Left to right: William Bogot and Joshua Horn Fox Rothchild (courtesy photo)
More large law firms are spreading the word about their medical cannabis practice capabilities as ethics rule changes and state legislation whittle down the amount of risk involved in providing that guidance. And in Pennsylvania, which is poised to be a center for clinical marijuana research, lawyers expect a major payoff for firms that get involved in the budding industry.
Entering the space still requires firms to weigh the fact that cannabis remains illegal under federal law. For some, malpractice insurance or perceptions of other clients have been a concern. But law firm leaders and practice leaders said those concerns are lessening as the law firm growth opportunities increase.
“It’s not so often in your lifetime that you see an entire groundswell of a new industry, in a matter of years, go from nothing to something so large,” said William Bogot, co-chair of the cannabis law practice at Fox Rothschild.
Fox Rothschild has been involved in the medical cannabis area for more than a year, since Bogot and Donna More joined the firm in Chicago from Nixon Peabody. But it just recently began marketing those services as a practice area beginning in September.
“Things sort of just internally came together in terms of Pennsylvania loosening up its ethical guidelines, Pennsylvania adopting medical marijuana and a couple of other states in the recent election approving various levels of legalization,” firmwide managing partner Mark Silow said.
Timothy P. Ryan, CEO of Eckert Seamans Cherin & Mellott, said his firm has been fairly comfortable moving forward in the medical cannabis space because of its strong practice in heavily regulated industries.
“We have at all times appreciated the uncertainty created by that odd situation of having the federal system be what it is and have it legalized in the states,” Ryan said.
Other practice areas have faced legislative complications, he noted, like Marcellus Shale and gaming.
Aside from federal laws, and in relation to that factor, firms may face an insurance risk for providing guidance on medical cannabis, said Daniel Clearfield, who coordinates Eckert Seamans’ regulated substances group. But that is not an issue Eckert Seamans has faced. Ryan said Eckert Seamans’ underwriters surely know the firm’s involvement in the practice area, and they don’t seem to be concerned about it.
Other clients could pose a challenge as well, Clearfield said, which is case-by-case.
“We definitely talked to some of our biggest clients in the pharmaceuticals and other areas that would touch on this before we started the practice group,” Clearfield said. “They had no problem with us doing it. But others might.”
The potential risk is outweighed by an ethical obligation to serve clients, Clearfield said.
“I think [there] are real risks, however I think that people who are trying to navigate through complex regulatory systems and laws pertaining to either medical or adult-use cannabis really need to have the benefit of legal guidance,” said Rachel K. Gillette, a Colorado shareholder at Greenspoon Marder.
Florida-based Greenspoon Marder has expanded to new locations across the country in an effort to capitalize on the legalization of marijuana if various states. In Colorado, Gillette has watched the legalized sale of marijuana evolve from an idea to a full-fledged industry.
When Gillette began practicing cannabis law, she said, there were few attorneys willing to represent those clients. She was able to find a malpractice insurer, but she knows other attorneys who struggled with their insurance carriers, she said. That was in 2013. In 2014, when Colorado clarified its ethical rules on medical cannabis, more insurers were willing to cover lawyers in the space, she said.
Regarding Fox Rothchild’s entrance into medical marijuana, Silow said any legal practice area presents risks.
“Clearly there is an issue specific to the cannabis practice in that cannabis is still illegal under federal law. … As we do in all our areas of practice we’re very careful to stick to all the ethical practices out there,” Silow said.
The Pennsylvania Supreme Court recently officially amended Rule 1.2(e) of the Rules of Professional Conduct, opening the door for medical marijuana practices. The new rule allows lawyers to counsel clients about conduct expressly permitted by Pennsylvania law, as long as they counsel the clients about potential legal consequences under other applicable laws.
Bogot, who was involved in petitioning the Illinois Supreme Court for a change in its ethics rules, said states are becoming aware of the necessity for guidance in what is becoming a highly regulated industry.
“Supreme courts are realizing … you have to have competent counsel to advise people,” Bogot said. “Otherwise it would just be a mess.”
Joshua Horn of Fox Rothschild said the changes in ethics rules across the country helped push the firm toward marketing the practice more.
For Fox Rothschild and other large firms, a wide variety of practice areas is attractive to many potential cannabis clients.
“We found that throughout our offices we had attorneys here and there that were already dabbling in it that we didn’t even know about,” Bogot said.
That included lawyers in corporate law, licensing, administrative law, real estate, banking and accounting.
“A large firm has the luxury of being able to use a land use attorney for land use, or a banking attorney for the banking … instead of one person having to learn all of those areas,” Clearfield said.
Still, he noted, there’s a place for small firms in the medical cannabis landscape, just as there is a place for small, specialized firms in any other industry. Some clients want a close, individualized relationship, he said, but other entities are used to working on a corporate scale and they are more comfortable with a full-service firm.
Andrew Sacks, head of the cannabis and hemp department at Sacks Weston Diamond, said clients will gravitate toward the types of firms they would typically work with on other issues. Big companies, as they enter the industry, are more likely to want large law firm representation. Sacks noted that his firm has partnered with other law firms of various sizes.
“There are so many different areas of the law of this that it’s going to be opportunistic for so many people,” Sacks said.
But until recently, small firms ruled the cannabis landscape, while few large firms got involved. Still, cannabis lawyers said, many firms are reluctant to be vocal about their marijuana-related practices.
Bogot said his previous firm had refrained from getting into cannabis-related work in the past because of ethics rules.
“Some of these smaller law firms didn’t have so much of that concern. They were able to run in quicker and take care of clients in this area,” Bogot said. “Once they were looking to get money, get bigger, and open in other states, they really needed some of the services and connections that a larger law firm can provide for them.”
Clearfield said Pennsylvania has the greatest chance of being successful in the medical marijuana space in the short term. A law passed earlier this year created state permits for clinical medical marijuana research.
“We’re really going to see just in the next decade a lot of the medical marijuana research in the world being done in Pennsylvania,” Bogot said.
Additionally, Horn said, with a strong pharmaceutical presence in Pennsylvania, it is likely to be an important location if medical cannabis becomes completely legalized.
Silow said marijuana will likely go through the same “phases” that gambling alcohol and tobacco have gone through legally. It will be widely legalized, he said, and more large law firms will get into the marketplace.
Lizzy McLellan can be contacted at 215-557-2493 or firstname.lastname@example.org. Follow her on Twitter @LizzyMcLellTLI.
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