New York State Bar Association Task Force on Nonlawyer Ownership
Table of Contents I. INTRODUCTION II. HISTORY OF THE DEBATE ON NONLAWYER OWNERSHIP IN NEW YORK A. The MacCrate Report Addresses Nonlawyer Investment in Law Firms B. NYSBA's House of Delegates Votes Against Nonlawyer Ownership C. The ABA Rejects a Proposal to Allow "Lawyer Controlled" Multidisciplinarry Practice D. The Appellate Divisions of the New York State Supreme Court Adopt Rules Addressing a Lawyer's Provision of Nonlegal Services and Contractual Relations Between Lawyers and Nonlegal Professionals E. The COSAC Report and the Appellate Divisions' Enactment of the New York Rules of Professional Conduct, effective April 1, 2009 F. New York State Bar Opinions 889 and 911 III. THE ABA's ETHICS 20/20 COMMISSION PROPOSALS AND THE NLO TASK FORCE'S MISSION IV. NONLAWYER OWNERSHIP IN OTHER JURISDICTIONS A. Australia B. United Kingdom C. District of Columbia V. SPEAKERS AND PRESENTATIONS AT TASK FORCE MEETINGS VI. TASK FORCE SURVEY RESULTS A. Demographics B. Questions Presented C. Survey Results VII. POSITIONS OF OTHER STATES AND COMMITTEES A. Opinions in Opposition 1. New Jersey 2. Illinois State Bar Association 3. NYSBA Trusts and Estates Section B. Opinions in Favor 1. NYSBA International Studies 2. NYSBA Commercial and Federal Litigation Section 3. New York City Bar Association Committee on Professional Responsibility 4. NYSBA Committee on Standards of Attorney Conduct VIII. TASK FORCE OBSERVATIONS AND RECOMMENDATIONS A. Task Force Observations 1. Nonlawyer Ownership as an Alternative Structure for Legal Practice 2. No Compelling Need 3. No Empirical Data 4. No External Pressures for Change 5. Concerns About Professionalism 6. Choice of Law Problems and Opinions 889 and 911 B. Recommendations APPENDIX A A. The Ethics 20/20 Commission B. United Kingdom C. Australia D. District of Columbia E. David Udell F. Gary Munneke G. Paul Saunders APPENDIX B
New York State, one of the world's most significant legal centers, has traditionally played a prominent role in the evolution of the law governing lawyers. In particular, New York has been influential in developing the law applicable to the structure and operation of law firms. Law firms are the vehicles through which essential legal services are provided to the public, and the integrity of their ownership and organization is indispensable to maintaining the effective delivery of those services.
At the turn of the twenty-first century, the New York State Bar Association ("NYSBA") established the MacCrate Committee and charged it with studying the existing law governing law firm structure and considering whether there was a need for any changes in the law. In 2000, that Committee issued the MacCrate Report, a seminal and expansive document that contained an appraisal of the American legal profession as of 2000 and discussed in detail nonlawyer involvement in the practice of law. The MacCrate Report opposed the adoption of a 1999 American Bar Association ("ABA") proposal that would have permitted nonlawyer ownership of law firms. NYSBA subsequently adopted a resolution that nonlawyer investment in law firms should continue to be prohibited and joined several other state bar associations in a successful effort to oppose nonlawyer ownership proposals that came before the ABA's House of Delegates.
On December 2, 2011, the ABA's Commission on Ethics 20/20 ("Ethics 20/20 Commission") released for comment a discussion draft proposing a limited form of nonlawyer ownership of law firms (the "ABA NLO Proposal"). The draft proposed to allow certain nonlawyers employed by a law firm to have a minority financial interest in the firm and share in its profits. …