October 05, 2011

Summary of the Testimony of Susan D. Gilbert - Center for Professional Responsibility

Summary of the Testimony of Susan D. Gilbert

Before the Multidisciplinary Practice Commission

Susan D. Gilbert, Ethics Counsel for the District of Columbia Bar, was the next witness. Her comments were limited to D.C. Rule 5.4 (b), a provision in the professional independence rule that allows fee sharing with a nonlawyer. She noted that the rule requires that the partnership or organization has as its "sole purpose" providing legal services to clients, that is, the organization must practice law. The ABA, in Formal Opinion 91-360, subsequently narrowed the scope of the rule even further by concluding that a multijurisdictional law firm having a D.C. office cannot have a nonlawyer partner in that office. With multijurisdictional firms cut out, the rule is available only to D.C. based boutique law firms that identify a specific need such as an accountant to do tax work or an office manager. There has been no disciplinary action under D.C. Rule 5.4(b). Ms. Gilbert is of the opinion that multidisciplinary firms located in D.C. should be permitted to fee-split with nonlawyers as described by the rule. Following the question of structuring in order to provide investment advice or insurance brokering there was discussion of whether a subsidiary was needed. Ms. Lamm commented that the current rules permit affiliates and that it’s a matter of linkage. It was believed that most law firms set up a limited partnership with a law firm partner as the limited partner, with other members of the limited partnership not being from the law firm board. Liability and management, thus, flow downstream. Ms. Garvey observed that under the D.C. Rule a nonlawyer could control the economic interest in the law firm. Professor Haddon also observed that the D.C. Rule does not require a law firm to disclose that it has nonlawyer partners.