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Alternative Business Models: Good or Bad?

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On March 8, 2011, Fletcher Hartsell Jr., a North Carolina attorney and state senator, introduced a bill in the general assembly that would permit an nonlawyer to own up to 49 percent of a law firm so long as lawyers in the firm continue to control the company and there is no interference with the exercise of professional judgment by licensed attorneys in the firm.  Currently the Rules of Professional Conduct do not permit nonlawyers to have an ownership interest in a law firm primarily to prevent a nonlawyer from directing or controlling the conduct of attorneys, thereby interfering with their professional autonomy.  See Rule 5.4(d).  Arguments for a change to this rule include greater access to justice for the public, more flexible business forms, and better and more comprehensive services to clients.  For example, a law firm/CPA firm may be able to provide more comprehensive services to the public.  The current proposal in the general assembly appears to open the door to investment in law firms by any nonlawyers, and may also open the door to a broader range of multidisciplinary practice – think personal injury firm/body shop.  I haven’t made up my mind whether the legislation as drafted is good or bad. But I think any legislation in this arena must serve the purpose of furthering the public’s interest without sacrificing a lawyer’s independence of professional judgment and unfettered loyalty to clients.