The American Bar Association’s Commission on Ethics 20/20 announced April 16 that it would not recommend policy changes to allow nonlawyer ownership of law firms.

Since 1991, Washington has been the only jurisdiction to allow nonlawyers such as financial officers or lobbyists to own pieces of law firms. The draft floated by the commission would have been more restrictive than the rules established in D.C. that require nonlawyer partners to provide a client service. This was to ensure that private investors did not influence legal decisions that might be to the detriment of clients.

In an interview, Jamie Gorelick, co-chair of the commission and a partner at Wilmer Cutler Pickering Hale and Dorr, said that the members took into account comments from the legal community before making a decision.

“The feedback that we received expressed concerns about the ability to maintain professionalism when lawyers and nonlawyers are partners,” Gorelick said.

Smaller firms most often take advantage of the ownership rule, D.C. attorneys say. Gorelick noted that the commission is weighing ways to ease the burden on larger firms that operate in multiple jurisdictions, where rules can often vary greatly. For example, she said, problems can arise when a firm from Washington with a nonlawyer partner does business with a firm from an outside jurisdiction.

“One of the things that we found is that we have people practicing across jurisdictional borders with much greater frequency,” Gorelick said. “The process for determining which rules apply to a lawyer’s conduct have proliferated.”

Many firms have invested time and resources to determine which rules apply, Gorelick said. Measures that could be brought before the House of Delegates in August include provisions to resolve conflicts arising from nonlawyer ownership, multijurisdictional practice associated with virtual law offices and rules for non-U.S. lawyers who work within the states.

According to an ABA release, the commission by last June had rejected some forms of nonlawyer ownership that have been allowed in other countries, including passive, outside nonlawyer investment.

The commission includes judges, practitioners, law professors who specialize in legal ethics, as well as liaison members from the ABA’s Board of Governors and its Center for Professional Responsibility.

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