Posted May 01, 2011 08:10 am CDT
The ABA Commission on Ethics 20/20 will probably receive some very interesting mail over the next several weeks. The commission is seeking input by June 1 on two key issues—alternative business structures and cross-border practice—as it looks at how lawyer ethics and regulation are being affected by technology and globalization.
The commission put out issues papers on ABS (PDF) and cross-border practice (PDF) this spring. The papers don’t make formal recommendations or stake out policy positions, but they offer insight into the commission’s early thinking on the scope of recommendations it may consider in these areas.
Under the commission’s timetable, most of its recommendations will be ready for consideration by the ABA’s policymaking House of Delegates in August 2012.
The April 5 issues paper put out by the commission’s Working Group on Alternative Business Structures, for instance, confirms that the commission does not plan to consider the full range of ABS possibilities.
Alternative business structure is an umbrella term that encompasses entities in which lawyers organize with nonlawyers to provide client services that could be limited to legal services or that might include certain nonlegal services. Alternative business structures are prohibited in every U.S. jurisdiction except the District of Columbia. Alternative business structures have gained a significant foothold, however, in Canada, Australia and the United Kingdom.
In February the commission decided that allowing outside passive investment by nonlawyers in law firms—either with or without caps on the extent of such ownership—“would not be appropriate to recommend for implementation in the United States at this time, though both have been adopted elsewhere since July 2000.” Instead, the commission is seeking feedback on three specific types of ABS:
• Limited lawyer/nonlawyer partnerships. A narrow version of this approach would require the firm to limit its work to the practice of law and require that a cap be imposed on the percentage of the firm’s nonlawyer ownership. Nonlawyer owners also would be required to pass a “fit-to-own” test.
• The District of Columbia model. Its version of Rule 5.4 of the ABA Model Rules of Professional Conduct permits lawyers to form partnerships with nonlawyers that engage only in the practice of law, but does not impose a cap on nonlawyer ownership or require a fit-to-own test.
• Multidisciplinary practice. Essentially this option would allow firms organized under the District of Columbia’s version of Rule 5.4 to offer both legal and nonlegal services.
Meanwhile, the Ethics 20/20 commission is expanding the scope of its look into possible rule changes for governing lawyers’ cross-border practices.
In November the commission issued a discussion draft (PDF) outlining how a lawyer from another jurisdiction might assist on a case in the context of outsourcing. And a December issues paper (PDF) seeks outside comment on whether rules on admission by motion should be revised to make it easier for lawyers to practice in jurisdictions where they are not already licensed.
The March 29 issues paper seeks comment on two more approaches to dealing with cross-border practice.
One option would be to amend Rule 5.5 of the Model Rules to authorize more domestic cross-border legal practice. The second would be to consider whether multijurisdictional practice issues should be addressed through the larger structure for regulating lawyers rather than under a single ethics rule.
“Globalization and technology are quickly transforming the legal marketplace both here and abroad,” says Andrew M. Perlman, a professor at Suffolk University Law School in Boston who serves as chief reporter to the commission. “The legal profession needs to adapt to these changes, but it’s not clear whether—or to what extent—the MJP rules need to change to ensure that lawyers can continue to provide clients the services that they need.”
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