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Tuesday, Dec 6, 2022
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Profit Sharing Central Issue For State Bar

Non-lawyers may soon be able to claim law firm profits and provide legal advice, based on proposals offered by the California State Bar Association. According to a Bloomberg Law article published last month, 16 proposed regulatory changes garnered backing from prominent law professors at a public hearing on Aug. 10. The hearing was led by the state bar’s Task Force on Access Through Innovation of Legal Services in San Francisco. The bar will allow public comment on the proposals through Sept. 23; its board of trustees is set to vote on them in January. Proposals would in effect loosen restrictions on Model Rule 5.4, which addresses law firm fee sharing and partnerships with non-lawyers, the article said, a notion the American Bar Association has resisted in the past. Other changes open up the possibility of providing regulated, dependable legal advice on a website or through a phone application. Proponents of the proposals argue that changes to the rule would increase access for individuals who may struggle to afford a lawyer. Legal apps, direct-to-consumer service websites and non-legal businesses would have more wiggle room to try their hand at firm ownership, or a division of firm ownership. “It seems to me the (State) bar should be able to promote access to justice, move into the 21st century smoothly and with appropriate regulation, and protect the public all at the same time. That’s the middle ground that I think we’re going to look for and I think there’s good will on behalf of the State bar board, and we’ll be able to work through an appropriate resolution,” said Tamila Jensen, a lawyer in Granada Hills. Jensen is also president-elect of the Los Angeles County Bar Association, but stressed the bar has not officially taken a stance on the proposals yet. “We need some time to really review them and what this is going to mean in practice,” she added. Other countries like England, Australia and New Zealand have allowed non-lawyers to back legal practices for several years now, the article said. Many opponents are concerned that California’s bar association has not given enough time to see if loosened standards are actually benefitting individuals in these countries. Proposal naysayers are also concerned that the big four accounting firms – Deloitte, Ernst & Young, KPMG and PwC – will use these changes to dip into the U.S. legal market. The accountancies have already been growing legal operations in Europe and Asia, where they don’t have to worry about ownership restrictions, according to the Bloomberg article. Bar associations in Arizona and Utah are following California’s lead in thinking about bar rule changes, as well as the Association of Professional Responsibility Lawyers, a national group.

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