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Friday, March 23, 2012


The New York State Bar Association has ruled that lawyers who primarily practice in New York cannot be part of a foreign firm in which non-lawyers hold a stake, even if allowed where the firm is based.  This directly affects firms in areas such as the United Kingdom and Australia where non-lawyers can be owner-investors, and also the District of Columbia which allows non-lawyer employees to share in a firm's equity. 

The association's committee on professional ethics said that such an agreement would violate Rule 5.4 of the New York Rules of Professional Conduct, which bars attorneys from sharing fees with non-lawyers and practicing law for profit with entities that include non-lawyer owners or members.

The United Kingdom's Legal Services Act allows United Kingdom firms to take external ownership once they convert to an alternative business structure - something which is geared toward mainly consumer-focused law firms. 

Currently, the ABA ethics committee is considering whether restrictions on non-lawyer ownership/equity sharing should be eased. As of now, all 50 states prohibit non-lawyer ownership of firms. 

The New York Ethics Opinion can be read here.

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