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Cal Bar Looks At Non-Lawyer Ownership of Legal Services

By William Vogeler, Esq. on July 31, 2018 | Last updated on March 21, 2019

"Follow the money" is a catchphrase in journalism and elsewhere, and it can apply to non-lawyers owning legal services.

In California, the State Bar commissioned a study into the subject. It wanted to know whether to change ethics rules that forbid non-lawyers from owning legal service companies.

The report suggests it's about time to open the doors because, among other reasons, fewer people are hiring lawyers.

$7 Billion Market Loss

According to the report by William Henderson, twice as many people are representing themselves in cases than they were 20 years ago. Over roughly the same time period, people have spent about 40 percent less on legal services.

That's part of the reason the legal market lost $7 billion between 2007 and 2011, said Henderson, a professor at the University of Indiana Maurer School of Law.

"As a sizable portion of the public struggles to afford a lawyer and a sizable portion of the bar struggles to find sufficient fee-paying client work, legal regulators need to seriously evaluate whether the consumer protection benefits of these ethics rules are worth the cost," he said.

In theory, the ethics rules protect consumers from non-lawyers practicing law and focusing on business more than clients' interests. But every practicing lawyer knows there are no clients if there is no business.

Now the State Bar wants to know whether "online legal service delivery models" justify the regulatory changes. Based on Henderson's report, change seems likely for the rules against non-lawyers owning legal services.

Henderson said modifying ethics rules will facilitate "greater collaboration" across law and other disciplines. It will also drive down costs, improve access, and help new businesses grow.

"Some U.S. jurisdiction needs to go first," the report said. "Based on historical precedent, the most likely jurisdiction is California."

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