'Professionalism' as pathology: the ABA's latest policy debate on nonlawyer ownership of law practice entities.

Author:Schneyer, Ted
Position:P. 118-138

    I turn now to the written submissions the 20/20 Commission received on the subject of nonlawyer ownership of law practice entities during the ALPS debate. Most were submitted in response to the Commission's calls for comment on the ALPS Working Group's Draft Resolution and Report (153) and its earlier Issues Paper on Alternative Business Practice. (154) Part II analyzes a representative sample of these submissions with three aims in mind: to show that opponents of nonlawyer ownership repeatedly relied on a handful of arguments, to link those arguments to rhetorical tools and concepts associated with the idiom of professionalism, and to criticize the arguments themselves.

    Altogether, the 20/20 Commission received more than thirty written submissions that address the Working Group's proposal and nonlawyer ownership of law-practice entities, generally. Most of the submissions were from lawyers or bar entities (155) and the great majority of these were strongly negative. (156) Because many of the negative responses were duplicative or insubstantial, (157) I focus on a representative subset (158) consisting of those I found most substantive. (159) These responses were often preoccupied with MDPs and law firms with outside investors rather than the Draft Resolution itself. (160)

    Drawing on the history of the idiom of professionalism in Part I, Part II.A identifies six concepts or rhetorical tools that are associated with the idiom of professionalism and salient in the opponents' arguments against the Working Group's proposal and nonlawyer ownership generally. Part II.B then examines a number of those arguments, links each argument to one of the elements of the idiom, and criticizes the argument itself. Because the six elements overlap to some degree, some of the arguments could be linked with more than one element.

    1. Six Elements of the Idiom of Professionalism That Are Salient in the Opponents' Arguments Against Nonlawyer Ownership

      Two of the six elements of the idiom to be discussed are "procedural"; they tended to skew the ALPS debate in the opponents' favor. The other four elements were used to establish a plausible downside for the Working Group's proposal.

      The first procedural element posits that the proponents of the Working Group's proposal had the burden of proof in the debate and would have to overcome a strong presumption in favor of the status quo (the existing ban). The opponents justified these ground rules by characterizing the very limited form of nonlawyer ownership the Draft Resolution would allow as a profound departure from longstanding professional rules and traditions. (161)

      The second procedural element is a biasing and selective approach to the role of empirical evidence in the debate. This element privileges the opponents to present their arguments without supporting evidence while criticizing the Working Group for providing nothing more than "anecdotal evidence" to support theirs. For example, just as opponents of the MDP Commission's 1999 recommendation to allow lawyers to practice in MDPs succeeded in tabling the recommendation "unless and until" studies demonstrate that MDPs (none of which existed in the United States at the time) would further the public interest without compromising core values, (162) so opponents of nonlawyer ownership in the ALPS debate found the Working Group's proposal unacceptable because the accompanying Draft Report failed to provide rigorous evidence that allowing lawyers to practice in law firms with a very limited form of nonlawyer ownership would benefit lawyers and clients. (163) At the same time, the opponents felt no need to provide any plausible evidence to support their claims that allowing even a highly restricted form of nonlawyer ownership would "compromise core values." (164) Although the core values are embedded in enforceable rules of legal ethics, (165) the opponents failed to produce any evidence of "compromise" that countered the Working Group's finding that two decades of experience with a less restrictive form of nonlawyer ownership in Washington, D.C. had produced no pertinent disciplinary complaints. (166) This mirrored the failure of the Litigation Section to provide any plausible evidence that permitting lawyers and law firms to own and operate ancillary businesses would embroil them in business scandals and bring an end to professional self-regulation. (167)

      Opponents of the Working Group's ALPS proposal relied on four more elements of the idiom to justify their claim that even the highly restrictive form of nonlawyer ownership the Draft Resolution would permit had a substantial downside. The first, consistent with Cohen's dichotomy, (168) posits that nonlawyer ownership in any form is an inherently corrupting business entanglement and must therefore be banned categorically. (169) On this view, the alternative of permitting but regulating some form(s) of nonlawyer ownership is no more acceptable than permitting but regulating lawyer advertising or participation in GLS plans had been--before the Supreme Court said otherwise. (170)

      A closely related element is the slippery Mope theory, which in this context means that even if adopting the Working Group's proposal would not itself be objectionable, it would inexorably lead to the legalization of more radical forms of nonlawyer ownership, which would be objectionable. (171)

      Another element of the idiom that the opponents used in an effort to establish a plausible downside for the Working Group's proposal was the familiar voicing of unsubstantiated concerns that nonlawyer ownership, if permitted, would compromise the core values of the profession and therefore be unacceptable--however modest the compromise or risk thereof might be. (172)

      Finally, a sixth element of the idiom was used not to establish a plausible downside for the Working Group's proposal, but rather to negate a possible benefit. The ALPS Draft Report suggested that, in the absence of demonstrated harm, allowing lawyers to practice in firms that have nonlawyer owners might be desirable as a way to promote competition in the legal services market. (173) One opponent relied on the proposition that even if doing so would promote competition, that point deserved no weight because, from the standpoint of professionalism, promoting lawyer competition is an irrelevant, if not a negative, value, (174) as Cohen believed. (175)

    2. A Critique of the Opponents' Idiom-Based Arguments Against the Working Group's Proposal

      1. Proponents of Nonlawyer Ownership Must Bear the "Burden of Proof"

        In their comment on the ALPS Discussion Paper, general counsel at nine U.S.-based companies asserted that in the debate on nonlawyer ownership, the burden of proof should fall on those who proposed such a "fundamental change" to Rule 5.4, and that the proponents had failed to meet that burden. (176) This raises a question of characterization. Assuming that the general counsels' argument here is not based on the slippery slope theory, what makes amending Model Rule 5.4 to permit such a limited form of nonlawyer ownership a "fundamental" change? Is it more fundamental than, say, the much earlier decision to permit lawyers to be employed by corporations to serve as in-house counsel? (177)

        Putting aside the question-begging characterization of the Working Group's proposed changes as "fundamental," and bracketing out slippery slope arguments for the moment, why should the proponents of such a limited form of nonlawyer ownership have the burden of proof? (178) In his comment on the Draft Resolution, Richard Thies, a bar leader in Illinois, purported to find the answer in ABA precedent, (179) namely, the extremely broad House of Delegates resolution that ended the MDP debate in 2000. (180) As noted earlier, that resolution declared, without elaboration, that "[t]he sharing of legal fees with non-lawyers and the ownership and control of the practice of law by nonlawyers are inconsistent with the core values of the legal profession." (181) Mr. Thies argued that this pronouncement should be dispositive because "[n]othing that has happened since 2000 would warrant a reversal" and "[t]he facts have not changed." (182) But he did not say what "facts" supported the 1999 resolution in the first place, or why the recent reforms that broadly authorize nonlawyer ownership in the U.K. and Australia (183) is not a changed fact. Nor did he consider whether the 1999 resolution might have been adopted with nothing quite as narrow as the Working Group's resolution in mind.

        Finally, in what may have been an effort to raise to unscalable heights the burden of proof that proponents of allowing nonlawyer ownership must meet in order to justify any liberalization of the ban, the president of the New York State Bar Association, when appointing a task force to reconsider nonlawyer ownership in light of the 20/20 Commission's work, told the task force to consider "whether a change would further advance the core values," and explained that nonlawyer ownership should not be considered "unless it is going to advance" those values. (184) Does this mean, for example, that nonlawyer ownership in any form is worth considering only if it would make lawyers more competent, independent, loyal to clients, and/or protective of client confidences? If not, what does it mean?

      2. A Biasing and Selective Approach to the Use of Empirical Evidence

        Opponents of nonlawyer ownership took a biasing and selective approach to the role of empirical evidence. They felt no need to support their arguments against the Working Group's proposal with any evidence but, at the same time, dismissed the Draft Report's arguments in favor of the proposal on the ground that they were supported by no more than "anecdotal" evidence.

        For example, the U.S. Chamber Institute for Law Reform (185) made assertions...

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