NEW YORK, April 16 (Reuters) - The American Bar Association
on Monday abandoned the idea of allowing non-lawyers to take an
ownership stake in law firms.
In a statement, Jamie Gorelick and Michael Traynor, who
co-chair a committee that had studied the controversial issue,
said they decided to pull the plug on developing a proposal last
"Based on the commission's extensive outreach, research,
consultation and the response of the profession, there does not
appear to be a sufficient basis for recommending a change to the
ABA policy," said the statement from the ABA Commission on
The proposal would have been submitted to the House of
Delegates, the association's policy-making body, in 2013.
Attorney ethics rules in all U.S. jurisdictions but the
District of Columbia bar nonlawyers from having an equity
interest in law firms. In 2012, the U.K. began allowing the
practice, and Australia also permits it.
The intent of the bans in the United States is to prevent
non-lawyers from undermining the duty of loyalty and
confidentiality owed to clients.
The issue of non-lawyer ownership became more visible after
the personal injury law firm Jacoby & Meyers filed federal
lawsuits in New York, New Jersey, and Connecticut last year,
arguing that those states' rules against non-lawyer ownership in
law firms curtailed its ability to raise funds from outside
A federal judge threw out the New York case last month.
On Feb. 2, New York State Bar Association President Vincent
Doyle announced that it was forming a task force to study
whether non-lawyers should be allowed to own equity in firms. It
was unclear Monday whether the ABA's decision would impact the
state bar's efforts.
(Reporting by Leigh Jones)
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