Lawsuit on Non-Lawyer Law Firm Investors Hits Snag In New York

The federal judge hearing the New York lawsuit filed last year challenging the professional conduct ethics rules that prohibit nonlawyer ownership of law firms has said that he will either dismiss the suit for lack of standing or abstain from hearing it because state courts are capable of deciding the matter. The suit argues that the ban on nonlawyer ownership "perpetuates economic inequity" by denying smaller firms the same access to capital markets for expansion that the larger firms have. But the judge has said that even if the ethics rule's ban is overturned, other New York state laws also bar outside ownership of firms. Meanwhile, the ABA's Commission on Ethics 20/20 remains split on the question, and has postponed a decision to bring a recommendation on the matter before the ABA's House of Delegates.