Would ethics regulators pursue Axiom in an IPO? Not likely, says law prof
Posted Nov 12, 2013 01:49 pm CST
Indiana University law professor Bill Henderson predicts no shot will ever be fired to fight the nonlawyer revolution in U.S. legal services.
Writing at the Legal Whiteboard, Henderson reflects on the expansion of nontraditional legal services provider Axiom Law, which received $28 million from outside investors earlier this year.
Early on, Axiom was described as a high-end temp service for legal departments, Henderson says. It was said to be staffed with disaffected BigLaw lawyers looking for more autonomy and better work-life balance. But now the fastest growing part of Axiom’s business could be its managed services practice, in which lawyers work with technology and other consultants to manage entire projects, according to this ABA Journal Legal Rebels article.
Axiom’s CEO Mark Harris says his company isn’t a legal process outsourcer, and it’s not a law firm. The company doesn’t give legal advice and its structure allows it to accept money from nonlawyer investors, he told Bloomberg Law. He also said an initial public offering isn’t being considered right now, but it’s an option in the future, the Legal Whiteboard previously reported in a summary of the interview.
Rule 5.4 of the ABA Model Rules of Professional Conduct prohibits lawyers from sharing legal fees with nonlawyers. Would that be a problem in an IPO?
Henderson says a state bar regulator “taking a very formalistic approach” might have an issue with outside ownership. But the purpose of the ethics rule is to preserve lawyer independence, Henderson says, and that’s not a problem when the person who hires Axiom is a sophisticated in-house counsel.
“Expect to read more about state regulators in the ‘risk factors’ section of Axiom’s S-1 registration statement if and when Axiom decides go public,” Henderson says. “I think these risks will likely remain hypothetical, but as my friend Ed Reeser is known to say, ‘That is just my opinion. I could be wrong.’
“Truth be told, the nonlawyer revolution in U.S. legal services is occurring right now. And there is a good possibility that the whole revolution will take place without a single shot ever being fired.”
ABA Journal Legal Rebels: “Why Silicon Valley’s biggest investors are betting on alternative legal companies”
ABA Journal Legal Rebels: “Mark Harris’ ‘Managed Services’ Make Multimillions”