As stakeholders in California weigh in on outside ownership of law firms and access to justice, the largest law firms are keeping relatively silent. What gives? Want to weigh in? Email me here. Want this dispatch in your inbox every Thursday? Sign up here.

Big Law On The Sidelines

"This is crazy, non-lawyers having a financial interest, are you out of your mind?"

That's one of hundreds of comments California's Task Force on Access Through Innovation of Legal Services has received in the last month and a half since releasing recommendations that would allow attorneys to share fees with nonlawyers—and ultimately open the door to outside ownership of law firms.

After even a cursory review of the comments submitted since late July, I was struck by two conclusions.

For one, the responses were overwhelmingly opposed to the proposed changes on fee-sharing and non-lawyer ownership. And two, Big Law voices were conspicuously absent from the discussion.

That can't be because only immigration, personal injury and criminal defense and other attorneys operating solo or at small firms recognize that they have a stake in these issues. After all, while the proposals—which also include changing bar rules to allow "technology-driven delivery systems" to provide legal assistance—are intended to confront the justice gap facing California residents, they could also have real implications for large firms, both in the Golden State and elsewhere.

Take the Big Four. Under the proposed changes, Deloitte or EY might not immediately be able to purchase an existing California law firm outright and put it under its umbrella, but these organizations could likely envision creative ways to invest in a legal services business while keeping it distinct from the rest of their operations. In certain practice areas, they'd quickly become formidable competitors to the large firms.

And the implications aren't limited to California-based firms or national firms with a sizeable presence in the state. Any rules change there will get tremendous attention from elsewhere in the country, particularly if it gives practitioners in the state an advantage over those in other jurisdictions.

So why the relative silence from the Big Law community?

One part is likely a disconnect between large firms and the state bar associations that's not unique to California. These organizations generally have more to offer solo practitioners and small shops, which on their own don't have the same clout or connections as large, sprawling firms. There's a twist in California, which in 2018 saw its bar split into a regulatory organization whose trustees include a minority of non-lawyers and a voluntary professional organization.

Jayne Reardon, the executive director of the Illinois Supreme Court Commission on Professionalism, was at an August public hearing in San Francisco addressing the proposals. In addition to noting that, unlike the written comments, the tenor of remarks was largely in favor of rules changes, she told me that Big Law was largely absent, with most participants coming from academia and smaller firms.

That's not to say the big firms aren't paying attention. A few weeks ago, I spoke with consultant Peter Zeughauser, who told me that he'd been approached by folks at several large law firms who were interested in coordinating a response to the proposals.

Zeughauser stressed that while Big Law is united in support of increasing access to justice, there are real questions about how the proposed changes would get at that goal. For one, he questioned whether restrictions on unauthorized practice of law were indeed impeding startups and technological advances in the industry.

"They've been widely embraced and they're doing well," he said. "The issue of whether or not they're practicing law has not arisen."

And, he said, there is real concern among those he's talked to about the consequences of non-lawyer ownership, even if Australia and the U.K. have implemented the change. They don't want the Big Four in the mix.

"That's not something that would be healthy for the profession," he said.

But when I checked in with him earlier this week about whether plans for a collective response had coalesced, he said that nothing had gotten off the ground, citing an unusually large number of comments, running 10 to 20 to one in opposition to the changes.

"If that is the case, it seems unlikely that it will move forward," he said.

Beyond those who are indeed taking a "wait and see" approach, the gears at big firms can simply turn slower than in small shops, where an attorney can fire off a response.

Gordon & Rees firmwide managing partner Dion Cominos, who's based in San Diego, told me in August that he wasn't as scared of the proposals as others, and saw plenty of opportunities for enterprising firms.

"It's the reality of practicing law in the 21st century," he said. "You can't remain in a bubble and assume that nothing's going to change."

But the firm hasn't put these sentiments on paper yet. Cominos told me the other day that the firm's partners were discussing the subject at their retreat this week.

The California deadline is Sept. 23. That's another 18 days for Big Law to make its voice heard. Or conversely, to let the smaller fish dictate the terms of the discussion.

In the News

➤➤Putting together a large trans-Atlantic law firm merger is tough, whether or not exchange rate volatility is actually to blame. That's the takeaway my colleagues with Legal Week in London have from the news that Allen & Overy and O'Melveny & Myers have pulled the plug on their plans to combine. Christine Simmons noted that the failure is likely to have ripple effects on other potential international mergers. And Patrick Smith found the atmosphere for law firm mergers is no longer as frenetic as we'd come to expect. Don't read too much into it, though, said Brad Hildebrandt: "It's cyclical."

➤➤Patrick also had the skinny on legal staffing and services provider Axiom landing a "significant" investment from European private equity firm Permira. Instead of a planned IPO, Axiom can look to Permira as its new majority owner.

➤➤Finally, for the 40th anniversary of the American Lawyer, I spent some time getting some smart names to speculate on where the legal industry is heading. Have a look.

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