Ethics panel tables question on whether Florida lawyers may passively invest in out-of-state firms that include nonlawyer owners
Citing a request from the representing attorney, the Bar’s Professional Ethics Committee postponed consideration of the proposed advisory opinion regarding an ethics inquiry during the Bar’s Winter Meeting on January 20 in Orlando.
The question at issue is whether it’s permissible for a Florida lawyer to be a passive investor in an alternative business structure (ABS) in another state that allows nonlawyer ownership of law firms.
In March of last year, Bar staff initially declined to issue an opinion based on a lack of Florida precedent in this area. The inquirers, however, requested the Professional Ethics Committee review the denial.
While alternative business structures are prohibited in Florida, under Arizona law, they are perfectly legal — so long as the investors are not involved in providing the legal services.
After debate during the Bar’s Fall Meeting in October, the committee voted 26-9 in favor of having staff draft an opinion that would allow the inquiring Florida lawyer to invest in an Arizona entity that is expected to practice law in Arizona.
The committee directed staff to present a draft opinion at the next committee meeting but agreed to approve the proposed transaction with ABA Ethics Opinion 499 as a guiding precedent along with any other applicable research.
Tallahassee attorney Richard Greenberg, representing the inquirers, couldn’t make the Orlando meeting, but sent his Rumberger|Kirk colleague, Sally Culley, in his stead.
Culley explained that Greenberg now asks the committee to consider additional information supporting their position at the next meeting as they have some concerns about the draft opinion and want more time to study it.
“What exactly is the issue?” committee member Jeffery Blostein asked.
“There are some factual inaccuracies and a feeling that the [proposed] draft opinion went further than it needed to,” Culley said.
Culley made it clear that Greenberg wants to present this information to the PEC at the next possible opportunity.
Accordingly, committee member Louis Reinstein moved to roll issue over to the next meeting, which was unanimously accepted.
The Professional Ethics Committee will meet next at the Bar’s Annual Convention in June in Boca Raton.