Friday, August 09, 2013

How to Escape the Rigours of Excessive Regulation in the US Legal Profession

(thanks to

My apologies for recent radio silence in the blogosphere. It's partly due to putting the finishing touches to a book, What Do Lawyers Do? An Ethnography of a Corporate Law Firm, due out from Quid Pro Books soon.

Jacoby & Meyers has announced that it's opening in the UK. This firm was a pioneer in providing standardized services to middle-class clients in a distributed network. Taking advantage of the relaxation on lawyer advertising in the 1970s, Jacoby opened lots of offices around the US. The firm developed a hub and spoke approach that had general lawyers in storefronts and specialists and computer resources at centralized locations. By 2010 Jacoby was spending over $10 million on TV advertising.

There is an excellent study of the firm and others in Jerry Van Hoy's Franchise Law Firms and the Transformation of Personal Legal Services (1997).

One of Jacoby & Meyers' aims has been to take in external investment. Unfortunately, it's an American law firm not English. US rules won't permit this. Gillian Hadfield has written expressively in "Legal Barriers to Innovation" why US rules stifle innovation and creativity in US law firms and the profession and will put US law firms at a competitive disadvantage with UK and Australian law firms.

Because of these barriers Jacoby launched a series of cases against state bars in New York, New Jersey and Connecticut. The New York case has made it through the first appeal after dismissal. Jacoby wants to overturn the ban on nonlawyer ownership, which will be a tough fight.

The UK with the Legal Services Act 2007 and alternative business structures (ABS) offers an exit route. Jacoby has linked up with MJ Hudson, a boutique finance law firm. Hudson has declared it wants to become an ABS and Jacoby wants external capital.

It's a slightly odd alliance since Jacoby is a personal client firm and MJ Hudson is a corporate client firm, but certainly Hudson must have access to many clients who are looking for investment opportunities. Both shy away from traditional billing preferring to use fixed fees and both believe in the corporate identity rather than the conventional partnership route.

If the tie up happens then Jacoby & Meyers will have further arguments with the New York State Bar (NYSBA) which recently opined against these kinds of linkages. The NYSBA realizes that access to justice is declining in light of budget cuts (see Expanding Access to Justice in New York State [2009]). Chief Judge Lippman is calling for retired lawyers to offer pro bono hours for unmet legal need. But all of this is short termist with no expectation of radically altering the situation.

It might be time for New York to rethink its opposition to externally owned legal services providers if they could open up services.


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