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Monday, February 17, 2020

Under foreign non-lawyer ownership rules, U.S. litigation funder opens law firm in London

By Seth Sandronsky | Oct 24, 2016

NEW YORK (Legal Newsline) - Burford Capital, a leading third-party litigation funder in New York, has opened Burford Law in London.

Tom Evans, hired from Akin Gump, is the sole lawyer in Burford Law’s London office. The establishment of Burford Law was to facilitate its judgment enforcement business, and not to compete with the litigation-funder’s law firm clients, according to Christopher Bogart, Burford Capital’s CEO.

Burford Law received a license to operate using an alternative business structure (ABS) that allows non-lawyer ownership in the United Kingdom this February.

The Solicitors’ Regulation Authority of England and Wales regulates Burford Law, according to Bogart.

There are about 10,000 law firms based in the UK, with some 450 licensed as ABS, reports the American Bar Association. 

There is no ABS in place that allows third-party litigation funders such as Burford Capital, which is listed on the London stock exchange, to provide attorney services to clients in the U.S.

“The American Bar Association Model Rules of Professional Responsibility, Rule 5.4, prohibit non-lawyer ownership of firms and the sharing of fees with a non-lawyer,” Morris Ratner, an associate dean and professor at the UC College of Law in San Francisco, told Legal Newsline.

But will non-lawyer ownership laws come to the U.S. as they have in the UK?

There would have to be a rather profound change in the cultural mindset of the American legal profession, Mary H. Terzino, an attorney who studies rules about law firm ownership, told Legal Newsline. "Such a change would face some very stiff opposition from lawyer professional associations such as the ABA,” according to her.

Apparently, no such countervailing force to let non-lawyer ownership rules stay intact took place in the UK.

“Eventually, I think we're going to see changes in the U.S.,” Ratner said, “but my gut intuition is that we're a generation or so away from it."

Is there talk in any legal circles of changing non-lawyer ownership rules for the U.S.?

The subject comes up from time to time. Pressure from funders is certainly part of the equation.

“The ABA may be looking at ownership rules for law firms again,” said Terzino, who also consults with the U.S. Chamber Institute of Legal Reform, owner of Legal Newsline.

However, the last time that happened the ABA decided to leave lawyer ownership rules unchanged. 

What circumstances would have to occur for law firm ownership laws to happen stateside?

According to Ratner, market pressure could fuel litigation-funders to launch law firms stateside, despite the U.S. profession’s opposition.

“Better capitalized foreign law firms will compete for global business,” he said.

In that scenario, heightened competition to provide legal services could lower prices. The potential of reduced prices for lawyer services could benefit customers.

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New York State Bar Association