Thursday, October 10, 2013

Legal Ethics: Vereins, Professional Rules & Accountability

Hat tip to the Legal Ethics Forum for pointers to two interesting articles on law firm organization and legal ethics discussions:

"The Legal Ethics of Verein-Style Law Firms" --
  • "In a nutshell, a firm set up as a verein typically uses a common name (e.g., DLA Piper), but each office is administratively and financially separate from the other offices.  The ABA Journal column notes that this kind of structure raises possible problems under Model Rule 1.5(e), depending on how the firm handles the origination of business and the referral of matters among offices."
  • "Another interesting question -- not directly addressed in the column [link] -- relates to Rule 5.4.  For example, imagine that a verein-style firm has offices in New York and London, and the London office has nonlawyer partners.  The New York office may be asked to make certain cost contributions to a common fund for, say, marketing that benefits all offices.  Depending on how the common fund is administered (e.g., Is it just for marketing?  Or is "cost" sharing used in such a way that it rewards particular offices or lawyers for their origination of business?), such contributions could raise problems under Rule 5.4."

"Large Law Firms, Regulation and Accountability"
  • "There has long been a debate over whether lawyers should be more accountable. Much of the discussion has focused on the validity of the principle of non-accountability, particularly in the transactional setting. This important question focuses on what we want to hold lawyers accountable for."
  • "However other important questions require attention, namely, why we might wish to hold lawyers to account, that is, what purpose does accountability serve, and how we might wish to make lawyers accountable."
  • "This paper addresses these questions, focusing on how they play out in the context of large law firms in the UK and their lawyers. It will argue that one reason to make such lawyers accountable is to deter unethical but strictly legal behaviour and to address the problem of creative compliance."
  • "This is a pressing concern since one cause of the global financial crisis was the lack of integrity displayed by those participating in the markets, and transactional lawyers were a part of this."
  • "The paper will consider whether regulatory reforms in the UK will be effective in promoting desirable forms of accountability in large law firms, given the Legal Services Board’s view that large law firms and their lawyers should be subject to light touch and market regulation. Although focusing on UK regulation the paper’s conclusions on accountability and accountability mechanisms are of general application."

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