lawyer advice
Why are law firms with non-lawyer owners/directors uncommon?
<p>Most law firms exist as partnerships of their main lawyers who are the owners/directors.</p>

<p>Why isn't the model popular where a non-lawyer but talented leader/organizer/visionary just puppets lawyers on the payroll who represent clients of the firm? Are lawyers too smart and/or noble to be puppeted that way?</p>

<p>In some jurisdictions it's against the code of ethics.</p>

<p>For example, in the <a href="/questions/tagged/united-states" class="post-tag" title="show questions tagged &#39;united-states&#39;" rel="tag">united-states</a>, <a href="https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_5_4_professional_independence_of_a_lawyer/" rel="noreferrer">Model Rule of Professional Conduct 5.4(b)</a> says:</p>

<blockquote>
  <p>A lawyer shall not form a partnership with a nonlawyer if any of the activities of the partnership consist of the practice of law.</p>
</blockquote>

<p>The idea has to do with independence: Lawyers are officers of the court and—as members of a regulated profession—can be bound to professional codes. Talented leader/organizer/visionaries aren't bound in any such way. The <a href="https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_5_4_professional_independence_of_a_lawyer/comment_on_rule_5_4/" rel="noreferrer">comment</a> to the Rule explains, "Where someone other than the client pays the lawyer's fee or salary, or recommends employment of the lawyer, that arrangement does not modify the lawyer's obligation to the client." This can create a conflict, and states resolve it by regulating the partnership's composition.</p>

<p>Other jurisdictions go even further and it’s prohibited in law.</p>

<p>Lawyers have what are functionally continuations of Medieval Guilds(they may be called State Bars, Legal Associations, etc, but that's just window dressing) that set rules(either as legally enforceable "ethics" violations or by successfully lobbying for these to be made into laws) that prevent the dilution of their members' power and collective financial status by doing what you describe: e.g. a rich entrepreneur hiring a bunch of heavily indebted (through crushing law-school student debt) young lawyers, desperate for any work and experience, to toil away and massively undercut the Guild's rates.</p>

<p>A law firm that <strong>has</strong> to be owned by rich old lawyers, will <strong>not</strong> rock the boat and declare war on the rest of the Guild by undermining the system that made them rich, old lawyers in the first place. It's a self-perpetuating cycle.</p>

<p>The restrictions aren't any different from what a medieval Blacksmiths or Shoemakers Guild had, except that the former were open about the purpose of the rules. Tellingly, they haven't survived, but law guilds have, because lawyers are proverbially smart and connected and can come up with fancy excuses like the need for "independence".</p>

<p>The primary work product of a law firm is legal work, which the lawyers do directly.  This is not a high-capitalization job: it's possible to be a Starbucks lawyer (or Lincoln lawyer lol) and not even have an office.  It has this in common with the professional trades, like plumbers, electricians, etc. </p>

<p>Contrast that with a baker, who needs a workplace and significant capital infrastructure for mixers, ovens, cooling racks, trucks, packaging, inventory, etc. That's where the capitalist enters the picture.  </p>

<p>If someone gave a law firm a cash infusion of $500,000, there isn't really a way to invest that into the business to get a payout. They can't buy better case files.  There's no "litigation machine" that can litigate faster than ten lawyers.   That's just not how that business works; it doesn't lend itself to capitalization.  </p>

<p>It's true that many law firms have significant capitalizations, but they didn't get there overnight.  They typically raise themselves on their bootstraps.  Even then, the prestigious offices tend to be leased.  </p>
