Lawyer corporations?

Factual Questions
1

It seems to me that all lawfirms are organized as partnerships, with the revenues being divided up among the partners and some of the rest going to pay the associates and staff.

What’s to stop a non-lawyer from getting some venture capital, starting a corporation, hiring a bunch of lawyers as regular employees and pimping them out? Is there a law that lawfirms must be partnerships?

2

Yes, there are such laws. The rationale for such laws is that lawyers should not be able to limit their liability.

3

Most states have laws or ethical rules for lawyers (or both) that prohibit:

  1. Lawyers sharing their fees with non-lawyers. legal ethics | Wex | US Law | LII / Legal Information Institute
  2. Corporations owned by non-lawyers engaging in the practice of law. Michigan Legislature - Page Not Found

These two rules together make what you have described illegal.

4

[QUOTE=Sevastopol]
Yes, there are such laws. The rationale for such laws is that lawyers should not be able to limit their liability.
[/QUOTE]

Gfactor has, of course, correctly answered the question. This is (a) non-responsive (the question asked about non-lawyers forming a corporation), and (b) not accurate. Lawyers can form professional corporations.

5

Why did you post that, Random?

6

[QUOTE=EJsGirl]
Why did you post that, Random?
[/QUOTE]

I don’t speak for Random, but people ought to know that Sevastopol is wrong.

7

[QUOTE=Sevastopol]
Yes, there are such laws. The rationale for such laws is that lawyers should not be able to limit their liability.
[/QUOTE]

Lawyers are barred in many states from prospectively limiting their malpractice liability:

legal ethics | Wex | US Law | LII / Legal Information Institute

But as **Random ** has already noted:

  1. I don’t see the connection between non-lawyers forming a corporation that provides legal services (which would arguably prevent the employee-lawyers from exercising independent legal judgment) and the rule against agreements limiting lawyer liability.

  2. As **Random ** points out lawyers can form professional corporations, professional limited liability companies, and limited liability partnerships. http://www.lectlaw.com/files/buo04.htm . All of those entities limit the liability of the principals.

8

Ack. I was reading too quickly and then picked up the snark factor. My apologies.

9

[QUOTE=psychloan]
I don’t speak for Random, but people ought to know that Sevastopol is wrong.
[/QUOTE]
In fact that is probably true in the jurisdiction the OP inhabits. Although the prior responses are not specific to that jurisdiction.

However the US is not the world, or indeed the entirety of the common law world. And such rules and rationales as I have outlined exist in its parts.

10

The problem is, Sevastopol, that your answer is not fully accurate even as restricted.

There are jurisdictions which insist that lawyers not be permitted to limit their liability (other than normal methods like buying stock available to anyone). And there are other jurisdictions which permit PLLCs (Professional Limited Liability Companies) for any practice, medical or jurisprudential.

11

Let’s review:

Doesn’t “jurisdictions insist that lawyers not be permitted to limit their liability” mean the same as “there are such laws… lawyers should not be able to limit their liability”? Why yes it does.

Is there a nexus between the policy that lawyers should not be able to limit their liability in the same manner as corporations and the prevalence of lawyer partnerships? Why yes there is.

Are the laws concerned found in every jurisdiction and with equal force? No.

Is the control on lawyers limiting their liability an absolute and overriding principle? No.

What more need be said? The response was both responsive and correct as a general proposition: However, as yet the particular laws pertaining to Brooklyn have not been stated.

12

[QUOTE=Sevastopol]
In fact that is probably true in the jurisdiction the OP inhabits. Although the prior responses are not specific to that jurisdiction.

However the US is not the world, or indeed the entirety of the common law world. And such rules and rationales as I have outlined exist in its parts.
[/QUOTE]

Are you thinking of a specifc jurisdiction. I’d be interested in knowing which one if you are.

13

[QUOTE=Sevastopol]

What more need be said? The response was both responsive and correct as a general proposition: However, as yet the particular laws pertaining to Brooklyn have not been stated.
[/QUOTE]

Your wish:

legal ethics | Wex | US Law | LII / Legal Information Institute

Here is the statute permitting the formation of professional service corporations.

Website of a New York law firm operating as an LLP. http://www.shearman.com/Home.aspx

Here is one operating as an LLC in New York: http://appsext5.dos.state.ny.us/corp_public/CORPSEARCH.ENTITY_INFORMATION?p_nameid=2824283&p_corpid=2812404&p_entity_name=morgan%20lewis&p_name_type=A&p_search_type=BEGINS&p_srch_results_page=0

Here is one operating as a professional corporation: http://www.bragarwexler.com/coleman.html

14

Well, Brooklyn is the former city, now borough of NYC, comprising Kings County, New York State. Considering I know of a PLLC in Adams, New York (oddly enough, comprised of a father and two sons, all lawyers), and one in Watertown, New York, I believe that PLLCs are legal in Brooklyn – perhaps just not yet very common.

15

[QUOTE=Polycarp]
Well, Brooklyn is the former city, now borough of NYC, comprising Kings County, New York State. Considering I know of a PLLC in Adams, New York (oddly enough, comprised of a father and two sons, all lawyers), and one in Watertown, New York, I believe that PLLCs are legal in Brooklyn – perhaps just not yet very common.
[/QUOTE]

Here is a lawyer operating as a PLLC in Brooklyn: http://www.divorcenet.com/Members/eroyzman

And here are two operating as a PCs: http://www.lawinfo.com/expert/brooklyninjurylawyer/
http://www.newyork-injury-lawyer.com/