(2) a non-lawyer is a director of partnerships or an officer of a partnership; Or if BigLaw law firms or the Big Four decided to aggressively seek alternative business structures and succeeded, this could pose problems for mid-law law firms. There are fears that this type of restructuring could lead to a “Wal-Mart effect” where the legal sector would be dominated by a handful of large one-stop law firms. In this scenario, small businesses could easily be displaced if they don`t adapt. The real problem is that law firm ownership rules limit how non-lawyers can participate in law firms. Unless he is admitted to the bar, a technologist, investor or marketer cannot have shares in a firm, which deprives him of a significant incentive to work with lawyers to develop new legal business models. Less than two weeks after the Utah program went into effect in August 2020, the Arizona Supreme Court followed the recommendation of its Task Force on the Provision of Legal Services and issued a sweeping order that completely repealed Arizona`s version of Rule 5.4 effective January 1, 2021. Arizona now allows companies and their potential non-rights holders to apply for licensing as alternative business structures (“ABSS”) that may have non-rights holders and managers. I feel like I`m saying this ad nauseum: the barriers to legal innovation are not what you think they are. Innovation is not slow in the legal sector because some of the built-in characteristics of lawyers are to reject technology. Nor because of a cultural bias against innovation. Such assumptions are widespread and counterproductive in the legal technology sector. In the true sense of the word, disruption means either completely reconfiguring a market or creating a whole new one. Or access to an existing and underserved market (see “Access to Justice”).
Practicing lawyers are best positioned to take responsibility for all of these factors, as they typically have the most direct understanding of clients` needs and trends. However, it is not always possible to do so without the help of non-lawyer partners. 2. Can a for-profit law firm in Texas pay certain premiums to non-lawyers or agree to pay them if the firm makes a certain income or profit? Alternatively, and perhaps in addition, it is necessary to create a consortium of lawyers ready to invest in the innovation efforts of other law firms. As California continues to debate the format of its own upcoming regulatory sandbox, some agencies have argued that ABS licenses should be strictly limited to companies targeting underserved demographics, which would exclude most high-end business law firms. When Baker Botts hired Gillian Ward as chief marketing officer in 2014, the company had no research role. Since then, it has built a sturdy one. The company also didn`t have a pricing strategist, so they hired John Strange from V&E. Last fall, the company even considered hiring a competitive intelligence manager, but put those plans on hold when it called on Clara Rodriguez, director of business development. It may simply be that it is still too early to say how the evolution of law firm ownership rules will or will not reconfigure the legal sector.
Although interest is strong among some suppliers, it remains lukewarm with others. Perhaps once the various pilot programs in some states are completed, the U.S. legal industry will have a better measure of what works and what doesn`t, and mid-sized companies will have a litmus test of where the opportunities and obstacles lie. Until then, players in the legal sector – especially mid-sized law firms – should keep an eye on ongoing developments and keep an eye on strategies on how to adapt and use these changes for the benefit of their business. Despite the potential benefits, many medium-sized companies are unlikely to be in a hurry to take unnecessary risks, especially given the historical resistance of lawyers themselves to the changes to Rule 5.4. In February 2020, the American Bar Association passed a highly controversial Resolution 115 that encouraged states to consider regulatory innovations that could improve access to justice. However, the resolution was only passed after the addition of a cautionary statement that the resolution “should not be construed as recommending changes to any of the ABA`s standard rules of professional conduct, including Rule 5.4, as they relate to the ownership of law firms outside of the law of law.” Toilet.. .