Sharing fees, ownership of law firms with non-lawyers

Those of us who have qualified to be Senior Lawyers know the importance of the core values of our profession. Those values are embodied in the Code of Professional Conduct and they have withstood the test of time to the benefit of the public and the legal profession.

The core values of loyalty to clients, competence in the law, confidentiality, avoidance of conflict of interest, and independence from outside pressure that would influence our representation of clients are qualities that set us apart from non-lawyers. Upon our admission to the Bar, we became officers of the court and of the Judicial Branch of government, thereby becoming subject to high ethical standards and accountability. With these bedrock principles in mind, it was surprising in December of 2011 when the ABA 20/20 Commission announced proposals that would permit non-lawyer ownership and control of law firms and the approval of fee splitting with non-lawyers, both in contravention of the core values of our profession.

To the credit of the Illinois State Bar Association leadership and its Board of Governors, our Association set out to defeat the radical proposals of the ABA Commission. By April of 2012, the Commission had announced that it would not propose changes to ABA existing policy prohibiting non-lawyer ownership of law firms, but it also announced at that time that it would continue its effort to find a way to permit fee splitting between lawyers and non-lawyers within a firm or between lawyers and non-lawyers in separate firms. Such an effort, if successful, would have given tacit approval to the concept of non-lawyer ownership and control of law firms.

Recognizing the urgency of the matter, the Illinois State Bar Association filed a resolution with the House of Delegates of the American Bar Association seeking to reaffirm American Bar Association policy that:

The sharing of legal fees with non-lawyers and the ownership or control of the practice of law by non-lawyers are inconsistent with the core values of the legal profession. The law governing lawyers that prohibits lawyers from sharing legal fees with non-lawyers and from directly or indirectly transferring to non-lawyers ownership or control over entities practicing law should not be revised.

By the time of debate in the ABA House of Delegates in August of 2012, other associations and entities had joined in supporting the ISBA resolution, namely, the state bar associations of Indiana, Iowa, Maryland, Mississippi, New Jersey, Nevada, North Carolina, Oregon and South Dakota. Additional co-sponsors were the Senior Lawyers and Young Lawyers Divisions of the American Bar Association, and the National Conference of Women’s Bar Associations. In the House of Delegates, the Commission carried on a full court press against the resolution, not on the merits, but proclaiming that the proposals were not final and that it should be allowed to complete its work and to decide in its own wisdom whether the proposals previously announced would be recommended to the House of Delegates. After debate in the House, the resolution was postponed indefinitely. Notwithstanding that action, it was clear from the debate in the House that changes in ethical standards to permit non-lawyer ownership of law firms or fee splitting with non-lawyers would be defeated if finally proposed by the Commission. By October of 2012, the Commission announced that it had or would drop all of its proposals pertaining to non-lawyer ownership of law firms or fee splitting between lawyers and non-lawyers.

This is an example of how our state bar association has been influential in defeating proposals from within and without the profession that would have a deleterious effect on the public and the profession. It is one reason for the continued membership of Senior Lawyers in the Illinois State Bar Association. ■