The New York State Bar Association led a nine-month inquiry over the issue; concluding that non-lawyer investors can possibly influence the objective professional judgments of a lawyer, and law firms are better off without non-lawyer owners.
The task force conducting the inquiry interviewed lawyers and probed into the possible benefits of non-lawyer ownership at law firms, including partnerships with companies that provide relevant services like e-discovery or document review. However, the findings of the task force show that the risk inherent in allowing such non-lawyer ownerships outweighs possible benefits.
The question of non-lawyer ownership rose to the fore against the backdrop of economic recession, financial crunches felt by law firms, exorbitant rates of interest charged by external funders who did not own a stake, and a spate of lawsuits filed by Jacoby & Meyers in favor of allowing non-lawyer ownership in order to overcome financial debacles.
Jacoby & Meyers filed separate lawsuits on the issue in New York, New Jersey and Connecticut. The lawsuits at New Jersey and Connecticut are pending, while the New York lawsuit, though dismissed by the court of first instance, has been given a chance by the 2nd U.S. Circuit Court of Appeals to be filed again including new causes.
