Just a few days after reporting that Colorado has formally moved to prevent the use of "alternative business structures" in the practice of law, the ABA has published an article suggesting that there is a "quiet restructuring of legal services" through the use of those types of structures and management organizations. The article starts:
The legal profession is in the middle of a quiet but very impactful structural shift. In Arizona, alternative business structures have created a regulated pathway for multidisciplinary ownership and innovation. In the rest of the country, management services organizations have emerged as an accepted preferred model for delivering operational sophistication while staying within the boundaries of ABA Model Rule 5.4.
The author argues that traditional law firm structures make long term investment difficult and that Arizona’s ABS framework offers a solution by providing a regulated path for multidisciplinary ownership. However, he states that in the rest of the country, the management services organizations law firm model has become the preferred alternative. He argues that when structured properly, an MSO does not violate Rule 5.4 because the law firm remains a separate legal entity owned entirely by lawyers, who maintain full independence of legal judgment
And then, there are the states that still strictly enforce bans on sharing fees with non-lawyers or entities, which I believe is still the majority.
I have not done a state by state survey to know which side of the argument is winning but it is obvious that the debate continues. And, as I have reported elsewhere repeatedly, the debate also continues as to whether the use of alternative structures has created more access to legal services. Some studies suggest that is not the case, even though that has always been one of the claims of those who support alternative business structures.
For all my posts on alternative business structures go here.
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