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Self-Inf licted Barriers to Access to Justice:
The Rules on Advertising and Investment
By Bob Glaves, CBF Executive Director
24
JULY/AUGUST 2017
Chicago Bar Foundation
Report
M
any thousands of Illinoisans who
need or would benefit from legal
assistance and can afford to pay
something aren’t getting it. They may not
recognize their problem as a legal one, or if
they do, they too often don’t know where
to go for quality legal help or whether
it would be a cost-effective solution for
them. At the same time, we have more
lawyers than ever before, most of whom
have capacity and interest in helping more
paying clients. In economics, this is called
a market failure, and our profession is
compounding this failure by unnecessar-
ily restraining market forces from fixing
the problem.
Our profession aggravates this market
failure in access to justice in two funda-
mental ways: our overly restrictive rules on
marketing and advertising, and our rules
limiting ownership and investment in law
firms to only lawyers.
In the rest of the business world, an
untapped market like this is met with
sophisticated marketing and advertising
campaigns to educate and attract con-
sumers, and new business models that are
fueled by a variety of capital investment
options. Lawyers, however, face a far more
difficult challenge in doing this under the
current Rules of Professional Conduct.
And it is people in need of legal help who
ultimately suffer.
The Shortsighted Rules Limiting Ownership
While more flexible investment and owner-
ship options for law firms are not a game
changer for every access to justice chal-
lenge, they have the potential to make a big
impact in the consumer and small business
markets. These potential clients—about
1.9 million in Cook County alone—have
too much income to qualify for free legal
help but are in the moderate-income
market. This is the heart of our market
failure. With notable exceptions such as
personal injury cases, access to affordable
legal help increasingly is out of reach for
this broad segment of our community.
A number of lawyers and firms are
developing innovative models to make
legal help more affordable and accessible
through the CBF’s Justice Entrepreneurs
Project and beyond. However, these
lawyers and firms face huge challenges in
accessing the capital that would be neces-
sary for them to scale up their successful
efforts due to the unyielding restrictions
on outside investment.
The Rule Restricting Outside Ownership and
Investment
Illinois and most of the country has long
prohibited lawyers from sharing profits
or attracting investments from anyone
except other lawyers in the same law firm.
As a result, not only are lawyers and firms
prohibited from attracting outside inves-
tors, they also are prohibited from sharing
profits or equity with other professionals
they work with who do not happen to be
lawyers.
Rule 5.4 of Illinois Rules of Professional
Conduct contains the limitation typical of
others around the country, and the com-
ments to the Rule reflect its underlying
purpose: “These limitations are to protect
the lawyer’s professional independence of
judgment.”
But is this kind of blunt prohibition
really necessary to protect lawyers and their
clients?
Isn’t there a way to underscore those
protections while still giving lawyers and
firms access to the capital investment
options other professions and businesses
have access to and utilize?
As a matter of fact, there is.
Other Jurisdictions Already Are Proving This
Can Be Done
Australia and the United Kingdom are
among many other jurisdictions that for
years have permitted what are commonly
referred to as “alternative business struc-
tures” for law firms. These rules allow for
outside investment and/or other profes-
sionals to be able to share in law firm
ownership and profits.
Recognizing the potential for innova-
tion here in the U.S. legal market, last year
the ABA Commission on the Future of