Hello welcome to this JACPA Ethics Alert and blog which will discuss the very recent New York State Bar Association Opinion which states that a lawyer who primarily practices in New York cannot be an employee of an out-of-state or foreign firm owned or managed by non-lawyers, even if non-lawyer ownership is permitted in the jurisdiction where the law firm is established. The opinion is New York State Bar Association Committee on Ethics Op. 901.
The opinion was issued on March 14, 2012 and cited NY Bar Rule 5.4 (a) (substantially similar to Florida Bar Rule 4-5.4(a)) which prohibits a lawyer from sharing fees with a non-lawyer, and NY Bar Rule 5.4(d) (substantially similar to Florida Bar Rule 4-5.4(e)), which prohibits a lawyer from practicing law for profit with an entity that includes a non-lawyer owner or member. The NY opinion addresses the employment of NY lawyers in law firms from such countries as the United Kingdom and Australia, which permit ownership by non-lawyer investors, as well as in the District of Columbia, where non-lawyer employees are permitted have an equity interest in law firms.
Florida, New York, and the 48 other states prohibit non-lawyer ownership of law firms; however, this issue is being addressed on both the state and national level. The ABA’s Ethics 20/20 Commission is considering whether to recommend that the prohibition in the current ABA Model Rules should be dropped. The Commission has requested comments on its December 2, 2011 discussion paper which proposes that non-lawyers who work at a law firm to own a limited, non-controlling share of that firm. The link is here: ABA Ethics 20-20 firm structure position paper. The commission is asking for comments by Feb. 29 which will be provided to the ABA House of Delegates at a future meeting. The Professional Ethics Committee of The Florida Bar (PEC) is also considering the proposals.
Bottom line: Non-lawyer ownership of law firms is another hot lawyer ethics topic and this opinion could certainly add fuel to that fire. If you would like to comment, you can respond to the ABA Ethics 20/20 Commission or the PEC.
Be careful out there!
As always, if you have any questions about this Ethics Alert or need assistance, analysis, and guidance regarding these or any other ethics, risk management, or other issues, please do not hesitate to contact me.
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