Written by Danny Foster
Recently, we wrote a guest post for our friends over at UpCounsel on Fee Sharing, Innovation, and the Consumer Interest. You’ll have to click through to read the whole thing, but (briefly) the argument runs as follows:
American Bar Association Model Rule 5.4 prohibits lawyers and law firms from sharing legal fees with non-lawyers, and while this might sound innocuous, in reality Rule 5.4 is hurting everyone who doesn’t have a law degree. The two justifications often given for the ban on fee sharing (the pernicious influence of non-lawyers and fear about the commercialization of the practice of law) simply don’t stand up to scrutiny. The most salient impact of Rule 5.4 is that it stifles innovation in the legal services industry – innovation that could provide consumers with more value for their dollar when faced with a legal situation. Despite successful liberalization of similar rules in other common-law countries like Australia and the UK, here in the US the American Bar Association has refused to even consider relaxing Rule 5.4. The ray of hope? An underreported Jacoby & Meyers lawsuit against the states of New York, Connecticut, and New Jersey is still working its way through the court system. If successful, these cases could overturn the prohibitions on fee sharing and outside investment, giving the American legal services industry a much-needed breath of fresh air - and consumers’ wallets a much-needed break.
Danny Foster is a Responsive Law intern.