal professionals can practice together with accountants? Haven’t they already been doing that? Lawyers can use a wider range of forms of company and a lawyer can be a shareholder of and work with more than one company at a time? Those restrictions were difficult to justify and were regularly breached, anyway. Lawyers can offer “commercial” services in connection with legal ones? Well, setting aside that we still don’t have a complete understanding of just what that means, haven’t lawyers been doing that already, through publishing, teaching/training, and subletting office space? And nonlawyer minority share ownership? Who cares? Few took advantage of the possibility in New South Wales or the District of Columbia – why should it work better in France?

That’s one way to look at it.

Here is another: When these changes are considered as a whole, they constitute real and concerted steps towards the adoption of alternative structures. The Charter is a first step towards bringing “legaltech” under the umbrella of regulation, and of expanding the regulation of lawyers (and the other legal professionals) to the broader category of the regulation of legal services. SPEs are a first step towards bringing different kinds of professional service providers – legal and non-legal – together in the same structure to offer holistic services to the same clientele. Freeing up lawyers to participate in variety of different kinds of companies and to offer “commercial” services together with legal ones are first steps towards enlarging the concept of “practicing law” – the first steps towards allowing lawyers and other legal professionals to develop a much larger variety of business models, potentially quite different from the “professional consultancy”/”solution shop” model of the traditional law firm. And allowing for minority nonlawyer ownership of law firms might be just a preliminary phase in ultimately allowing for majority nonlawyer ownership.

They say that the first step is the hardest. Once France has taken these first steps, the next ones will surely follow: previously unregulated legaltech professionals, having demonstrated the willingness as well as ability to respect ethical rules, will be allowed to fully participate in regulated SPEs alongside other kinds of professionals. SPEs and law firms, having demonstrated the ability to operate a limited number of different business models in an ethical manner, will be allowed to experiment with an even greater variety. Nonlawyers, having demonstrated they are “safe” as minority shareholders, will be allowed to become majority. The end result will be structures – whatever they end up being called – that can be easily compared to the alternative business structures (ABSs) of England & Wales and the incorporated legal practices (ILPs) of Australia.

That is, in the end, the French will get there. They’ll do it in their own special French way.

In the next post I’ll ask the question: why is France succeeding while the US continues to fail?

If you’d like to subscribe in order to receive notices of new posts, you can do so by scrolling to the bottom of this page — you’ll see the place in the bottom left corner. Thanks for subscribing!

Links to the other seven posts in this series:

  1. There’s Something About France
  2. A Big Happy (French) Family
  3. A Little More Liberté
  4. France’s Haeri Report on the Future of the Legal Profession: Intro
  5. France’s Haeri Report and Alternative Structures (1 of 2): Je t’taime un peu
  6. France’s Haeri Report and Alternative Structures (2 of 2): Je t’aime, moi non plus
  7. France and Alternative Structures: Putting the Pieces Together
  8. Alternative Structures: Why is France Succeeding While the US Continues to Fail?

All eight posts, regrouped, can be viewed at this link: Regroup of posts on France

Blog, France

France’s Haeri Report and Alternative Structures (2 of 2): Je t’aime, moi non plus

This is the sixth in a series of eight posts relating to France, and the third and last post specifically focused on the report entitled The Future of the Legal Profession (L’Avenir de la profession d’avocat), recently submitted to the Minister of Justice by French lawyer Kami Haeri.

Again, background information about the Report is available here.

The immediately preceding post examined in detail one element of the Haeri Report, which expressly recommends that law firms be allowed to open their share capital to nonlawyers (specifically, to persons who are not members of one of France’s regulated legal professions), provided that nonlawyers remain minority shareholders.

While the Report does make this recommendation, it does so in a lukewarm manner. It simply says that “there’s no obstacle” to it, at the same time emphasizing that this is only the case as long as the nonlawyer shareholding remains under 49% .

On the other hand, there are a number of other recommendations that the Report makes with enthusiasm, if not outright passion. Whether the commission realized it or not, these recommendations bear a direct relation to alternative structures.

More specifically, the Report recommends that lawyers:

  • Unlearn their highly individual manner of working. Instead, the Report calls on them to learn and apply methods of co-working, and notably to learn from more innovative sectors how to better work together,
  • Better understand and utilize technology in order to make themselves more accessible to clients and more efficient in their work,
  • Develop a “brand strategy” that allows a firm to be known on the basis of its own brand rather than only on the basis of the names of its founders,
  • Introduce into their firm management tools and practices borrowed from the business world,
  • “Professionalize” firm management by favoring the placement of nonlawyers in upper management positions,
  • Reform their firm cultures by reducing censure, self-censure and skepticism and supporting innovation and risk-taking, and
  • Reconsider their firms’ profitability requirements, to better support periods of lower revenue that often result from the development and implementation of innovation.

Through these recommendations, the Report in essence calls on lawyers to dramatically change, if not revolutionize, the way that they work. The Report calls on lawyers to do this not by looking inside to themselves or to other lawyers, but instead by looking outside of the legal profession.

In fact, it is entirely unrealistic to think that lawyers could implement any of the recommendations above with any modicum of success without help – a lot of help – from persons outside the legal profession. One of the recommendations is even explicit on this point, calling on firms not only to “professionalize” firm management, but to deliberately seek out nonlawyers for that purpose.

“So,” you might be thinking, “what’s the problem?” What do alternative structures have to do with it? If you need more expertise, just find the nonlawyers you need and either hire them as consultants and pay them their fee, or hire them as employees and pay them their salary. There’s no reason to make them partners or shareholders. And if you need more capital to “better support periods of lower revenue,” then that’s what bank loans are for.  It’s not rocket science. Case closed.

Not so fast.

Certainly those are the solutions for some firms. Certainly larger firms that have the resources. But this is not a solution for all firms, or even for many firms, for two reasons:

1)         Not all firms have the resources:

They do not have the financial reserves to pay consulting fees or to bring a non-fee earner onto their payroll. This is especially true for the “young lawyers” (the principal focus of the Report) who are seeking to establish their own firms, as well as for the not so young lawyers seeking to do the same. They, the Report painstakingly points out, already face considerable start-up and overhead expenses, notably for office space (as discussed more here). For these firms, the only way they could access the help they need to implement the Report’s recommendations would be in partnering with those who have the necessary skills and expertise. That is, by bringing them into the firm as partner or shareholder.

Further, not all firms have the capital to “better support” periods of lower revenue due to the development and implementation of innovation. As Jeff Winn, the Managing Director of Winn Solicitors in England has explained, banks are used to lending on invoices of 30, 60, 90 days payment. They are not used to lending on the basis of distant, uncertain outcomes. Only capital investment can fill this gap.

Today, of course, that is impossible in France. Under today’s rules, lawyers can only partner with or have as shareholders other lawyers, members of other regulated legal professions, and accountants (experts comptables), as discussed here. Lawyers cannot partner with, for example, experts in technology, management, marketing, etc., nor can they partner with passive equity investors (unless they are themselves a member of a regulated profession).

As noted above, the Report does expressly advocate for nonlawyer minority ownership of law firms. It is possible that this might help some firms to access some of the expertise they need. And yet, history teaches a different story: As explained here, when minority ownership of law firms was permitted in New South Wales (Australia), very few firms took advantage of the possibility. Further, minority ownership of law firms has been permitted in the District of Columbia (United States) since 1991: it appears that few firms take advantage of this possibility, either.

And while France may prove to be different from NSW and DC in that minority nonlawyer ownership of law firms may indeed end up helping some firms in France, that help will necessarily be limited. Certainly some nonlawyer experts may be satisfied with minority shareholding, but just as certainly others will not be. They will prefer to take their time and talents to other industries, where their stake in a company is not subject to such a limitation, but instead can fully match the value of their contributions.

2)         Consultants and employees are not motivated in the same way that partners and shareholders are. Hiring an expert as a consultant to advise for a fee on how a firm might better use technology is one thing; bringing that expert in as a partner or shareholder and staking his/her success (and compensation) on the success of the firm in using that technology is something entirely different. Multiple studies show that when workers are given a stake in a company, the workers are more productive and more innovative, and the company’s profitability and revenue increase. Further, such companies are more resilient during periods of economic crisis. A partner/shareholder “owns” the success of a firm in a way that a consultant or employee cannot.

In sum, even though the Report mentions alternative structures only briefly, and expressly advocates for only a limited form of them (minority nonlawyer ownership) in a lukewarm manner, a close reading the Report suggests that its authors in fact enthusiastically support alternative structures. Or, at least, they enthusiastically support outcomes that for most lawyers and law firms can be achieved only with alternative structures. And not just the kind that limits nonlawyer ownership to less than 49%, but the kind that imposes no such restriction.

Perhaps you could say that France’s Haeri Report supports alternative structures in spite of itself.

If you’d like to subscribe in order to receive notices of new posts, you can do so by scrolling to the bottom of this page — you’ll see the place in the bottom left corner. Thanks for subscribing!

Related posts on this site:

Chapter 6: The Payment of Salary is Adequate Compensation for Nonlawyers

Adrian Powell, Partner, Proelium Law

Richard Stephens, Partner, Proelium Law

Jeff Winn, Managing Director, Winn Solicitors

David Simon, Chair, Triton Global

Jenny Beck, Partner, Stephensons Solicitors LLP

Robert Camp, Managing Partner, Stephens Scown LLP

Martin Powell, Director, OmniaLegal Limited

John Ray, Senior Consultant, Law Firm Consulting Group

Links to the other seven posts in this series:

  1. There’s Something About France
  2. A Big Happy (French) Family
  3. A Little More Liberté
  4. France’s Haeri Report on the Future of the Legal Profession: Intro
  5. France’s Haeri Report and Alternative Structures (1 of 2): Je t’taime un peu
  6. France’s Haeri Report and Alternative Structures (2 of 2): Je t’aime, moi non plus
  7. France and Alternative Structures: Putting the Pieces Together
  8. Alternative Structures: Why is France Succeeding While the US Continues to Fail?

All eight posts, regrouped, can be viewed at this link: Regroup of posts on France