Here’s What it Looks Like on the Law-Firm Shareholder Rollercoaster

Some advocacy groups in the U.S. have promoted the idea of letting non-lawyers invest equity in law firms as a way to provide access to justice, enable innovation in the legal marketplace, and expand legal services. But what about creating more jobs for lawyers by causing more shareholder lawsuits?

The first law firm in the world to go public, Slater & Gordon, saw its share price plummet 65% last week. The reason? The United Kingdom announced a change in the law concerning whiplash injury cases which could eat into the firm’s profits. Once the firm reaffirmed that it still expected to make a profit in the next year, the share price clawed back some of its losses. But, according to the Herald Sun, during the downturn rival law firms were “monitoring the chaos to decide whether there is a case for a shareholder class action against the company.

Forget solving the access to justice gap, this means allowing non-lawyer ownership of, let’s say, a law firm practicing in the area of legal malpractice could lead to the holy grail of lawyering: lawyers suing lawyers suing lawyers. But what if the lawyers representing the shareholders commit legal malpractice in their shareholder lawsuit against the malpractice lawyers? There’s conceivably no end to the self-eating snake.

Earlier this year a federal court in New York upheld the state’s ban on non-lawyer ownership, holding that the ban did not violate the constitutional rights to free speech, association, due process, and equal protection. Nearly every other state in the U.S. has a ban on non-lawyer ownership nearly identical to New York’s. While the push for non-lawyer ownership and alternative business structures will continue, Slater & Gordon’s stock tumult certainly isn’t going to help the cause in the U.S.

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