The term “business” is too limiting, and, for that reason, misleading. These structures are about much more than “business:” They are about new ways of developing and delivering legal services.

In the United States, legal services are traditionally viewed as something provided by individual lawyers. A lawyer may work alone, as a “sole practitioner,” or a lawyer may join with others, in a law firm or in an in-house corporate or governmental legal department. Either way, the traditional perspective is that legal services are provided by individuals, and not by just any individuals but by special ones who have a specific education and qualifications.

But is this traditional perspective a truly accurate one? Do lawyers really act alone? Are the best — the most useful — legal services provided by lawyers (and only lawyers) working as individuals?

The legal affairs of most people and companies span multiple states if not countries as well as multiple areas of law. It is beyond the intellectual capacity of any single individual lawyer, however gifted, to master the sheer volume of knowledge and process that would be required for that individual, acting alone, to be all things to any one client, or, in many cases, to even be anything to one client.

And legal matters are rarely strictly legal matters that can be addressed in isolation of other, non-legal matters. To the contrary, legal matters arise in their own specific contexts and, in order to be addressed effectively, need to be addressed in that specific context: a business matter, a financial matter, an environmental matter, a health matter, a family matter… It is beyond the capacity of any single individual lawyer, however gifted, to master the full context in which any legal matter may arise.

It is for these reasons that, in reality, most lawyers work not individually but in teams. Obviously, they work in teams with other lawyers, in order that they may complement each other’s legal skills and expertise. Perhaps less obviously, they also work in teams with persons who are not lawyers but who have expertise in other areas — medicine, science, social work, economics, finance, accounting, IT, business, marketing,  and even law (paralegals)… in order to address a client’s needs in a holistic manner. Finally, and perhaps not obviously at all, lawyers also work with technology — not simply word processing and email, but software for document generation, electronic discovery, predictive coding and technology assisted review, analysis by rules-based expert systems, blockchain.

In sum, as the world has evolved and grown more complex, so have the practice of law and the provision of legal services.[1]

However, the regulations that govern legal services in the United States have not evolved in a comparable manner and they do not take account of such complexity.

There are multiple ways in which this is the case. Most notably the regulatory framework continues:

  1. To restrict the services that lawyers may provide across state borders.
  2. To restrict who may provide legal services — they may be provided only by lawyers.
  3. To regulate lawyers only as individuals — the organizations within which lawyers work are regulated only in an indirect manner, through lawyers as individuals.
  4. To restrict who may own and who may manage the organizations that provide legal services — they may be owned and managed only by lawyers.
  5. To prohibit organizations that provide legal services from providing any other kind of good or service — that is, to prohibit multidisciplinary practices.[2]

Why does it matter that the regulatory framework has not evolved? Because even if it has been possible for legal services to evolve, and to evolve significantly, continued evolution is necessary. But as long as the current regulatory framework remains in place, this evolution cannot occur.[3]

What kind of evolution is needed?

Evolution is needed in the way that legal services are accessed (or, more accurately, not accessed): In the United States today, many people and businesses struggle to obtain legal services. They struggle in a number of ways: they don’t realize that their issue is a legal one,[4] they don’t know who can help them, they don’t know who they can trust to help them, they don’t know where to go to find help, they look for help but can’t find anyone willing to help them, they are afraid of what it will cost, they simply don’t want to take the time and trouble to figure it all out. And even if they manage to secure legal services, their problems do not end — they have to contend with arcane and complex court procedures, they receive poor customer service from their lawyer, they question if the work could have been done more efficiently and, as a result, more cheaply, they don’t understand the information they are given, they are not able to judge the quality of the services they receive, they receive bills they do not understand, for amounts they never anticipated.[5]

Evolution is needed in the way that legal services are produced: While the ways that lawyers work have changed in many respects, in certain respects it has changed very little. A primary example is the use, by most lawyers, of the service model termed “professional consultancy”[6] or “solution shop.”[7] Under this model, lawyers do not sell products or “precut solutions.”[8] Instead, they solve problems by spending time working on the problems, under the assumption that the problem requires a solution tailored especially for the specific client. For lawyers to solve additional problems, they spend more time. The scalability of this model is limited — more problems can be solved only by adding more lawyers, who need to spend more time. As a result, the number of clients that can be served using this model is limited.

Finally, evolution is needed in the way that legal services are priced. This problem has multiple facets. One facet results from the professional consultancy model — under the model, when lawyers solve additional problems, there is little or no reduction in marginal costs. Additional work incurs additional marginal costs, such that increased volume cannot result in lower prices. A second facet is that under the professional consultancy model, pricing is driven by the number of hours that lawyers bill — work accomplished in some other manner, such as by nonlawyer staff or by automated processes, is not billed. This incentivizes the delegation of as much work as possible to lawyers, and discourages the development of processes that would relieve lawyers of lower-level and routine tasks in order to have them carried out in a less expensive or less labor intensive manner. Finally, the traditional way of pricing legal services is based upon billable hours, or time spent. This is true even for many fixed price arrangements that many law firms offer, in that the fixed fees are based upon an estimation of the number of hours required to do the work. Most other industries have developed more or less sophisticated means to price their goods and services in a manner that is mostly or wholly independent of the time required to produce the good or service — lawyers, for the most part, struggle immensely to do this.[9]

Theoretically, law firm partnerships could instigate at least some of this needed evolution. The reality is, however, quite different. The reasons for this can be debated: is it because many law firm partnerships cling tightly to the solution shop model as a matter of culture? Is it because law firm partnerships are sheltered from competition from other forms of service models, and so have little incentive to develop new service models? Is it because, for reasons of nature or nurture, lawyers are particularly adverse to risk? Whatever the reason(s), and regardless of the theory, the reality is that it would be a mistake to rely upon evolution of any significant scale to be instigated by traditional law firm partnerships.

Without the needed evolution, legal services are placed out of reach for a large portion of the US population. This population obviously includes people who are so poor that they cannot afford to pay anything for legal services, because even though government-funded legal aid and private pro bono services do exist, they are able to meet only a small fraction of the needs of this market. Less obviously but no less importantly, the population shut out of legal services also includes the middle class, as well as many start-ups and small businesses. Generally speaking, they are able to pay some amount. But that does not mean that they are able to pay any amount — much less sign up to pay an unknown amount. And this entire population — the poor, the middle class, start-ups, small businesses — all of them suffer from the same problems described above: difficulty to know where to find legal services, not knowing who to trust or how to judge quality, ….

While these problems are not the only cause of the problem of access to justice in the United States, they constitute, in themselves, an often impregnable barrier. And the access to justice problem in the US is not a small one. To the contrary, it would be difficult to overstate its enormity. The extent of the unmet legal need in the United States is so high, some consider it a human rights crisis, with the result that the United States is in breach of its obligations under a number of human rights treaties which require the United States, for example, to provide effective remedies to rights violations, to provide for procedural fairness, and to protect against discrimination and provide equal protection under the law. As regards the question of affordable and accessible civil justice, the World Justice Project Rule of Law Index 2015 ranks the US 65th out of a total of 102 countries (behind Russia, Ukraine and Kyrgyzstan), and out of the regional group of North America and Western Europe, it ranks the US last (behind Romania and Bulgaria).[10]

A catalog of all the causes of the access to justice problem in the US would be lengthy and complex. Addressing the causes in full will require multiple, complex solutions. There is not any one or even any two changes that could be made that would have the effect of addressing all the causes and ending the problem, or even of ending the problem for most people. What is required is a multitude of solutions to address the multitude of causes.

We could take the position that this is simply the reality of legal services, and there is nothing that can be done to change it. We could throw up our hands in frustration, not knowing where to start to make a change, and as a result, start nowhere.

Or, we could start somewhere.

An obvious place to start is with the regulatory framework. We can move away from the current regulatory framework that centers nearly exclusively on lawyers, in favor of a framework that instead focuses on legal services.[11]

While the benefits of this fundamental change are numerous, this book will focus on one of them: that such a regulatory change will allow for a greater variety of legal service providers to enter the market, and especially a greater variety of organizations. It will do this firstly by facilitating the regulation of organizations (or entities) alongside individuals (lawyers and nonlawyers). And then, in doing so, it will enable the restrictions on who may own and who may manage legal service providers as well as the restrictions on multidisciplinary practices to be lifted.

The reason for this focus is twofold: (i) because lifting such restrictions in order to allow for these different kinds of organizations is today a highly controversial topic — arguably the most controversial of the consequences that would result from changing the regulatory framework, and (ii) because it is the restrictions on these different kinds of organizations that serve the most to limit evolution in legal services.

Why do these restrictions serve to limit evolution in legal services? For multiple reasons:

  1. They favor the partnership structure over the corporate structure. While a partnership structure surely does work for some legal service providers, it does not work for all of them: (i) by conditioning ownership on employment with the firm, it forces the partnership to make investment decisions on a short-term basis only, and (ii) it obliges the partners, and the partners alone, to assume full responsibility for the risks of the firm — risks cannot be shared with outside, more diversified investors (private or public). This limits the risks that the partnership is willing to assume.[12]
  2. They limit the capital available to legal service providers. Under the regulations, because only a lawyer can be an owner of a legal service provider, only lawyers can make capital contributions. Third parties, such as venture capital funds or other passive investors (again, private or public), may not. While lawyers are not restricted by regulation regarding the amount of capital they can contribute, in reality they are: For most lawyers, the firm is a source of income, not opportunity for investment. As a result, not only do lawyers seek to limit their capital contributions, in addition most firms retain only enough profits to cover immediate operating expenses, and pay out the rest to the partners each year. This limits the ability of a law firm to make capital-intensive investments.[13]
  3. They limit the expertise available to legal service providers. A legal service provider needs people proficient in law, for sure. But it also needs people proficient in other areas, and notably in IT, business management, marketing, finance, accounting, pricing, and human resources. It is possible for a lawyer to develop proficiency in one and even perhaps in two of these areas, but not in all of them. People proficient in these areas can be and are hired as employees — indeed many firms today employ persons specialized in these areas.[14] But those persons cannot hold executive management positions and they may not hold shares. These limitations handicap legal service providers: (i) in recruiting and retaining employees as the best ones can opt instead for other types of businesses where their career progression and ability to share in profits are not stymied by regulation, and (ii) in fully motivating the employees they do retain, since those employees cannot and never will have a stake in the business.
  4. They make it more complicated for clients to have their needs addressed in a holistic manner. As noted above, most legal matters do not arise and cannot be addressed in isolation from other, non-legal matters. In the absence of a multidisciplinary practice, clients have to identify multiple service providers and coordinate their services. Multidisciplinary practices can provide a one-stop shop for clients and make it easier to have their needs met in their totality.[15]
  5. They limit the way that legal services can be provided at no or very low cost.[16] Under current regulations, there are very few options for funding pro bono legal services — the only choices are either through government (taxpayer) funding, interest on lawyer trust accounts, or private donations, or through the donation of time by members of the bar. These methods are neither sustainable nor scalable.
  6. They stifle the motivation for persons who are not lawyers to take ideas for better ways to deliver legal services and turn them into viable businesses. They understand that the permitted range of activities for such businesses is small, and that even within that limited range, there is significant risk that such businesses will be challenged as the “unauthorized practice of law” and will lose value if not simply be forced to close.[17]

What difference would it make if people who are not lawyers could share in the ownership of legal service providers? What difference would it make if legal services could be offered together with other (non-legal) goods and services? In other words, what if “alternative structures” (alternative to law firm partnerships) were permitted?

Here are the differences that it would make:

  1. It would enable the development of: (i) business and technological processes to reduce the marginal cost as well as the time required to provide a service, (ii) large-scale branding and marketing to reduce the search costs for clients, and (iii) reliable methods to price legal services on a fixed price basis, independent of time spent. With these developments, a greater number of persons would be able to access a greater variety of legal services, under more acceptable conditions, with more confidence, and at more predictable prices. But these developments require a number of elements: a corporate structure, access to capital for long-term investment, the ability and willingness to take significant business risks, and advanced expertise in business management, technology, marketing, finance, human resources and pricing. Under the current regulations, these elements are out of reach to law firms.[18]
  2. It would enable lawyers to join forces with other service providers, such as accountants, financial planners, doctors, psychologists, scientists, social workers, economists, lobbyists, in order to provide holistic services that address a client’s entire problem rather than only the legal aspects. Under current regulations, services cannot be combined in this manner.[19]
  3. It would enable the development of more sustainable and scalable means to provide pro bono (free) legal services — means that do not rely upon state or private donations of time or money. For example, it would enable a charitable, philanthropic or educational organization to own and operate a legal services provider that would provide legal services for free. The legal services provider could be funded by private donations, or, in a more sustainable manner, it could be funded from the profits of a sister company that offered legal services on a paid basis. Under current regulations, this kind of arrangement is impossible.

So, you may ask, why not just change the regulatory framework and, as one consequence of doing so, permit alternative structures?

Because it is not easy to do.

Manner of Regulation Today

The current manner of regulation in the United States is highly complex. To begin, most regulation is on a state rather than national level. That’s 50 different regulatory systems, plus the District of Columbia. Ostensibly, it is the supreme court of most states that holds regulatory power (in many states by sharing it with the state’s bar association), but there are examples of state legislatures attempting to assert their own authority to regulate, at least with respect to certain issues. Finally, and most importantly for our purposes here, is the role of the American Bar Association (ABA).

The ABA is a voluntary, national association of lawyers and law students. It counts about 400,000 members out of the total of 1.2 million lawyers in the United States. It is governed by a body called the House of Delegates — most of its 560 members are selected or, in a few cases elected, by state and local bar associations.

The ABA is a private (non-governmental) organization that, officially, does not have any regulatory authority at all. However, in practice the ABA’s regulatory power is immense, or, as two Canadian commentators describe it, “hegemonic.”[20] It is the ABA that developed the Model Rules of Professional Conduct, a set of rules that, as the ABA explains on its website,[21] has its origins in large part from a 1836 list of “Fifty Resolutions” in book entitled “A Course of Legal Study.” The most current form of the rules, under its current name, was adopted by the ABA House of Delegates in 1983. While officially the Model Rules are only the recommendations of an unelected private organization, the reality is that 49 states as well as the District of Columbia and the US Virgin Islands have adopted the Model Rules, if not in their entirety then in very large part.

It is the ABA Model Rules that today form in large part the basis for the regulatory framework governing lawyers across those jurisdictions. As specifically regards the restrictions on nonlawyer ownership of law firms and on multidisciplinary practices, they are found principally in Model Rule 5.4. (California has not adopted the ABA Model Rules in the manner that the other states have. However, the California rules have the effect of prohibiting nonlawyer ownership and multidisciplinary practices in the same manner as Model Rule 5.4).[22]

From time to time, the ABA House of Delegates adopts amendments to the Model Rules. Those amendments are, in most cases, subsequently reviewed by each state’s bar association(s), and then proposed to the state’s supreme court for adoption. While there is no legal provision that prevents a state supreme court from adopting rules that do not conform to the ABA’s Model Rules, in reality this seldom occurs, and the greater the opposition of the ABA and/or the state bar association(s) to the amendment in question, the less likely it is to occur. This fact was recently underscored by Stephen Younger, an attorney who chaired a 2012 review of Model Rule 5.4 by the New York State Bar Association (a review that recommended to the ABA that the Rule not be changed): “Most chief judges who are responsible for the ethics rules in our states don’t want to get too far ahead of the bar.”[23]

In 1983 and again from 1999 to 2000, the ABA considered revising Model Rule 5.4 in order to allow for nonlawyer ownership and multidisciplinary practices in some form, but in each case the House of Delegates declined to make any changes.[24] The position that the House of Delegates took in July, 2000 was particularly strong, stating:

The sharing of legal fees with nonlawyers and the ownership and control of the practice of law by nonlawyers are inconsistent with the core values of the legal profession.

The law governing lawyers, that prohibits lawyers from sharing legal fees with nonlawyers and from directly or indirectly transferring to nonlawyers ownership or control over entities practicing law, should not be revised.[25]

The question was put on the table again in 2010, when the President of the ABA established the Commission on Ethics 20/20 “to perform a thorough review of the [Model Rules] and the US system of lawyer regulation in the context of advances in technology and global legal practice developments,”[26] with a view towards making recommendations to the House of Delegates for amendments to the Model Rules. The Commission, composed of 17 lawyers, deliberated over a period of three years. Their work included a review of Model Rule 5.4, and in particular whether it should be revised in order to allow for alternative structures. In 2012, the Commission decided to not recommend to the House of Delegates any changes to Model Rule 5.4 because the case for such changes “had not been made.”[27]

In August 2014, the ABA appointed a new Commission, the Commission on the Future of Legal Services. The Commission had a much broader mandate than that of the Ethics 20/20 Commission, although it was not so broad as to encompass the entire regulatory framework as a whole. The mandate of the new Commission was to seek input from the public and the legal profession to learn their vision for more efficient and effective ways to deliver legal services, to analyze and synthesize the insights gained, and, on that basis, to “propose new approaches that are not constrained by traditional models for delivering legal services and are rooted in the essential values of protecting the public, enhancing diversity and inclusion, and pursuing justice for all.”[28]

In November, 2015, the Commission submitted a proposed Resolution and Report on Regulatory Objectives, for consideration by the House of Delegates during its Midyear meeting in February, 2016. The proposal contained a list of ten regulatory objectives, and as well as an explanation that “each state’s highest court” not only be guided by the objectives when assessing the court’s “existing regulatory framework,” but also with respect to “any other regulations they may choose to develop concerning non-traditional legal service providers.”[29]

While this proposal might have been considered a breakthrough, the House of Delegates adopted it in February, 2016 with a significant caveat: “that nothing contained in this Resolution abrogates in any manner existing ABA policy prohibiting non lawyer ownership of law firms or the core values adopted by the House of Delegates […] on July 11, 2000.”[30]

Interestingly, and seemingly in defiance of this caveat, in late March and early April 2016 the Commission issued two “Issues Papers” calling for comments, one with respect to the regulation of as-yet “unregulated legal service providers,”[31] and the other with respect to alternative structures.[32] At the time this book went to press, it was too early to know the outcome of these Papers.

If the US does change its regulatory framework in order to regulate legal services instead of only lawyers, and thereby, as one consequence, permit alternative structures, it will not be the first country to do so. It will not be the second either, and, unless it acts quickly, it is even unlikely to be the third. The Australian state of New South Wales was the first to make these changes — it modified its rules gradually, between 1990 and 2001. Since 2001, under a framework that evolved to regulate legal services rather than lawyers, legal practices in NSW have been permitted to incorporate, to create multi-disciplinary practices, to share fees with non-lawyers, and even to publicly list on the Australian Securities Exchange. The other states and territories of Australia followed the lead of NSW in the years soon thereafter. Today about one-third of Australia’s legal service providers are “incorporated legal practices” (ILPs).[33]

The second place to make these changes was a part of the UK. The principal instigator of the changes was a 2004 report entitled “Review of the Regulatory Framework for Legal Services in England and Wales.”[34] The report was commissioned by the government of Tony Blair and issued by David Clementi, a former governor of the Bank of England. Referred to as the “Clementi Report,” it led to the 2007 Legal Services Act, which radically overhauled the regulatory framework in England and Wales (the other two countries of the UK, Northern Ireland and Scotland, were not covered by the Act). An important part of the changes was to grant to regulators the authority to regulate not just lawyers but also entities that provide legal services. In doing so, England and Wales now permit nonlawyers to own and manage legal service providers, subject to a fitness test, and also permit multidisciplinary practices. The relevant provisions of the Act entered into effect in 2011, and at the time this book went to press approximately 745[35] “alternative business structures” (ABSs) were authorized to operate.[36]

The third place that is on the path to make these changes is Canada.[37] In August 2014 the Canadian Bar Association’s “Futures Initiative” issued a report[38] strongly endorsing changes to Canadian regulations (the Canadian Bar Association represents, but does not regulate, lawyers on a national level). Nova Scotia has already implemented a certain number of changes in a move towards entity regulation[39] and Manitoba is in the process of doing so, together with the other “Prairie provinces” of Alberta and Saskatchewan.[40] Ontario, after a false start, may be following in their path,[41] as well as British Columbia.[42]

Moving from north to south of the US border, Mexico has always permitted alternative structures. In contrast to Australia and England and Wales, this is due not to any intentional regulatory design, but to the fact that, as a general manner, legal services are only lightly regulated in Mexico. The few regulations that are in place address neither nonlawyer ownership nor multidisciplinary practices. Because neither is expressly prohibited, each is permitted.

Why Changing the Regulatory Framework is Difficult

It is possible to change the regulatory framework in the US and, as one consequence, permit alternative structures, but it is extremely difficult. This is for several reasons:

To begin, many lawyers and lawyer organizations are strongly opposed to alternative structures. They offer a number of arguments in this regard — those arguments are examined in part I of this book.

Next, the changes needed are not simple ones. Lawyers are regulated on a state-by-state basis, resulting in a lengthy and complicated process to make any change for the entire country, even straightforward ones. And changing an entire regulatory framework is highly complex. It is not just Model Rule 5.4, but all the rules that will need to be reviewed in order to enlarge the regulatory framework from lawyers to legal services. The review will need to include a revision of the unauthorized practice of law rules in order to reduce restrictions not only on who may provide legal services, but also on the provision of legal services across state lines. It will need to address the situation of structures that operate in more than one state, if any one or more of those states do not also change their regulatory framework, and notably if they do not change them to allow for alternative structures. In sum, an extensive re-working of a number of regulations will be required.

Finally, it is not at all clear whose responsibility it is, or, at least, whose responsibility it should be, to decide upon and implement the changes. Should it be the ABA, an unelected, private organization with no political accountability and a history of resistance to change?[43] Should it be each of the state supreme courts, who would be required, on a state-by-state basis, to step widely outside their comfort zones given their traditional reliance upon the decisions of the ABA? Should it be a combination of the ABA and the state supreme courts, working together via the Conference of Chief Justices — again, not a process that, to date, has generated significant change? Should it be each of the state legislatures, who may be seen as defying state constitutions (which, in many states, allocate the regulation of attorney conduct to the state’s supreme court), on the grounds that they are regulating not attorney conduct but legal services and corporate structures more generally? Or, should it be the executive or the legislative branches of the federal government of the United States, who would then override a 200+ year tradition of the regulation of the legal profession on the state level, on the grounds that it is regulating not attorney conduct but restrictions on competition, economic policy and the protection of human rights?[44]

No, it will not be easy at all.

The Approach of this Book

This book is divided in five parts. The first four parts address the topic of alternative structures in a conventional manner: The first part examines the variety of objections that are made to alternative structures. The second part explores the opportunities that they offer. The third part delves in-depth into the issue of access to justice. And, finally, the fourth part places the question of alternative structures in its larger context of how and by whom legal services are regulated.

A famous quote attributed to Mark Twain runs along the lines of “Don’t say the old lady screamed. Bring her on and let her scream.” In Part V, the old lady is brought on and allowed to scream. She does this in the form of stories and experiences told firsthand by people who have created, are managing, are employees of, and/or have invested in alternative structures, as well with persons who regulate them. (And, in one case, by a person who has closely studied alternative structures that existed in the US a century ago). The stories offer unique, direct perspectives on the variety of issues that are raised in the first four parts of the book. The stories move the discussion of alternative structures from the realm of the theoretical, the general, and the academic and place it firmly in the realm of the concrete, the specific and the entirely real.

In fact, Part V contains a sampling of 16 out of 58 firsthand stories. The remaining stories are available online at this link:

All of the stories, whether in part V or posted online, speak (or, using Twain’s terminology, scream) indirectly to the variety of topics that are raised in the chapters of the book. Many also speak directly, in more or less detail. To the extent this is the case, there appears at the end of the relevant chapter references to the related stories that appear in Part V or online. In this manner the book provides a direct link from theoretical, general and academic discussions to concrete, specific and very real examples. With the stories, alternative structures come alive.

Note About Terminology: A variety of terms are used to refer to organizations that are owned and/or managed by one or more nonlawyers and/or that are multidisciplinary practices (in other words, to refer to legal service providers that are not the traditional structures of either sole practitioner or law firm partnership). In Australia as well as in England and Wales, where there exist formal regulatory frameworks for such organizations, the terminology is fixed and easy to identify: in Australia they are referred to as “incorporated legal practices” or “ILPs” (as well as “multi-disciplinary partnerships,” or “MDPs” and the recently coined “unincorporated legal practices,” or “ULPs”). In England and Wales, they are referred to in common speech as “alternative business structures” or “ABSs,” and in the formal legal texts as “licensed bodies.” In the Canadian provinces, which are moving towards formal regulatory frameworks for such organizations but have not yet established them, the English/Welsh reference of “alternative business structures” or “ABSs” is often used, but by no means is it the only one used. Others include “new business models,” “new business structures,”  “alternative business models,” and “liberalized structures.” In the US, “alternative business structures” and “ABSs” are also often used, but so are expressions like “alternative law practice structures,” (an expression occasionally used by the ABA Commission on Ethics 20/20), and “alternative law firm structures.”

In this book, I have chosen to use the term “alternative structures” as a general, all-purpose term of reference. I have done this for these reasons:

  • In order to reserve the terms ILP and ABS for reference to the Australian and the English/Welsh entities specifically,
  • In order to distance the general concept of these kinds of organizations from the specifically Australian and the specifically English/Welsh manifestations of them (manifestations which, as compared to each other, have significant differences). In doing so, I seek to underline that while in the US we can and should be informed by Australian ILPs and English/Welsh ABSs, in creating our own versions of them, there is no need that we identically copy their terminology, much less create identical copies of the structures themselves. In other words, Australian ILPs and English/Welsh ABSs are only two of the many possible manifestations of these kinds of organizations — the term “alternative structures” is used to encompass all possible manifestations.
  • Perhaps most importantly, because the term “business” is too limiting, and, for that reason, misleading. These structures are about much more than “business:” They are about new ways of developing and delivering legal services.


[1] A pioneer on this topic is Ted Schneyer, for example, “Professional Discipline for Law Firms,” Cornell Law Review 77 (1991): 1-46, Further, Thomas D. Morgan has published extensively in this regard. See, for example: Thomas D. Morgan, “Comments of Professor Thomas D. Morgan on the Discussion Paper on Alternative Law Practice Structures,” January 30, 2012,; Thomas D. Morgan, “The Rise of Institutional Law Practice,” Hofstra Law Review 40 (2012) 1005-1026,; Thomas D. Morgan, “The Shift to Institutional Law Practice,” in The Relevant Lawyer: Reimagining the Future of the Legal Profession, ed. Paul A. Haskins (Chicago: ABA Publishing, 2015), 143-155.

[2] See, for example, Gillian K. Hadfield and Deborah L. Rhode, “How to Regulate Legal Services to Promote Access, Innovation, and the Quality of Lawyering,” Hastings Law Journal, Forthcoming; USC CLASS Research Papers Series No. CLASS16-6; USC Law Legal Studies Paper No. 16-7 (2016), 5,

[3] The OECD recently stated: “current regulatory frameworks are the most important barrier to innovation in the legal services market, as well as to the benefits it brings.” Organisation for Economic Co-operation and Development, “Protecting and Promoting Competition in Response to ‘Disruptive’ Innovations in Legal Services: Issues Paper by the Secretariat,” March 9, 2016, 13,

[4] See, for example, ABA Standing Committee on the Delivery of Legal Services, “Issues on the Future of Legal Services,” December 2, 2014, See also Rebecca Sandefur, “Accessing Justice in the Contemporary USA: Findings from the Community Needs and Services Study,” August 8, 2014,

[5] For a general discussion of the reasons people don’t seek out counsel and the difficulties they face when they do so, see, for example, Noel Semple, Legal Services Regulation at the Crossroads: Justitia’s Legions (Cheltenham, UK: Edward Elgar Publishing, 2015), 133-182.

[6] See, for example, Malcolm Mercer, “So Many Lawyers, So Many Unmet Legal Needs,” Law Practice Magazine, July/August 2015, 44-47,; and Malcolm Mercer, “Utopia, Dystopia and Alternative Business Structures,” Slaw, November 11, 2013,

[7] Ray Worthy Campbell, “Rethinking Regulation and Innovation in the US Legal Services Market,” New York University Journal of Law & Business 9 (2012): 1-70, 24-25, Campbell drew this term from the works of Clayton Christensen; see, for example, Clayton Christensen and Mark Johnson, “What Are Business Models, and How Are They Built?” 2010,

[8] Campbell, “Rethinking Regulation,” 25.

[9] See, for example, Mike Ayotte, “How Fixed Fees Are Going to Change BigLaw Forever,” The Last Honest Lawyer, August 28, 2013,

[10] The World Justice Project, Rule of Law Index 2015, 2015, This ranking is derived from the data (xls) that is available for download from the World Justice Project website.

[11] Certainly this author is not the first or the only to advocate for an enlargement of the regulatory sphere to include legal services rather than just lawyers. See, for example, Andrew M. Perlman, “Towards the Law of Legal Services,” Cardozo Law Review 37 (2015): 49-112, Perlman, however, deliberately turns attention away from alternative structures (as well as, without expressly mentioning them, the general concepts of entity regulation and compliance-based / proactive regulation) in favor of a focus on the provision of legal services by individuals (rather than entities) who are not lawyers and by existing legal service providers, notably “consumer facing automated document assembly companies.” Ibid., 55, 89-112. While there is nothing inherently objectionable in Perlman’s proposals, his proposals do not address most of the fundamental limitations on the provision of legal services that alternative structures address (access to capital, access to non-legal expertise, the ability to offer holistic services by combining legal and non-legal services,…). At any rate, in certain states, notably Washington State (discussed in Part IV) and New York nonlawyers (individuals) already provide precisely delineated legal services, and a significant number of “consumer facing automated document assembly companies” and other non-regulated legal service providers already exist and offer their services throughout the country. In proposing that these kinds of already existing providers (but no other kind) finally be brought under a regulatory regime, Perlman substantiates Moliterno’s observation that the profession does “nothing more than modify existing lawyer regulation in ways that have been dictated by changes from outside the profession.” James E. Moliterno, The American Legal Profession in Crisis: Resistance and Responses to Change (New York: Oxford University Press, 2013), 17.

[12] For a general discussion of risk in the context of law firms, see Edward M. Iacobucci and Michael J. Trebilcock, “An Economic Analysis of Alternative Business Structures for the Practice of Law,” (paper presented at the Law Society of Upper Canada’s symposium for the Alternative Business Structures, October 4, 2013),

[13] See, for example, Dan Katz, video “Innovation in the Legal Services Industry — The Future is Already Here, It is Just *Not* Evenly Distributed,” posted October 2, 2013, See also Gillian Hadfield, “Legal Barriers to Innovation: The Growing Economic Cost of Professional Control Over Corporate Legal Markets,” Stanford Law Review 60 (2008): 101-146,

[14] For a general discussion on the value to law firms of persons with expertise in areas other than law, see John Sterling, “Non-Lawyers: A Critical Success Factor for the Law Firm of the Future,” Sterling Strategies, December 5, 2013,; see also Frank H. Stephen, Lawyers, Markets and Regulation (Cheltenham, UK: Edward Elgar, 2013), 128-131.

[15] See, for example, Michael Kelly, “Ethical Issues Associated with Multidisciplinary Practices in Texas,” Saint Mary’s Law Journal 41 (2010): 750-752,

[16] On the opportunities that “deregulation” of the legal services market would offer in relation to the “justice gap,” see, for example, Clifford Winston, Robert W. Crandall and Vikram Maheshri, First Thing We Do, Let’s Deregulate All the Lawyers (Washington D.C: R.R. Donnelley, 2011), 91-93.

[17] See, for example, Mary Juetten, “Technology and the Unauthorized Practice of Law,” Law Technology Today, June 12, 2015,; see also Campbell, “Rethinking Regulation,” 35-39.

[18] A number of persons have written on this topic, perhaps most notably Gillian Hadfield. See, for example: Gillian K. Hadfield, “The Cost of Law: Promoting Access to Justice through the (Un)Corporate Practice of Law,” International Review of Law and Economics 38 (2014) 43-63,; Gillian K. Hadfield and Jamie Heine, “Life in the Law-Thick World: The Legal Resource Landscape for Ordinary Americans,”. USC CLASS Research Papers Series No. CLASS15-2; USC Law Legal Studies Paper No. 15-2, January 9, 2015,; Hadfield, “Legal Barriers to Innovation,” 101-146. See also, for example, Renee Newman Knake, “Democratizing the Delivery of Legal Services,” Ohio State Law Journal 73 (2012): 1-46,; and Edward S. Adams and John H. Matheson, “Law Firms on the Big Board?: A Proposal for Nonlawyer Investment in Law Firms,” California Law Review 86 (1998): 1-40,

[19] See, for example, John S. Dzienkowski and Robert J. Peroni, “Multidisciplinary Practice and the American Legal Profession: A Market Approach to Regulating the Delivery of Legal Services in the Twenty-First Century,” Fordham Law Review 69 (2000): 83-207,; and David A. Hoffman and Richard N. Wolman, “Multidisciplinary Practice: Three-Dimensional Client Service,” Massachusetts Psychological Association Quarterly, Summer 2004,

[20] Richard Devlin and Ora Morison, “Access to Justice and the Ethics and Politics of Alternative Business Structures,” The Canadian Bar Review 91 (2012): 526,

[21] American Bar Association. “Model Rules of Professional Conduct: Preface,” accessed August 27, 2015,

[22] Rules 1-310 and 1-320 of the California Rules of Professional Conduct: and

[23] Lance Duroni, “US Law Firms Still Flirting with Going Public,” Law 360, July 15, 2015,

[24] Devlin and Morison humorously liken the different attempts to change Model Rule 5.4 to a series of zombie movies. Devlin and Morison, “Access to Justice,” 527-537.

[25] Florencio Ramirez, “The Debate Continues,” GPSolo, Vol. 18 No.1, January/February 2001,

[26] “Message from the Co-Chairs: Message from Commission on Ethics 20/20 Co-Chairs Jamie S. Gorelick and Michael Traynor,” American Bar Association, accessed August 20, 2015,

[27] ABA Commission on Ethics 20/20, “ABA Commission on Ethics 20/20 Will Not Propose Changes to ABA Policy Prohibiting Nonlawyer Ownership of Law Firms,” April 16, 2012,

[28] “Commission on the Future of Legal Services: Background,” American Bar Association, accessed August 20, 2015,

[29] Commission On The Future Of Legal Services, et. al., “Report to the House of Delegates,” November, 2015, 1,

[30] Resolution 105, American Bar Association, February, 2016, See also Richard Zorza, “Good News from the ABA — Regulatory Objectives Adopted,” Richard Zorza’s Access to Justice Blog, February 9, 2016,; Susan Beck, “Divided ABA Adopts Resolution on Nonlawyer Legal Services,” The American Lawyer, February 8, 2016,

[31] ABA Commission on the Future of Legal Services, “For Comment: Issues Paper Concerning Unregulated LSP Entities,” March 31, 2016,

[32] ABA Commission on the Future of Legal Services, “For Comment: Issues Paper Regarding Alternative Business Structures,” April 8, 2016,

[33] See, generally, Devlin and Morison, “Access to Justice,” 499-508.

[34] Sir David Clementi, “Report of the Review of the Regulatory Framework for Legal Services in England and Wales,” December, 2004, accessed August 20, 2015, (“Clementi Report”).

[35] At the time this book went to press, four “front-line” regulators in England and Wales had the authority to grant ABS licenses. The Legal Services Act requires that each such regulator maintain a registry of the ABSs that it has licensed. Those registries may be consulted online at these links (all accessed July 15, 2016): Solicitors Regulation Authority (SRA):; Council for Licensed Conveyancers (CLC):; Institute of Chartered Accountants in England and Wales (ICAEW) (licensed for probate work): At the time this book went to press, the SRA had authorized approximately 525 ABSs, the CLC approximately 50, and the ICAEW approximately 150. The fourth front-line regulator, the Intellectual Property Regulation Board (IPReg), had just begun the licensing process and at that point 20 out of an expected total of 45 firms had been licensed. See IPReg, “Firms Requiring to Transition to Licensed Bodies Pursuant to the Legal Services Act 2007,” November 16, 2015, Finally, at the time this book went to press, the Bar Standards Board, which regulates barristers, had submitted an application for comparable authority; that application was pending.

[36] See, generally, Devlin and Morison, “Access to Justice,” 508-525.

[37] For a pan-Canadian summary see, for example, “Regulation Reform: A Cross-Canada Checkup,” Nova Scotia Barristers’ Society, accessed May 20, 2016, See also Mitch Kowalski, “Entity Regulation Comes to Canada,” Financial Post, February 23, 2016,

[38] CBA Legal Futures Initiative, “Futures: Transforming the Delivery of Legal Services in Canada,” August, 2014,

[39] “Legal Services Regulation,” Nova Scotia Barristers’ Society, accessed May 16, 2016,

[40] “Innovating Regulation: A Collaboration of the Prairie Law Societies,” November, 2015,; “Innovating Regulation,” Law Societies of Alberta, Manitoba and Saskatchewan, accessed May 16, 2016,

[41] Law Society of Upper Canada Compliance-Based Entity Regulation Task Force, “Report to Convocation,”

December 4, 2015,; “Compliance-Based Entity Regulation,” The Law Society of Upper Canada, accessed February 1, 2016,

[42] “Law Firm Regulation Consultation, Phase Two,” The Law Society of British Columbia, January 28, 2016, See also Law Firm Regulation Task Force, “Law Firm Regulation Consultation Brief,” October 26, 2015,; and The Law Society of British Columbia, “Law Firm Regulation Consultation: FAQs,” n.d.,

[43] On the ABA’s history of resistance to change, see Moliterno, The American Legal Profession in Crisis.

[44] For a general discussion on the lack of clarity over the authority of bodies other than supreme courts to regulate the legal profession and legal services more generally, see Hadfield, “Legal Barriers to Innovation,” 108-113. For a discussion of the control the legal profession in general, and the ABA in particular, has with respect to the regulation of legal services in the US, see Gillian Hadfield, “Innovating to Improve Access: Changing the Way Courts Regulate Legal Markets,” Daedalus 143 (2014) 3, 10-11. For a discussion of the significant limitations of judicial regulation and an analysis of the advantages and disadvantages of regulation by the legislature, see Benjamin H. Barton, “An Institutional Analysis of Lawyer Regulation: Who Should Control Lawyer Regulation-Courts, Legislatures, or the Market?” Georgia Law Review 37 (2003): 1167-1250.

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