By Casey Sullivan
Nov 19 (Reuters) - The New York State Bar Association House
of Delegates has voted to reaffirm the group's position that
non-lawyers should be barred from having an ownership stake in a
The decision comes after a nine-month inquiry by a state bar
association task force, which concluded that a lawyer's judgment
could be influenced by the non-lawyer investors.
To reach its conclusion, the task force interviewed lawyers
and researched possible benefits of non-lawyer ownership such as
allowing law firms to partner with companies that provide
consulting advice on e-discovery and document review.
The task force found that the risks inherent in outside
owners outweighed any financial benefit, said Stephen Younger,
chair of the New York State Bar Association Task Force on
Non-Lawyer Ownership and a former president of the bar
The vote by the House of Delegates, which took place on
Saturday, is the latest defeat for proponents of non-lawyer
ownership in law firms. New York, like the 49 other states,
prohibits non-lawyers from holding a stake in law firms, though
Washington has allowed the practice under certain limited for
more than 20 years.
New York Bar leaders took up the idea of non-lawyer
ownership in February after England and Australia adopted rules
allowing non-lawyers to invest in law firms as a way of raising
The American Bar Association decided in April that
non-lawyers could not own a stake in law firms after conducting
its own inquiry into the matter.
The personal injury law firm Jacoby & Meyers last year filed
federal lawsuits in New York, New Jersey and Connecticut,
arguing that those states' rules against non-lawyer ownership in
law firms hindered its ability to raise funds from outside
The cases in New Jersey and Connecticut are pending. A
federal j udge threw out the New York case, but a judge on the
2nd U.S. Circuit Court of Appeals indicated in October that the
firm could get a second shot at bringing the lawsuit.
As part of its vote, the House of Delegates also adopted a
proposition that would allow New York attorneys to share fees
with out-of-state lawyers at firms with non-lawyer owners. The
delegates accepted the conclusion of the task force, which said
such arrangements would be less likely to unduly influence New
The proposal will now be passed on to the New York State Bar
Association Committee on Standards of Attorney Conduct for
further revisions. After that, the proposal will go back to the
House of Delegates for a vote to finalize the rule.
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