because life is no fun without stereotypes. or 90ft of gold coins.

No, this has nothing to do with the earth-shattering news that LinkedIn is seeking public investment through an IPO. What? You hadn’t heard about that? You don’t care? That’s why I didn’t blog about it.

No, this is about a lawsuit that was filed [PDF] just a day or so ago by the venerable law firm of Jacoby & Meyers, suing – essentially – the legal profession in the Tri-States: New York, New Jersey and Connecticut. The basis of the suit [surprisingly in-depth Courant article] is to force these states to alter their rules of professional conduct to permit non-lawyers to invest in law firms.

The legal profession is very tightly – albeit poorly – regulated and it’s very insular. Law firms are closely held businesses and there are rules that govern who can and can’t own a firm. In CT, the Rule is 5.6, which states:

(d) A lawyer shall not practice with or in the form of a professional corporation or association authorized to practice law for a profit, if:

(1) A nonlawyer owns any interest therein, except that a fiduciary representative of the estate of a lawyer may hold the stock or interest of the lawyer for a reasonable time  during administration;

(2) A nonlawyer is a corporate director or officer thereof or occupies the position of similar responsibility in any form of association other than a corporation; or

(3) A nonlawyer has the right to direct or control the professional judgment of a lawyer.

The commentary explains the basis for this:

COMMENTARY: The provisions of this Rule express traditional limitations on sharing fees. These limitations are to protect the lawyer’s professional independence of judgment.  Where someone other than the client pays the lawyer’s fee or salary, or recommends employment of the lawyer, that arrangement does not modify the lawyer’s obligation to  the client. As stated in subsection (c), such arrangements should not interfere with the lawyer’s professional judgment. This Rule also expresses traditional limitations on  permitting a third party to direct or regulate the lawyer’s professional judgment in rendering legal services to another. See also Rule 1.8 (f) (lawyer may accept compensation  from a third party as long as there is no interference with the lawyer’s independent professional judgment and the client gives informed consent).

So, in layman’s terms, the point is to prevent financial interests being put ahead of that of the client. No one said the profession didn’t pretend to appear noble.

So what’s this suit all about? Jacoby and Meyers say – basically – it’s a scare tactic. Nothing happens if you let non-lawyers invest in law firms. UK and Australia do it and they have oodles of money, which make them better able to serve clients. So they sued the Judges of the Superior Court, who make up these court rules here in CT, alleging that this prohibition has no rational basis.

Okay, that’s about all I can type on this topic without getting completely bored. I’m sure some of my private practice lawyer friends will have more to say about this, but I’m done.

H/T Ryan for the copy of the complaint.

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