Ethics

Another interesting debate in Seattle:

Resolved, that Model Rule 5.4 be amended to permit lawyers to practice in law firm entities that have non-lawyer investors or owners.

James Holzhauer, former chair of Mayer Brown, represented the "pro" side, and while some of his arguments were familiar to me (e.g., the current rule favors established firms that have sufficient partner capital), he made two arguments that I had not thought about before:

First, he pointed out that firms currently have to deal with bank financing, and oversight by banks can be much more intrusive than oversight by owner-investors would be.  Second, he argued that the threat to lawyers' professional judgment can be much greater when lawyers stand to profit personally from their decisions, rather than when the profit would flow to third-party investors.  In other words, self-interest is much more central to the current regime, and self-interest can more easily crowd out professional values.

I haven't thought in depth about this issue, but after hearing Holzhauer's presentation, I couldn't help but think that non-lawyer ownership of firms will probably be a reality here within the next five years.