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Board of Governors unanimously opposes non-lawyer firm ownership, fee splitting ideas

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The board also opposes recommendations to simplify Bar advertising rules and end mandatory review of some lawyer ads before they are aired or published

Rule booksProposals to test allowing non-lawyer ownership in law firms and for lawyers to split fees with nonlawyers have been unanimously opposed by the Bar Board of Governors, but the board was considering a scaled back idea on allowing an expanded role for Registered Florida Paralegals.

The board at a special November 8 meeting took up the controversial report of the Supreme Court’s Special Committee to Improve the Delivery of Legal Services.

The board voted unanimously to oppose amending Bar Rule 4-5.4 on fee sharing to allow minority ownership in law firms by non-lawyer firm employees and to allow fee splitting with nonlawyers, such as online legal service companies.

The board also opposed the special committee’s recommendation to simplify Bar advertising rules and end mandatory review of some lawyer ads before they are aired or published.

The board, though, endorsed the idea of better education about Bar Rule 4-1.2(c) allowing the provision of unbundled legal services. It discussed the idea of allowing not-for-profit law firms — mirroring the way many legal aid offices are operated — before tabling that idea until its next meeting.

Gordon Glover

Gordon Glover

The board was debating the special committee’s proposal to allow Florida Registered Paralegals to perform more legal services while under a lawyer’s supervision when it ran out of time. The board specifically voted to consider a truncated version proposed by board member Gordon Glover that would limit the program to legal aid offices and to the defense of landlord/tenant and debt collection cases.

The board did not get to a major special committee recommendation, creating a legal lab to test innovative ways of providing legal services. The special committee recommended that non-lawyer minority firm ownership, fee splitting with nonlawyers, allowing non-profit law firms, and the expanded role for paralegals all be tested within the lab.

Bar President Mike Tanner said the board will meet again before the end of the month to finish its deliberations and recommendations to the Supreme Court, which will have the final say on the proposals.

The special committee was directed by the Supreme Court in late 2019 to study how legal services to consumers could be improved with lawyers playing a “proper and prominent role in the provision of these services.” It was directed to look at lawyer advertising, referral fees, fee splitting, regulation of lawyers, regulation of online legal service providers and non-lawyer providers of limited legal services, and related matters.

The committee filed its report June 28 with the court and the Bar, and Tanner reported that Chief Justice Charles Canady said the court would not take it up until early next year, giving the board time to make its views known.

Those views were strongly expressed at the November 8 meeting, especially on non-lawyer ownership and fee splitting with nonlawyers.

Josh Chilson

Josh Chilson

“I’m troubled by the profound conflicts of interest the proposal would create between lawyers and their ethical obligations and nonlawyers that the court can’t regulate who are entirely driven by profits,” said board member Josh Chilson, who moved to reject the concept of non-lawyer ownership in firms. “I’m troubled by the fact that the committee by its own admission never looked at what some of the proposals have done to other professions, including doctors, without improving access to the consumers.

“I’m troubled that this is being offered with no real evidence that the proposal will improve access to justice.… This is a bell that once rung, will never be able to be unrung.”

“The independent judgment of a lawyer is critical to the fair administration of justice in our state,” said board member Sia Baker-Barnes. “That is why these rules have been in place for so many years. We lawyers have been trained to exercise our judgment, not driven solely by profit or the desire to make money, but driven by what is in the best interest of our clients.

“Allowing non-owners to have an interest in law firms, allowing non-owners to be participants in those decisions, and to drive those decisions, significantly impacts the independent judgment of a lawyer, and threatens the very foundation of what it is we do every single day,” Baker-Barnes said.

Roland Sanchez-Medina

Roland Sanchez-Medina

Board member Roland Sanchez-Medina said he had heard from a large number of his constituents and other lawyers he knows who opposed the special committee’s recommendations.

“We can’t overcome that,” he said. “There’s a profound belief that this should be rejected. I’m going to do exactly what my constituents are requesting.”

Board members said those comments applied to the recommendation on sharing fees with nonlawyers as well.

The board voted 46-0 to reject allowing active non-lawyer firm members to have a minority ownership in a law firm, and 45-0 to reject the sharing of fees with nonlawyers.

The board appeared to be ready to oppose expanding services that Florida Registered Paralegals could provide in a law or legal aid office while under a lawyer’s supervision. Areas of expanded service mentioned by the special committee included family law, wills, landlord/tenant, debt collections, and small claims, and assistance with court proceedings.

Then board member Gordon Glover moved to amend the original motion to reject that idea. His proposal would limit the concept to legal aid offices, and the areas of assistance to defense of landlord/tenant and debt collection matters.

The board voted 24-15 to accept that amendment and then, having run over its scheduled meeting time, voted 30-8 to postpone final action on that recommendation to its next meeting.

Glover noted the Supreme Court’s former Commission on Access to Civil Justice, on which he served, proposed a broader expansion of supervised paralegal services. He said the commission saw it as providing more assistance for clients, allowing paralegals to use their knowledge, and a way for supervising lawyers to expand their client base. He said the program could run on its own and wouldn’t require the legal lab, if that is approved.

Board member Wayne LaRue Smith likened it to when real estate associates were allowed to fill out simple real estate rental and related contracts.

There are occasional abuses and problems when an associate fills out a complex, multi-million dollar contract, but “I think that by and large the community of people who enter into routine real estate contracts have not been dramatically harmed by that,” Smith said. “I think that’s not the end of where we can go in expanding how Florida Registered Paralegals can serve the public, but it’s a start.”

“I still have concerns about the graying line between what is the practice of law and what is not the practice of law,” board member Jorge Piedra said. “Governor Glover’s amendment addressed most of my concerns.”


Larry Sellers

On the advertising recommendations, the board unanimously agreed with board member Larry Sellers to reject the special committee’s findings. The recommendations were to streamline the rule, largely by moving some detailed rules into the rule comments, and to end mandatory review of Bar ads that contain more than basic information and are not firm websites.

“While well intentioned, I think both of them are ahead of their time,” Sellers said.

He said moving details from rules to comments might create ambiguities for lawyers and lead to more work for the Board Review Committee on Professional Ethics and the board in reviewing advertising appeals.

As for ending review of ads, Sellers said the special committee noted there are few grievance cases for violation of ad rules, so the reviews might not be needed. But he argued the low number of grievance cases might be because ads are reviewed, and Sellers said figures from the Bar showed more than half of the submitted ads had a violation of Bar ad rules.

Smith, who chairs the BRCPE, which handles advertising appeals, agreed.

“If this recommendation were implemented, we would shift the Bar’s resources from review to discipline,” he said. “We would not be giving as much guidance in advance…. I see the current process as being far more collaborative than the disciplinary process.”

The board approved Sellers’ motion to reject the special committee’s recommendations 43-0.

The board began deliberations on the special committee’s two recommendations on not-for-profit law firms. One recommendation would be to amend Bar rules to allow specifically for not-for-profit law firms as an allowed form of legal practice, and the second would allow nonlawyers to serve on the boards of directors of those non-profit firms.

Those changes acknowledge the way many legal aid organizations operate, and that many are required by those granting them funds to have nonlawyers on their boards.

Hilary Creary

Hilary Creary

Board member Hilary Creary moved to endorse the special committee’s recommendations.

“The current situation is that legal service programs and providers are not allowed to organize as a legal entity,” she said. “This would correct a historic oversight. There is no legitimate reason why a legal service program should not be allowed to become a non-profit corporation [recognized by Bar rules].”

Board members voiced support for the concept but also concerns. One is that the proposal called for the idea to be tested in the proposed legal laboratory and the board had not considered the legal lab. The second was a concern the language was too broad.

“Not for profit is a very, very broad scope and can be the stalking horse for other for-profit type corporations,” said board member Michael Gelfand. “I’d like to see this narrowed.”

The board eventually voted 40-4 to table the discussion about not-for-profit law firms.

Board members did broadly support the special committee’s recommendation for better education about the unbundled legal services rule. Board member Leslie Rothenberg, though, said she was concerned that with the special committee’s recommendations about non-lawyer firm ownership and fee splitting, the proposal could be another way to have nonlawyers practice law.

Gelfand disagreed, saying the rule is useful.

“I would suggest in our comments to the court we note that education may also be well directed to the judiciary. The comments that I have received from our members indicates it is the judiciary that frequently doesn’t understand it and prevents the rule from being effectively utilized,” he added.

The board voted 34-10 to accept the motion to endorse the committee’s recommendation.

Tanner noted the Bar received more than 300 comments about the proposals, many signed by multiple lawyers (one comment, opposing the non-lawyer ownership and fee splitting proposals, was signed by 327 Bar members). Those comments overwhelmingly opposed most of the special committee’s proposals. See story here.

Special committee members, in making their proposals, noted that the current legal system has failed to provide affordable legal services to most lower- and middle-income families. The legal lab not only would allow testing and evaluation of innovative ideas, but those participating, such as online providers like LegalZoom and Rocket Lawyer, would agree to be regulated by the Supreme Court.

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