Should Non-lawyers be Permitted to Own Law Firms?

In December, the Future of Lawyering Subcommittee of the Association of Professional Responsibility Lawyers (APRL) issued its “Report Regarding Proposed Revisions to ABA Model Rule 5.4,” entering the intense debate over non-lawyer ownership and fee sharing. 

Like most states, California’s Rules of Professional Conduct Rule 5.4 (mirroring ABA Model Rule 5.4) prohibits sharing fees with non-lawyers and bans non-lawyer ownership of law firms. Washington, DC, is an exception: for years, it has permitted non-lawyer ownership in limited circumstances. Several states are experimenting with so-called alternative business structures, where non-lawyers are permitted to own and operate firms under strict registration and oversight guidelines, including Arizona and Utah. Other states are studying the issue. Non-US jurisdictions, including the UK, Canada, Australia, and others, have permitted non-lawyer ownership for years. (California studied the issue, formed a committee to recommend reforms, then abandoned the effort). 

APRL’s report traces the history and intended purpose of Rule 5.4 in the context of current issues with the existing rule structure, including limitations on access to legal services, limitations on innovation in the delivery of legal services, and limitations on capital to finance law firms. The report concludes that lawyers’ professional independence can be maintained even with non-lawyer ownership and fee sharing and proposes a revised Rule 5.4 to permit both.