With private equity firms and hedge funds going public left and right, can law firms be far behind? Well, yes, actually. Lawyers must adhere to a Code of Professional Conduct that prohibits sharing fees with nonlawyers and practicing law as part of entities in which nonlawyers hold ownership interests.
But suppose one could devise some sort of derivative instrument that would reflect a law firm's value without conferring an ownership interest. Could such a security be sold to nonlawyers, thus allowing a law firm to "go public"? Three experts in law and economics have been debating that subject and have released a record of their correspondence. Larry Ribstein has a summary on his blog. (For the complete paper, click here.) Ribstein is one of the participants; the others are Bruce MacEwen, the editor of Adam Smith, Esq., and Georgetown law professor Milton Regan.
Regardless of whether a publicly held law firm makes ethical or economic sense, it would be fun to read Gretchen Morgenson's complaints about the "undemocratic" governance structure of, say, Acme Law Firm Inc. And it would be even more fun to read Ribstein's apoplectic response. —Jeffrey Kanige
Continue reading below
