When both I and my friend Larry Ribstein are quoted in the same Wall Street Journal article, it’s too rich to resist. So, hoping this constitutes "fair use," herewith the piece from today’s paper, pg. B2:
Losing the ‘LLP’?
With the trends of law-firm consolidation and globalization, and at a time when the private-equity partnership Blackstone Group has made headlines with its IPO filing, some in the legal industry are wondering if and when we’ll see the first publicly traded law firm.
“I would be surprised if in my lifetime we didn’t see a law firm go public,” says Leslie Corwin of Greenberg Traurig LLP, who advises law firms on business issues. “And I hope I’m around to do the deal.”
Why hasn’t it already happened? Ethics rules prohibit firms from selling equity shares in law firms to nonlawyers. Theoretically, say legal-ethics types, a law firm could have a potential conflict between its duty of loyalty to its clients and its duty of loyalty to its shareholders. Another ethical conundrum: Lawyers vigilantly protect the attorney-client privilege, and some fear that as a public company, a law firm could risk divulging client confidences.
Still, Goldman Sachs Group Inc. is a partnership-turned-public-company that is very much in the business of servicing clients and protecting their confidences, and has managed the move well. Larry Ribstein, a professor at the University of Illinois College of Law, says a publicly traded law firm could be set up so that the lawyer-owners control the firm and the public shareholders have little or no control.
Adds Bruce MacEwen, a law-firm consultant and blogger, “The restriction against law firms going public reflects a medieval-guild mentality.” He adds, “Today’s law firms, which are sizable businesses by any standard, deserve access to the capital markets.”
And thanks to Peter Lattman, the Journal‘s law beat reporter.
