Jacoby And Meyers Sues Over Ban On Non-Lawyer Law Firm Investment

NEW YORK (WCBS 880) — Jacoby and Meyers was suing to change rules that prohibit non-lawyers from investing in law firms, John Metaxas reports.

Andrew Finkelstein, a partner with the law firm, said that by tapping into outside sources of funds, the firm could deliver legal services to clients at a lower price. Also, he argued that the rules were unconstitutional.

“The reality is that law – and law firms – is a business, as much as it is the delivery of legal services,” he said. “We would access capital to improve technologies that help us deliver more efficient and better legal services to a wider group of people who need legal services.”

That includes lower and middle classes who may be priced out of expensive law firms.

LISTEN: WCBS 880’s John Metaxas reports

“Lawyers have been second-class citizens when it comes to business, in that they are limited to only be in business with other lawyers,” he added.

The suit has generated opposition from lawyers who argue it’s a question of professionalism.

“What we’re about is serving clients, and if this becomes about investing in the profits of the law firm, investing in the equity of the law firm, we will no longer be lawyers,” said Stephen Younger, a partner at Manhattan’s Paterson, Belknap, Webb and Tyler. “When a client comes to a lawyer, the client should know that the only obligation that lawyer has is to the client.”

“Every day, the first thing we think of when we get up in the morning is what is in the best interest of our client? That’s our job. That’s our ethos as lawyers. Our investors, if we took investors, the first thing they care about is what’s the return on our investment? They don’t care one iota whether our clients are served or not, and that’s why the two interests can’t coincide,” Younger added.

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  • Arshad Sherif, M.A., M.Ed.

    If law firms allow the general public to invest in their stock, profits would be the focus of the law firm. But profit depends on the difference between revenue and cost. The focus on revenue would make any lawyer in the firm reluctant to do any pro bono work. In fact, only well-to-do clients would be represented. The value of a case would be determined by how much money it brings in, not by the degree of injustice that was perpetrated. Cutting costs would also be a primary concern for the law firm. This may mean cutting the salaries of lawyers. Lawyers facing a significant pay cut may decide to turn their attention to politics. Some turn their attention to politics regardless. Kirsten Gillibrand voluntarily gave up a salary of over half a million dollars to enter the House and then the Senate. She is making less than half of what she was making as a lawyer. I wonder where she comes down on this issue. No one, of course, ever invests in their senator. Unless she happens to be a hot babe.

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