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  • Writer's pictureKirk Hartley

American Bar Association Gives Up On Non-lawyer Ownership of Law Firms – More Litigation Fund

The American Bar Association has given up on pushing changes to allow non-lawyer ownership of law firms, and related activities. Currently, non-lawyer ownership is allowed in the UK, Australia and Washington, D.C.

The ABA’s decision to give up is not a surprise. The venerable ABA is useful, but not much for controversy, and this topic is controversial. The issue also gets into federal versus state issues since most states regulate lawyers, sometimes in ways intended to support local interests (think Florida, Delaware, and South Dakota, among others). We will see how the ownership issue unfold at the state level.

One result is plain – this decision means that litigation funding will continue to grow. Why? Because lawyers are businesspersons too, and all businesses need capital from some source. These days, investing more personal capital in law firms can be riskier than it was in the past. Today, large law firms sometimes implode (e.g. Howrey, Dewey, to cite recent examples). And, plaintiff’s firms are less stable as they increasingly practice in many states through satellite offices, and fairly frequently see "young turks" spin out and create new firms because of issues over dividing the pie. It follows logically that litigation firms will continue to increase their demands for litigation funding.

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