Legal Ethics

Jacoby & Meyers Sues to Overturn Bans on Nonlawyer Ownership of Law Firms

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Personal injury law firm Jacoby & Meyers has filed suit in an effort to overturn the ban on nonlawyer ownership of law firms.

Jacoby & Meyers is challenging bans in New York, New Jersey and Connecticut, where it has a strong presence, the Wall Street Journal (sub. req.) reports. The lawyer representing the firm, Jeffrey Carton, said the litigation could have a broader impact because the ethics rules banning nonlawyer owners are essentially the same in all of the states. Only Washington, D.C., allows such ownership.

The suit filed on Wednesday claims the ethics rule against outside ownership “perpetuates economic inequity” because smaller firms don’t have the same access to capital markets for expansion that the larger firms have.

The ban is intended to protect lawyers’ professional judgment from outsider influence. Australia and England have passed laws allowing nonlawyer ownership, and the issue is being debated in the United States.

The ABA Commission on Ethics 20/20 is seeking comment on whether to change the model ethics rules to allow some kind of joint ownership. The commission is seeking comment on possible approaches, including one that would cap nonlawyer ownership, require nonlawyers to pass a “fit to own” test, and restrict a law firm with nonlawyer owners to law practice.

Prior coverage:

ABA Journal: “Ethics 20/20 Commission Seeks Input on Alternative Business Structures for Law Firms” “Law Prof: Outside Ownership Could Help BigLaw”

ABA Journal: “Selling Law on an Open Market”

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