Florida Bar's Rejection of Non-Attorney Ownership Thwarts Innovation

By Etan Mark, Don Hayden and Josh Migdal, Mark Migdal & Hayden?|?Bloomberg Law, January 12, 2022

Co-founders of Miami law firm Mark Migdal & Hayden call out the Florida Bar for rejecting changes that would have allowed non-attorneys to own portions of law firms. They say doing so would improve access to justice and give law firms capital to help them keep up with modern innovations in business practice.

By and large, the delivery of and access to legal services is broken. Too slowly, jurisdictions throughout the U.S. are beginning to consider ways to improve access to justice, with non-attorney ownership of law firms a leading candidate for institutional improvement. There was hope in 2021 that Florida—our home state—would be one of the leaders for innovation in this space. But embracing the definition of insanity, the Florida Bar’s governing body instead determined that doing the same thing will yield different results.

Most people who need legal services do not get it because they cannot afford it. In 2017, Legal Services Corporation released a report finding that the vast majority (86%) of low-income Americans do not receive the civil legal services they need, usually relating to fundamental, life-altering matters including evictions, child custody proceedings and debt collection.

Despite the U.S. having one of the highest concentrations of lawyers in the world, it ranks 108th out of 128 countries in access to justice, behind Zimbabwe, Nicaragua, and Afghanistan. Sixty percent of small business owners who have what they characterize as a “great” threat to their business do not have a lawyer to help them.

With these realities in hand, the Florida Supreme Court appointed a special committee focused on how to “improve the delivery of legal services.” That committee—comprised of the former president of the Florida Bar and some other leading Florida attorneys—issued a report in June to consider ways to improve the relationship between attorneys and consumers.

Foremost among its conclusions, the report recognized that the prohibition in allowing non-attorneys to own portions of law firms resulted in a threshold barrier to increased access to justice. The report’s research strongly suggests that attorney-only ownership leads directly to failed innovation in marketing, finance systems, and project management (ask an attorney you know to run some Excel calculations or prepare a compelling slideshow).

This prohibition stunts access to justice because it stifles outside investment, reduces capital, and therefore makes it harder for law firms to innovate their business practices. Joint-venturing with other service providers becomes impossible, leading to inefficient processes, clunky interfaces, and unintegrated services.

Meanwhile, attorneys are forced to run businesses—something they do not teach in law school—rather than practice law.

For these reasons, our sister bar in Arizona recognized that allowing non-attorneys to have ownership stakes in law firms would be a boon to its citizens. The Arizona bar noted that the original (nearly 100-year old) prohibition on non-attorney ownership of law firms is rooted in economic protectionism; not the ethereal desire to “protect the public.”

Arizona amended its rules in August 2020 to allow non-attorney ownership of law firms, following in the footsteps of England, Wales, and British Columbia. This will result in more innovation, improved service to consumers and reduced prices.

But our bar’s policies here are subject to the Florida Bar’s Board of Governors, and while handwringing about access to justice, in its June 28, 2021, report, they voted unanimously to reject the committee’s recommendations to allow minority ownership in law firms by non-lawyer firm employees.

Ultimately, concerns that non-attorney ownership would lead firms to be profit-driven rather than pursuing the “best interests of the clients” carried the day. In other words, under the veneer of “non-attorneys will cause law firms to be too focused on profits and not focused on clients,” the board rejected the proposal.

Florida Bar Turns Blind Eye to Legal Profession Realities

The willingness to turn a blind eye to the current realities of the legal profession, while pearl-clutching about profit-centric law firms is disingenuous. The largest law firms in the U.S. have substantially increased over the past five years, and proudly broadcast their “profits per partner” to reflect their continuing growth.

[…] The full article on Bloomberg Law here

The system needs an overhaul, or at least we need to try. If we really care about our commitment to our clients, the Florida Bar should permit—on a trial basis—non-attorney law firm (minority) ownership. The Florida Bar will continue to have the power to hold the (majority) attorney owners of those firms accountable for its continued commitment to the best interests of the clients.

If the Florida Bar Board of Governors truly cared about protecting the public, it would not short-shrift the opportunity to fix a broken system. If instead, the board of governors is more interested in protecting its turf, then it should spare us the platitudes and have the guts to just say so.