So many things in 2019 aren’t done the way they used to be. Phone calls, writing letters, and even cooking are all things we have always done daily, but not the same as we did before. The introduction of everyday technology and the Internet makes everyday tasks faster, easier, and more efficient.
Law offices have also embraced technology, even if their structures haven’t changed. Firms are still owned, managed and run by attorneys, who want nothing more than to serve their client’s needs. They also need administrative staff like office and project managers, forensic accountants and other individuals with specific skill sets that attorneys may not have.
But while law firms can hire these individuals, they can’t form a partnership with them. Rules from the American Bar Association dictate that law firms cannot be owned and managed by anyone other than attorneys, with state laws following suit.
After Australia, England and Wales changed their laws to allow outside investments and ownerships in law firms, the US may eventually allow law firms to convert to an ABS, despite some objections by lawyers themselves.
Reasons For An ABS
The ABA’s Model Rule of Professional Conduct 5.4 prohibits lawyers from going into business with or sharing fees with non-lawyers. They are also not allowed to have outside, non-legal investors in their firm, have non-legal owners or business partners, or seek outside capital. Two areas that allow law firms to become an ABS with limited exceptions in the US are Washington State and Washington, DC.
One advantage of an ABS would allow a law firm to offer additional professional services alongside their own, such as accounting, technology, and risk management. Law firms adapting to a new way of offering their customers multiple professional services could not only save money but increase revenue.
On the other side, there are concerns that as a profit-focused entity, law firms will be required to focus on revenue, rather than the outcome of the client’s case. But Illinois Supreme Court Rule 13 has changed, allowing limited scope representation, meaning a client can pay for just the services they need.
The American Bar Association issued an opinion on several firm-related topics in its paper on The Future of Legal Services in 2016. In it, the ABA requested input from anyone interested in offering an opinion.
The Illinois Bar Association has already stated its position on law firm ABS to the American Bar Association, and stands firmly against them. However, the 2015-16 Association of Legal Administrators Board of Directors of the Association of Legal Administrators also offered its position to the ABA. This organization is very much in favor of allowing law firms to convert to an ABS.
What An ABS Means For Clients
Corporate and high-dollar clients will always be able to get the legal help they need. Pro bono services are available for clients who need legal representation but can’t afford it. But in the middle, the “modern-income” clients may avoid seeking legal representation because they fear being taken advantage of or that they can’t afford it.
The ABS can also introduce competition into the legal market, lowering costs and offering clients more choices.
The advent of online legal services like LegalZoom and UpCounsel for business clients brings additional competition to the legal field. These aren’t law firms, they simply offer specific services that many law firms don’t want to handle. An ABS may offer their own services in the same ad hoc fashion as the online services do now.
Contact James C. Provenza & Associates, PC For Organizational Structuring Today
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