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FIRM NAME: Marten Brown Inc. LOCATIONS: Seattle and Olympia, Wash. SIZE: 14 attorneys FOUNDERS: Bradley M. Marten and Rodney L. Brown Jr. This month, a Seattle law firm announced that it has incorporated, demoting partners to salaried employees, issuing stock to all lawyers and giving stock participation rights to nonlegal staff. Leaders hope to compete with companies that offer stock options and to position their firm for a time when lawyers can share ownership equity with nonlegal professionals and staff. That a law firm has finally tested the waters and adopted an “Inc.” isn’t surprising — firms have been moving toward the corporate model for some time. The shocker is that it wasn’t a tech firm taking the leap, but a three-year-old environmental law boutique, formerly known as Marten & Brown. The firm expects to supplement its legal services with other business services and to extend ownership to all firm employees as rapidly as professional rules permit. “We would hope this would motivate the bar association,” says Marten Brown CEO J. Daniel Ballbach. In the meantime, he says, the firm wanted to create a stock plan that complies with ethics rules which prohibit fee-sharing and firm ownership by nonlawyers. Although all lawyers were issued stock, non-attorney staff were given stock participation rights. Staff members don’t sit on the board of directors and can’t vote or trade their rights. But the participation rights have par value to the stock, and employees can redeem their rights for cash when they leave. The company plans to undergo a formal process of evaluation, applying methods used to value closely held businesses. Giving employees a stake in the business already has helped the firm in its recruiting efforts. Executive director and nonlawyer Robert G. Stevens, who joined the firm three months ago, says that he doubts whether he’d have taken the job without the new incentive. “When I was contacted by Marten Brown, what intrigued me was their plans for change. I hadn’t planned to go to another law firm.” The appeal, he says, is that “I’m invested in the success of this company.” Marten Brown was formed in 1996 by five lawyers from the Seattle office of Morrison & Foerster. From the start, the founders wanted to try something new, but change didn’t come easily, Marten says. He and his former partners have relinquished their authority over salary issues to a corporate committee many of them don’t sit on. Neither was the change straight-forward. Firm leaders wanted to reorganize under the state’s general corporate, rather than its professional service, statute, but when they filed the papers, state bureaucrats had to meet before determining whether they could. Marten Brown leaders believe their structure also gives them more flexibility to launch ancillary businesses, such as a policy and dispute resolution center, and a brownfields redevelopment company to deal with contaminated land use. So does a plan like Marten Brown’s pass ethical muster? Maybe, says George A. Kuhlman, staff counsel to the ABA Standing Committee on Ethics and Professional Responsibility. “If this is one of the various forms of law firms’ attempts to develop a compensation package for their nonlawyer employees — many varieties of which have already been found by the … states not to constitute the sharing of fees in the sense that there’s no control by nonlawyers — then the practice will probably pass muster,” he says. But “it wouldn’t be responsible,” Kuhlman continues, “without giving considerable thought to the details that … arise in … these plans to say that they are without a potential problem.”

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