Just as my Death of Big Law has been published, I’m working with Bruce Kobayashi on a new paper with the above working title, which I will be presenting at the Canadian Law & Economics conference in October. Here’s a taste of an early version I presented last May at Law & Society.
Now the September issue of the ABA Journal has a long article on owning firms that produce legal work. The article discusses “[a] new class of lawyer-entrepreneurs in U.S. legal services [that] is attracting hundreds of millions of dollars from global investors, even while traditional law firms are forced to cut back.”
The article notes that ABA Model Rule 5.4 limits non-lawyer ownership of law firms. But:
Some say the market already has moved beyond the bar’s restrictions. “The question used to be: ‘Will the ABA change Rule 5.4?’ “says lawyer and professor Larry Ribstein, associate dean for research at the University of Illinois College of Law. “The question now is, ‘Who cares?’ If the ABA wants to continue to regulate a tiny fraction of the legal market, they can keep their rule.”
The article focuses on legal outsourcing, and on financing of litigation by firms like Juridica Investments Ltd.. The latter’s founder is quoted as observing that “I began to see claims simply as a business asset that needed to be monetized.”
The article concludes:
University of Illinois prof Ribstein says the growth of these financiers underscores the legal industry’s transition. “Bringing in capital allows businesses to scale up and provides efficient specialization,” he says. “Once a business model calls for capital, there’s no particular reason why lawyers themselves are the best people to provide it.”
Couldn’t have said it better myself.
My work in progress will go beyond outsourcing and litigation financing to discuss other potential mechanisms for owning a piece of the production of law and legal services.