Lawyer Regulation: The clash between core values, alternative business structures

Paul D. Paton (left) recently spoke at the 2012 Fellows of the Wisconsin Law Foundation Annual Dinner. Paton, professor of law and director of the Ethics Across the Professions Initiative at the University of the Pacific, McGeorge School of Law, discussed the challenges of change for the legal profession. He poses with State Bar of Wisconsin Executive Director George C. Brown and Wisconsin Law Foundation President Dean R. Dietrich.

By Joe Forward, Legal Writer, State Bar of Wisconsin

The ABA recently rejected a proposal to allow nonlawyer ownership in law firms through the amendments to the Model Rules of Professional Conduct. But as other countries explore alternative business structures, the debate will continue, according to ethics expert Paul Paton.

Think third-party investment in law firms is a good idea? What about lawyers partnering with engineers or accountants? These “alternative business structures” are happening overseas, but they won’t be happening in the U.S. anytime soon.

The American Bar Association (ABA), which drives state regulation of attorneys through the Model Rules of Professional Conduct (Model Rules), has consistently rejected proposals to ease restrictions on law firm business structures, citing conflicts with the profession’s “core values.”

Primarily, the ABA Commission on Ethics 20/20 – established in 2009 to study the U.S. lawyer regulation system in light of advanced technology and globalization – has expressed concern that allowing alternative business structures could infringe on a lawyer’s duty to exercise independent judgment, to provide undivided loyalty to clients, and avoid conflicts of interest, among other duties unique to the legal profession. Meanwhile, countries such as Australia, England, and Germany have eased restrictions on the way their law firms operate.





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