North Carolina - Introduction of Bill to Permit Non-Lawyer Ownership of Law Firms

On March 8, 2011, North Carolina state senator and lawyer, Fletcher Hartsell Jr., introduced a bill in the General Assembly of North Carolina that would permit non-attorney ownership of law firms.

Under the proposed measure, non-lawyers can own up to 49 percent of law firms so long as lawyers continue to control the company. Furthermore, stock certificates must state that "no nonlicensee shareholder shall interfere with the exercise of professional judgment by licensed attorneys in their representation of clients." The certificates must also provide that any conflict between the company's duties to its clients and the court versus shareholders will be resolved by giving the duty to the court first priority, followed by the duty to the client.

The current version of North Carolina Rules of Professional Conduct 5.4(d) does not allow such ownership of law firms by non-lawyers:
"A lawyer shall not practice with or in the form of a professional corporation or association authorized to practice law for a profit, if:
(1) a nonlawyer owns any interest therein, except that a fiduciary representative of the estate of a lawyer may hold the stock or interest of the lawyer for a reasonable time during administration; or
(2) a nonlawyer has the right to direct or control the professional judgment of a lawyer."

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