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Of the many changes affecting the legal profession over the past 20 years, one of the most intriguing has been the evolution of ancillary businesses � law firm-created business enterprises offering a wide range of law-related services to clients who may or may not be clients of the firms themselves. The practice of lawyers providing related nonlegal services to their clients is almost as old as the U.S. legal profession itself. Many practicing lawyers have historically qualified to practice in other professions as well, holding separate licenses as certified public accountants, real estate brokers, insurance agents, financial planners, marriage counselors, and the like. In hundreds of firms, real estate lawyers routinely act as agents for title insurance companies. In others, lawyers provide trust services or act as personal representatives; serve as trustees or conservators; and provide mediation services. In the mid-1980s, a number of prominent law firms in Washington, followed by firms in other cities, began to experiment with ancillary businesses as a means of expanding the range of services offered to their law clients. The range of services offered by law firms today is staggering. A recent survey by Hildebrandt International identified some 74 separate lines of business currently being offered, including some fairly exotic ones like consulting services for auto dealerships and toxic substance control services. The most common include lobbying or government relations services; financial counseling and planning; client asset management through registered investment companies; human resources or benefits consulting or training; international trade or finance services; and educational, environmental, or health care consulting. In mid-1989, largely in response to the publicity generated about these activities, the American Bar Association commenced a tortuous process for reviewing the ethical implications of the ownership and operation of ancillary businesses by law firms. For almost five years, the ABA wrestled with the issue through two separate special committees and three acrimonious debates on the floor of the House of Delegates. After several false starts, including one short-lived attempt by the House of Delegates to ban ancillary businesses altogether, the ABA finally adopted the current Rule 5.7 of the Model Rules of Professional Conduct. That rule effectively legitimized ancillary businesses and clarified the ethical rules applicable to law firms that choose to form and operate such enterprises. Rule 5.7 has been adopted in nine jurisdictions, but even in those where it has not, it has often been cited with approval by bar disciplinary committees. It is thus fairly clear that law firms may safely own and operate ancillary businesses in virtually all jurisdictions throughout the country, subject to compliance with certain basic disclosure requirements, as set out in Rule 5.7. � James W. Jones and Terri Pepper Gavulic

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