The Economist
Jacoby & Myers embodies what many people dislike about American lawyers. The firm solicits new clients with advertisements which tantalize people with dreams of huge payouts. “Remember that guy? Who came in second at the last New York Marathon? Neither do we. Winning is everything,” boasted one of its commercials in 2011 (though the firm settled the vast majority of cases before a verdict).
Jacoby & Myers was a pioneer in fighting in the 1970s for lawyers’ right to advertise. Today, the firm is trying to win another suit to change the rules of America’s legal industry, which generated revenues of $261 billion in the 12 months to September. If successful, the suit would allow non-lawyer investors to put money in a law firm—first in New York, New Jersey and Connecticut, which Jacoby & Myers has picked as a target, and then probably elsewhere. Currently law firms, whether a “single shingle” or one like Jones Day (the biggest American firm by headcount with more than 2,400 lawyers and 800 partners) may have only one corporate form anywhere except the District of Columbia: a partnership owned only by lawyers.
The arguments in the case are well-rehearsed—and self-interested. Jacoby & Myers says that the existing rules violate its freedoms of speech and assembly. It has lined up non-lawyer investors who would buy a chunk of the firm and share its profits, if allowed to do so. Andrew Finkelstein, the firm’s managing partner, says that outside capital would allow the firm to upgrade technology and take advantage of scale. His aim is simply to give more clients with low incomes access to justice, he says with the tone of a man indignant that anyone could oppose such a thing.
Equally predictably, the American Bar Association (ABA), which indirectly sets the rules that regulate lawyers (states delegate these to their courts, which usually follow the ABA’s “model rules”), opposes the change. Lawyers, it argues, are not businesspeople with a duty to the bottom line, but professionals with an ethical duty to their clients’ best interests. Outside investors could push lawyers to file junk suits or take quick settlements to maximize profits.
