The New York Bar has banned lawyers in the state from becoming an employee of a firm in which non-lawyers hold a stake, effectively preventing UK firms with New York bases from seeking external investment.
The ruling by New York State Bar Association (NYSBA), issued yesterday, applies to law firms in other states or outside the US that have non-lawyer partners, including those based in jurisdictions such as the UK where non-lawyer ownership is allowed.
The NYSBA opinion cited one of the New York Rules of Professional Conduct, which prohibits a lawyer from sharing fees with a non-lawyer or practising law for profit in a firm that has non-lawyer members.
The American Bar Association is currently considering dropping the ban on non-lawyer ownership of law firms in the 50 states where the prohibition exists.
The UK, Australia and Washington DC all allow non-lawyer ownership of law firms, with the British market opening up to external investment last year.