Category Archives: Stories

Blog, Nova Scotia, Voices of Modern Regulation

Nova Scotia’s Stealth Revolution

If you’re not paying attention, you’ll miss it for sure:

On November 17, 2017 the Nova Scotia Barristers’ Society (NSBS) made a series of decisions that move the Canadian province considerably closer to the adoption of alternative business structures.

The decisions implement in part the NSBS’s 19-point Policy Framework, which the NSBS Council approved in November, 2015. More specifically, the decisions implement these elements of the Policy:

  • The regulation of the delivery of legal services by lawyers as well as by legal entities, “which include lawyers, law firms, law corporations, law departments and other similar entities,” and
  • Each such law firm and other legal entity will be required: (i) to designate an individual who will be responsible for the entity’s compliance with its regulatory requirements, (ii) to establish and maintain a management system that promotes competent and ethical legal practice, and (iii) to undertake self-assessment and report to the NSBS on its management system.

The first decision requires that, as of January 1, 2018, newly established law firms must register with the NSBS before beginning to deliver legal services to the public. The NSBS explains this decision as allowing “us to work with new practices to ensure they have an effective management system for ethical legal practice in place and appreciate the complexities of running a law firm and their regulatory obligations.”

As regards existing firms—and this is the second decision—they are now required to file with the NSBS an expanded Annual Report that includes the names of “support staff” (that is, persons who are not lawyers) who “assist or on their own” deliver legal services to clients. The NSBS explains that this requirement comes in preparation for amendments to the Legal Profession Act that will “allow more staff in law firms to deliver supervised legal services.”

The third decision requires that individual lawyers as well as law firms obtain the permission of the Executive Director of the NSBS before operating a client trust account. This permission will not be granted automatically; instead, the applicant must first successfully complete an assessment and demonstrate that the lawyer or the firm “has the infrastructure in place to safely and appropriately operate a trust account.”

The fourth decision requires all firms, over the course of a three year period, to undergo a self-assessment process and submit to the NSBS a completed self-assessment form. The process and the form itself are reminiscent of the self-assessment process and form pioneered in New South Wales, Australia and in place today in Queensland.

Finally, the fifth decision expands the role of a law firm’s “designated lawyer.” In the past, this role was merely administrative—it was the lawyer identified to receive correspondence from the NSBS. The fifth decision adds to the designated lawyer’s responsibility by making he/she responsible both for the submission of the firm’s Annual Report as well as for the performance of the firm’s self-assessment. In this manner, Nova Scotia’s designated lawyer can be compared to the role of Legal Practitioner Director, also pioneered in New South Wales and in place today in Queensland.

With these decisions, Nova Scotia has gone beyond the theory of its Policy Framework in order to implement both entity regulation and compliance-based regulation in a concrete manner. While Nova Scotia’s regulations in this regard will continue to evolve, and in all likelihood evolve considerably, that does not detract from the significance of these initial, ground breaking decisions. Admittedly, from the perspective of England & Wales and Australia, there is nothing ground breaking about them, given that those countries adopted entity regulation as well as “outcomes focused regulation” (England & Wales) and “proactive, management based regulation” (or “PMBR,” a term Ted Schneyer coined for Australia) quite some time ago. However, from the perspective of Canada and the United States, the NSBS decisions are ground breaking indeed. No other Canadian province or US state has even come close to adopting entity regulation or compliance-based regulation to this extent. Not yet, anyway. (Illinois and Colorado have taken tentative first steps).

What does all this have to do with alternative structures? At first glance, the response may appear to be nothing at all. Further, if you peruse the NSBS website and its supporting documentation, such as the Council meeting minutes, you would be very hard pressed to find references to alternative structures, “alternative business structures” or “ABS.” For the NSBS, it’s as if alternative structures were beside the point.

Don’t be fooled by appearances, though. The NSBS’s silence with respect to alternative structures is deafening. Entity regulation and compliance-based regulation have everything to do with alternative structures. This is because these two kinds of regulation are necessary before the NSBS—or any other legal regulator—can be in a position to adopt alternative structures. The successes of England & Wales and of Australia in adopting alternative structures demonstrate this. The failures of Ontario as well as the United States in adopting them equally demonstrate this. These two kinds of regulation (entity regulation and compliance-based regulation) are the response to the very common objection to alternative structures that is raised in Canada and the United States, which is: “but there is no way to regulate them.” There definitely are ways to regulate them. England & Wales and Australia have proven this, and Nova Scotia is well along the path of doing the same. With so few paying attention—at least outside Nova Scotia—it is a stealth revolution. And it is well underway.

Related posts on this site:

Chapter 9: And in This Corner: New South Wales and Victoria

Chapter 12: Nova Scotia: The Road is Made by Walking

Chapter 15: Ontario: A False Start But On Its Way

Chapter 21: The Two Commissions: Different or the Same?

Chapter 25: Final Assessment

Darrel Pink, Executive Director, Nova Scotia Barristers’ Society

James Coyle, Attorney Regulation Counsel, Colorado Supreme Court

James J. Grogan, Illinois Attorney Registration & Disciplinary Commission

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France, Stories

Kami Haeri, Partner, August Debouzy

If you gather five interns in your office, you will see immediately which ones have been encouraged and loved. You will see immediately which ones had a father or a mother or an uncle who said to them “you know what — you’re 13 years old — you should read this, you should read that. And you can do it.”

Kami Haeri is one of four authors of “L’Avenir de la profession d’avocat” (The Future of the Legal Profession), a report submitted to the French Minister of Justice in February, 2017.

The structure and the representation of our profession raise governance issues. We have three governing bodies, the CNB (Conférence National des Barreaux), the Conférence des Batonniers and the Barreau de Paris. The Paris bar is by far the largest of the French bars, and also by far the richest. In our highly centralized county, the Paris bar has the most direct exposure to the French public authorities. The CNB is the general assembly representing the overall community of French lawyers and is meant to represent all of them, nationwide, via its 82 members. The Conférence des Batonniers represents all of the bars in France, except Paris: that’s 160 (again, excluding Paris) super diverse bars. When there are new ideas to develop and new issues to debate, the fact that we have these three bodies to be consulted raises a huge structural problem of representation. I state this not as a reproach, but as something I regret.

We see this problem manifested in our professional bar schools, for example. The vast majority of the students who are admitted to an Ecole d’avocat know that they will just have to suffer through an 18-month program that does not convey the energy and practical education that they expect in anticipation of their future job. All they do is hold their breath and wait for it to finish. Why aren’t we, as a profession, able to create an attractive forum for education?

The answer is that we don’t always have the information and governance that we need for the profession to move forward: to conduct a qualitative or quantitative approach or analysis of us as a profession, to understand who we are and where we are going, who joins us, and why. In this context, I think it makes sense that the Minister might have asked someone outside of the representative bodies to do the work that we (the Haeri Commission) did.

I met the Minister of Justice for the first time in July, 2016, when I attended a dinner that he organized (something he does from time to time). I did not know him and I don’t know for sure why he invited me to that particular dinner, but it might have been linked to the work I did in 2013 on the quality of new lawyers and access to the profession. (In that report, I deplored that it is our universities and not us, lawyers, who decide who joins our profession).

I’m not a big fan of small talk, and certainly I wasn’t going to waste my time with the Minister of Justice on small talk. So I immediately spoke with him about the image of our profession that new lawyers have, and that we as lawyers have of ourselves. I spoke about how we are blinded by the legend of our profession, and how the storytelling around us keeps us from thinking about our profession with more creativity and curiosity.

I teach in a variety of contexts and for that reason I have spent a lot of time with law students. With that experience, I could speak with confidence to the Minister about how worried today’s law students and new lawyers are. We spoke for two hours — it was an amazing moment. The Minister expressed a genuine interest in our discussion.

To be honest, I don’t think I know or understand these matters any better or worse than anyone else does. I do feel that technology is changing our market, as is globalization – we have not integrated the changes of the outside world into our profession, or into our thinking. And young lawyers are right to be worried, and they are right to demand that we address this.

So, he asked me, what are your ideas? I responded that we need to re-think our approach to legal education. We need to be more focused on how we, as a community, can be more structured and innovative and how we can better train young lawyers. (I also believe that we need to re-think our institutions, but that was not the focus of my conversation with the Minister and it is not the focus of the Report. In the Report, we seek to make what we hope are useful suggestions. If our institutions agree, then they will use them and if not, they won’t). It was a very cordial and very pleasant dinner.

A week or two later, I received a call from the Minister’s office asking me if I would be interested in going further — in doing research and preparing a report. Of course I responded that I would be honored. So I was invited to the Minister’s offices, where I met with Professor Pierre Berlioz, who is a law professor and also the person responsible in the Ministry of Justice for France’s variety of legal professions. We agreed upon format and methodology. We agreed that the approach needed to be balanced and that it was important to include all kinds of lawyers in the work (Paris/province, solo practice/larger firm, litigation/transactional, men/women). I was honored to gather a team composed of Sophie Challan-Belval (a sole practitioner in Rouen), Eleonore Hannezo (an associate at Linklaters, Paris) and Bernard Lamon (the founder of an IT dedicated boutique in Rennes). It was important to keep the number of people on the Commission small as a large one would be too difficult to manage, and certainly impossible to manage quickly. And, given the upcoming elections, we agreed that the work needed to be done very quickly. We ended up doing the work in just over three months.

Regarding our methodology: Of course it was important that we speak with elected representatives of the bar institutions and as well as with representatives of the lawyer unions, and we did speak with them. However, we felt it was equally important that we speak with people who are not representatives of either — who are not elected and do not have a public duty of any kind — and that we spoke with them first. Also, we felt that it was important that the four of us on the Commission work together as much as possible, and that the result be a mutual product of the four of us. We didn’t want to split up the work as “this is Eléonore’s part, this is Bernard’s part, this is Sophie’s part,…” with the result being a mere agglomeration.

Officially we spoke with 130 persons but unofficially we spoke with about 160. The reason that not all of their names appear at the end of the report is partly by mistake but mostly because some did not want their names to appear. They wanted to be able to speak freely about their institutions. Further, you’ll note that we did not quote anyone in our Report.

We did a small experiment with the online collection of opinions. While we did receive interesting input in that manner, we quickly decided not to place any emphasis on it as a method for collecting input. This is because, we discovered, if we conducted an online information gathering process, we would also have to hold an online debate regarding our work, and we did not want to do that. Instead, we wanted to be able to completely focus on our analysis and deliver a finished work. In our opinion, if you launch a live debate, you cannot work on the report at the same time. It was either-or. This was especially the case since we had so little time.

The first steps — the first weeks — of our work were devoted to learning as much as we could about society at large, about how clients and people in general live, work, consume. What do they need today? What is their relationship to institutions? To mobility? What is their relationship to work, and how it is structured? With this analysis, we can understand where we are going as a society, which should permit us, as a profession, to realign our own projection to match society’s.

We spent those first weeks on the one hand reading as much as we could, and, on the other hand, speaking with as many people as we could who were experts in those areas. We also spoke with experts in diversity and gender parity. We spoke with clients of legal services, and union members. And we spoke with people who used to be lawyers but have left the profession. It was only after those discussions that finally we spoke with members of the profession. In other words, we tried to have an outside-in approach, where we looked at what is happening outside our profession before we looked in detail at what is happening inside.

We did not speak with elected representatives of bar institutions or of lawyer unions until the very end. This was not because we didn’t want to speak with them or because we didn’t think that what they had to say was not important — we did and it was. But their conversations are the most structured. We wanted our discussions with them to be useful. So we wanted to absorb a lot of information before, and we wanted to be able to challenge them if necessary with what we had learned.

And we learned amazing things. About how people approach work, about why certain generations think and work certain ways, about how loyal we are to our legal community, … We would very much have liked to speak to many more people, and especially to more people outside the legal profession, but the four of us are all practicing attorneys with heavy workloads, and we just didn’t have time. In the end, we focused on what we thought was the most urgent. We wanted to wake up our collective conscious on what we are as a profession, and on the huge gap in salaries between men and women.

Much of the information we present in the report, and notably the statistics regarding the profession, is not new — it’s been in the public domain for quite some time. By including it in our report, in a consolidated format, it is our hope that it will finally get the attention it needs and deserves. We hope that the fact the report was prepared by persons who are not connected to any of our bar institutions will mean the report carries additional credibility. Further, we say things in the Report that you wouldn’t read in any official document issued by our bar institutions, and we do so in a tone they would not use. It is our hope that this also adds to the Report’s credibility.

Over 200 years ago we had a Revolution in France. Yet here we are, still with a highly centralized system, still with our love for strong leaders. We despise weak leaders. We cut off the head of our king, yet just a decade later we crowned an emperor. Social change is hard for us in France. Our profession could be so much more innovative than it is.

In the end, we hope that we have created a momentum, first for discussion and then for change. Will this in fact happen? I don’t know.

We didn’t prepare the Report for people who as a general matter don’t pay attention to issues it raises. We didn’t prepare the Report for people who don’t appreciate the fact that we were entrusted with this mission. And make no mistake, there are those who don’t appreciate it — they have said: “Who are you? You are not from any of our institutions and your appointment is an insult to our institutions. Who are you to open debates, and to re-open debates that have been closed?” My response is: are there only specific, designated groups who are entitled to debate? To decide what is open for debate? The world doesn’t work this way, and I am glad that people from outside our institutions open these debates.

We lack dialogue among law students, young lawyers, and older, established lawyers. This causes us to miss many things, and to fail to develop an understanding of how the profession needs to develop. How do you think it makes us look when creators of legal start-ups go to conferences and explain how our institutions sued them to keep them from operating, but lost?

I believe in appearances. And I also believe we should take ideas from innovative sectors. Take their working spaces, for example. They like to work in open spaces to encourage the free-flow of ideas. I believe that if we as lawyers set up our working spaces in a more creative way, we would create the appearance of creation, and our thinking and our work product would also be more creative. Same for education. If we change our methods, if we change our spaces for education, it will automatically change the content. Immediately.

I believe in equality of opportunity. In this context, I have had the chance to observe the many interns we have had in our offices at August Debouzy. From the moment they walk in the door, I see major inequalities among them. Learning substantive law can be tough, but it’s not the toughest thing we have to face in our profession. After all, we often face challenges bringing us to learn or update our knowledge on in areas in which we’ve had little to no training. And when a law changes, it can force us to develop a completely new understanding. That happens every day. Our substantive knowledge becomes outdated every day. And someone who has better substantive knowledge than us comes along every day. That’s not where the problem of equality of opportunity lies.

If you gather five interns in your office, you will see immediately which ones have been encouraged and loved. You will see immediately which ones had a father or a mother or an uncle who said to them “you know what — you’re 13 years old — you should read this, you should read that. And you can do it.” (I don’t know what, say To Kill a Mockingbird or Camus’s L’Etranger, whatever). The fact that someone has done this for some of our new lawyers but not for other creates a massive gap in equality. Because the new lawyers who have had a father or a mother or an uncle like this are the new lawyers that have confidence in themselves. They have the real skill, which is to know how to speak, how to behave, how to convey confidence.

I believe that with legal education we can provide balance — we can and we must help the less fortunate students and young lawyers to develop the soft skills they need to succeed in our profession. We can help them to develop confidence in themselves. We are proposing a continuing legal education program for new lawyers — for their first six years or so after law school. In this program, each year they will be invited (not required) to learn a new soft skill.

Let’s put it in this context: We know that after about five or six years of practicing law, most lawyers reach a pivotal point in their careers when they must take full stock of their opportunities and make decisions about how they want the rest of their career to progress: do they want to go in-house, do they want to be on a partnership track, etc. Now let’s step back, to when such a lawyer was a law student: Law students are inundated with classes, programs, information — a lot of things are put in their brain. But once they are sworn into the bar, they are abandoned. They are completely abandoned. And so what happens? Those who have a father, an uncle, a friend in the profession — they are helped by wise people who can guide them to make the right decisions, as well as guide them through the many other challenges they encounter in their career. On the other hand, those who are alone, they will learn, sometimes by making mistakes, by banging their heads against a wall and thus being forced to change direction until they finally find a path, if indeed they do find a path. Those are the people I want to help. Those are the people I think can be helped by the CLE program we are proposing.

Our bar institutions do a fair amount of research and collect certain statistics with respect to the legal profession. To be sure, there are many skilled and dedicated people doing good work in this regard. However, I would fault their work in two ways. Firstly, there is little planning and strategy to it — their work seems to go off in all directions without any thought as to how it does or should fit together. Further, most of their work is retrospective; very little is prospective. That is, very little looks ahead to the future. Further, we should have a research body that is only dedicated to numbers and statistics. Especially we need statistics in order to understand bias, and notably gender bias. Without statistics, we cannot show how we have failed with respect to diversity and gender parity.

In the Report, we deliberately did not address the problems of our bar institutions. This is not because we don’t think that they have problems — of course they do. We just didn’t see any point in addressing them in the Report because it wouldn’t have changed anything. Those who govern our institutions know the institutions have problems and that they suffer from them. They have not been able to fix those problems, and there is nothing our Report could do that would make them more able to fix them. It takes a huge amount of courage to give up some of your sovereignty, even when you know it’s for the greater good. It is unlikely that our bar institutions will change without some kind of powerful force from the outside.

Another problem we have as a profession is in working with the other regulated professions. We see each other in meetings, and we say nice things to each other, like “we should work together,” and then nothing happens. We need to create spaces and platforms that bring the different regulated professions together, that facilitate their work together. In my opinion, interprofessionality is the future. It’s the addition of intelligences. We are far too inward-looking. We have so far to go. There was so much controversy around the Macron Law. So many debates that afterwards we’re now all exhausted. And for what? All the Law does is allow us to create platforms for different professions to work together. I can’t understand the resistance to this.

Look at what happened with AGN Avocats. This is a law firm that has set up their offices to look like shops, where anyone can walk in without an appointment. They were able to raise funds in the way a start-up would, but in order to stay within the rules, only members of the bar were allowed to invest. Our bar institutions were opposed to AGN, and they sued them, but lost. And for what? What is wrong with making it easier for people to see a lawyer? We should have law firms in malls, so that people who feel lawyers are inaccessible can access them.

It was only relatively recently that lawyers were allowed to join together in firms. For a long time, law was seen as strictly an individual endeavor. Lawyers that still practice alone today see our new structures and cannot recognize the bar or themselves.


The Story Behind the Stories

The stories on this website are the work-product of oral interviews I conducted between March 2014 and June 2016.

The principal way that I identified candidates to tell their stories was to scour the website Legal Futures.[1] This website is a treasure trove of information especially (but by no means only) with respect to alternative structures in England and Wales. In particular, this is the go-to website for information about newly licensed ABSs — in searching the archives as well as the current pages of this site, it was possible for me to identify not only the ABSs that merited attention, but also the best person with those ABSs for me to contact for an interview. Once I identified a candidate, my next step was to search for that person’s contact information. In most cases a simple and quick Google search sufficed to produce an email address, but in a few cases lengthier and more in-depth Google sleuthing was required.

The other way I was able to identify as well as access candidates was through personal introductions. In this context, I am indebted to a number of persons for making those introductions, and most notably to Neil Rose (the Editor of Legal Futures), John Chisholm, Mitch Kowalski, Colin Lachance, Lisa Webley, and Paddy Oliver.

I wasn’t sure what kind of reaction I would get when I reached out to request an interview. Would they agree to speak with me? Would they even respond to me? How long would it take to receive a response? At the beginning, some (but not many) of the people I contacted did not respond to me. In retrospect, I think this was because they were not the people I needed, and they recognized that faster than I did. In time I got better at identifying the people I needed, and as I did, nearly everyone I contacted not only responded to me, but also responded relatively quickly, and expressed little hesitation in agreeing to speak with me.

I conducted the interviews either by phone or skype, with one exception (Sir David Clementi, with whom I met in person). Most interviews lasted about one hour. A small number were shorter — about 30 minutes — and some were much longer — up to two hours, with some of those taking place over more than one call. When I conducted the first interviews in early 2014, I had no idea what I was doing: I wasn’t sure what questions to ask, I wasn’t sure in what order to ask them, and I wasn’t adept at formulating follow-up questions. After the first few interviews, I got the hang of it. The interviews became semi-structured, with the support of a topic guide.

More specifically, I developed a core set of questions. Before each interview, I studied the publicly available information about the organization and the interviewee, and tailored the core set of questions to reflect the specificities of both. As I listened to each interviewee, I got into the habit of noting follow-up questions and I got better at identifying the right moments to ask them. Because I was never sure that I asked all the right questions, my last question became “What should I have asked, but didn’t?” Often it was this question that elicited the most interesting comments.

In most instances, the interviews were recorded with the permission of the interviewee, and I also took handwritten notes as needed. After each interview, I prepared a write-up. I quickly recognized that a simple transcript of the interview wouldn’t work: hearing the spoken word is one thing — reading the spoken word is something entirely different. Run-on sentences, sentence fragments and the repetition of words and ideas are tolerated and even expected in speech, but not in writing. So, what I did was take the words and ideas that the interviewee expressed orally, and organized them on paper (or, more precisely, on a screen) in way that they could be easily accessed by a reader rather than a listener. Because I wanted the focus of the reader to be on the interviewee and not on the interviewer (me), I excluded from the write-up the questions that I posed and any other limited commentary I occasionally made during the interviews. An unfortunate by-product of this is that sometimes in reading the stories, the transitions can be abrupt.

I sent each write-up back to the interviewee. In doing so, I invited him/her to make comments and corrections. At first, I wasn’t sure how “warmly” I should extend this invitation. Naturally I wanted any factual errors to be corrected. More than that, I wanted the interviewee to be comfortable with the write-up. At the same time, however, I didn’t want the write-up to be transformed into something that no longer reflected the interview, and I especially didn’t want changes that would transform the write-up from an interview to advertising. In progressing with the first few write-ups, I discovered that those fears were mostly unfounded — most interviewees made very few if any substantive changes. And when substantive changes were made, in most cases I felt that they improved the write-up. So, after those first few write-ups, I became comfortable extending what I intended to be a warm invitation to make comments and corrections, saying “please don’t feel wedded to what I have typed” and “it is important that you are comfortable.” And when I received a write-up back, usually in the form of a mark-up, I did not question or quibble with the changes — instead, in nearly all cases I accepted all of them, and then went back through the revised document simply to correct any spelling or grammatical errors.

As noted above, the interviews were conducted between March 2014 and June 2016. In August 2015 I contacted everyone I had interviewed up to that time, and I invited them to work with me to update their write-ups — most of them did so, if not immediately, then over the course of the following months.


Voices of Modern Regulation

Gene Shipp and Lawrence Bloom, DC Office of Bar Counsel

DC could be an incubator to see how [alternative structures] could work in the United States. But it can’t be.

The Office of Bar Counsel serves as the chief prosecutor for attorney disciplinary matters involving attorneys who are members of the District of Columbia Bar. Wallace E. “Gene” Shipp, Jr. serves as Bar Counsel and Lawrence Bloom serves as Senior Staff Attorney.

It is difficult for a firm to know how to work under DC’s Rule 5.4. Here is an example:

Imagine a small law firm in North-East DC with two partners. Imagine that the firm has a family law practice, and it sees that its clients are experiencing certain problems and questions regarding their fitness as parents, for example, and decides to bring a social worker on board. The firm wants to help its clients improve their skills as they go through a child custody or child support proceeding. It’s a great idea — this two-person firm providing access to justice.

So they approach a social worker, but the social worker will only come on board if they are made partner and get a cut of the action.

So, there they are — a three person firm — two lawyers and one social worker.

But the social worker is bound by its own ethical rules to report any abuse or other illegal activity. Therefore, they cannot be bound under the rules of confidentiality that apply to the firm. But the heart and core of a law firm is confidentiality.

On the other hand, if that social worker had been hired as a consultant, it would have been bound by the same obligation to report.

This presents a dilemma for the firm. Rule 5.4 presents an opportunity for new kinds of legal services to be delivered, but it requires the firm to tread carefully.

In addition, a firm like this could work only if the lawyers were admitted just in DC and not in any other state. Because if they were admitted in another state, an arrangement of this kind would violate that other state’s rules. But there are very few DC lawyers who are not also admitted in another state.

You could make a case that the principle purpose of Rule 5.4 is to permit retiring Congress people to remain in DC and work as lobbyists.

But regardless of the reasons why Rule 5.4 was adopted and regardless of its potential uses, the reality is that very few people are taking advantage of it because no one is quite sure how to make it work. Instead, they set up work-arounds, such as an ancillary firm down the hall, or taking on the person as an employee and offer them a salary, a cut of the profits and a retirement program.

In this context, it is not a surprise that DC’s Office of Bar Counsel has never been presented with any complaint, and the Office has never investigated any firm, in connection with nonlawyer ownership of a law firm.

It appears that multidisciplinary practices and nonlawyer ownership of law firms is the future. It is not the end of the natural world as we know it. Places like England and Australia have figured out how to make it work. DC could be an incubator to see how this could work in the United States. But it can’t be because it’s just too tricky for a firm to make things work under the Rule.

This story is supplemental material for Modernizing Legal Services in Common Law Countries: Will the US Be Left Behind? To learn more about the book, please click here.

To download a pdf of this and the other stories, please click below.

Voices of Modern Regulation

Saul Singer, District of Columbia Bar

D.C. Rule 5.4(b) is a client-centric rule — it is all about the client.

The D.C. Bar serves both a representative and a regulatory function for the District of Columbia. Its core functions are the registration of lawyers, operation of a lawyer disciplinary system, maintenance of a Clients’ Security Fund, and other administrative operations. The D.C. Bar’s Legal Ethics Program provides informal guidance to lawyers on questions that arise under the D.C. Rules of Professional Conduct. Saul Singer serves as Senior Legal Ethics Counsel.

My job with the D.C. Bar is to provide informal guidance to D.C. lawyers regarding their ethical duties and responsibilities under the rules of the professional conduct for the District of Columbia.

The District is an outlier jurisdiction. We are not a wholesale ABA Model Rule jurisdiction — our rules are very different from the ABA Model Rules in many areas. In some instances we are stricter than the ABA (as regards confidentiality, for example). But in other areas the D.C. Rules are more lenient.

Save for one exception, the District of Columbia is the only jurisdiction in the U.S. that under very limited circumstances actually permits ownership or management of a law firm by nonlawyers. (The exception is Washington State, which allows lawyers to share fees with Limited License Legal Technicians).

Because we are the only jurisdiction that allows this (again, save for Washington State), this is something that must be done very carefully. Anyone seeking to do this must be sure to dot their i’s and cross their t’s.

The Rule is 5.4(b). It has four elements, all of which must be strictly met.

Where the rubber meets the road is with respect to the first element, which requires that the firm have as its sole purpose providing legal services to clients.

Here is a situation contemplated by this: let’s say I am a personal injury lawyer. A case comes in the door, and I gather all the pertinent information, including the medical records. I send the medical records to “Doc,” who is my consultant. Doc reviews the file, telling me if this is a good or a bad case, and where the holes might be. If I decide to take the case, Doc continues to act as my consultation, helps me to prepare expert witnesses, etc.

One day we get the great idea that instead of simply acting as my consultant, Doc should come in-house and be my partner. He’ll continue to do what he’s always been doing, but with an ownership interest in the firm. We’ll be a team — I will be the law guy and he will be the medicine guy.

This is ok, as long as these very strict conditions are met:

1)         Doc cannot be involved in any way in making any legal decision. He cannot have any say in whether the firm should take on a case or not. He can make a recommendation, but he cannot decide.

2)         The firm must be managed by lawyers. Doc’s decision making authority  may not be greater than 50%. The Rule does not actually contain this cap, but this limit must reasonably apply in order to assure that the nonlawyer does not have control of the firm and cannot vote down the lawyers.

3)         Doc must actively participate in the operation of the law firm. That is, he must actually help the firm to represent its clients. Passive investment by a nonlawyer is not permitted.

4)         I, as the firm’s supervisory lawyer, will bear responsibility for Doc’s conduct. So, if Doc violates an ethics rule, I can be on the line for it and it could cost me my law license.

There is no requirement that D.C. firms that have nonlawyer partners declare this fact to the D.C. Bar, and the D.C. Bar does not keep a registry or record of any kind of the firms that do have nonlawyer partners. For that reason, we do not know how many D.C. firms have nonlawyer partners.

That being said, a firm cannot keep secret the fact that it has a nonlawyer partner. For example, if a firm lists its partners on its letterhead or on its website, then the nonlawyer’s name must be included, or that would be considered a misrepresentation or omission in violation of Rules 7.1 and 7.5. Of course, in listing the nonlawyer’s name, there must also be a clear indication that the person is not a lawyer, much in the same way you would indicate that a lawyer is not admitted in the District of Columbia  but in a different state.

D.C. Rule 5.4(b) is a client-centric rule — it is all about the client. The Rule was adopted to help lawyers better serve their clients. We recognize that in a complex environment, a nonlawyer can provide significant help and assistance to a lawyer, especially if they are in-house. This is why passive investment is not allowed — because a passive investor will not do anything the help the client. But someone like a doctor definitely will.

At the same time, lawyers cannot abdicate their responsibility to make legal decisions, all the way through. Nonlawyers can provide input, but they cannot call the shots.

I can understand that in some states, simply hiring Doc as a contractor or simply paying him a salary would be considered sufficient compensation, and that may be one reason why those states do not permit nonlawyer ownership. My personal opinion — it is not the official position of the D.C. Bar — is that there is an advantage to bringing a nonlawyer in as a partner rather than an employee. There is a big difference between the motivation of a contractor or an employee and the motivation of an owner. An ownership interest, as opposed to just a salary, is a great motivator for anyone. Again, that is not the D.C. Bar’s official position, it’s my personal opinion.

This story is supplemental material for Modernizing Legal Services in Common Law Countries: Will the US Be Left Behind? To learn more about the book, please click here.

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