Saturday, November 24, 2007

kanBARoo Court, 10th Installment. Law Practice or Law-Business

The State Bar's Notice of Disciplinary Charges intertwines without distinguishing two broad issues. The first is my administrative service contract's lawfulness. The second is my ethical responsibility for the fraud the service's staff perpetrated. The State Bar alleges that I am responsible for the fraud because it resulted from the arrangement's impropriety. The State Bar also alleges that I am strictly liable in ethics for the misdeeds of my staff. These Installments have considered strict liability in ethics and will focus on this important issue again, but legally, strict liability in ethics is a nonstarter for the State Bar.

I didn't anticipate staff fraud, yet I anticipated that my manner of contracting would collide with the State Bar. The relevant question: is an administrative services general contract unlawful? If the contract was lawful, charges that the contract facilitated the fraud do not state disciplinary charges, even if the contract increased those consequences' likelihood. I have the right to rely on my partners in contract following the law, provided I have taken reasonable care.

The Notice of Disciplinary Charges alleges that I formed a partnership contract for the practice of law with nonlawyers. Much of the NDC depends on this allegation. The NDC alleges that I contracted with persons defrauded by staff, "through staff." These defrauded persons were unknown to me, and I did not direct, approve or ratify the fraudulent staff practices. The theory that I operated "through staff" requires that staff function as my agent. General partners bear the requisite reciprocal agency relationship, although only in a civil context. I am not liable, even civilly, for the torts of my staff committed outside the scope of employment, but I would be civilly liable for the torts of my general partner undertaken in the name of the partnership.

The State Bar has ignored that my contract does not meet the statutory definition of a partnership. To state the best argument, where the State Bar itself supplied none, they might argue that the contract substantially satisfied the definition of a partnership agreement. A law governing law partnerships might hold only certain aspects of partnership strictly essential to the definition. Applying the criterion depends on distinguishing the primarily relevant partnership factors for the practice of law. The problem can also be approached from the opposite side. What disadvantages go with restricting the practice of law to forbid various quasipartnership agreements? To see the disadvantage of restriction is to see the case for narrowing the concept of partnership applied to law.

Traditional law practice, sanctioned by a broad antipartnership law, fills all three roles with lawyers: legal, administrative, and entrepreneurial. The condition restricts the small law firm more: in solo practice, one attorney must fill all three roles. How much legal talent is wasted where the lawyer lacks the other skills or aptitudes? How many incompetent lawyers do we suffer because, to get entrepreneurial talent, you often must sacrifice legal talent?

The conventional answer to this problem is that the legally talented, nonadministrative, non-entrepreneurial lawyer should become the employee or associate of a lawyer with the full panoply of skills. This is no solution; it means the best legal thinking is not in charge of cases' conduct. To get to the top, attorneys need a mix of the other talents, each in approximately equal proportion, leaving numerous low-legal attorneys in control of offices. The pseudosolution of hiring expertise leaves the actual control and ultimate responsibility for prosecuting and defending cases to some legally unable attorneys. My administrative services contract—delegating administrative and entrepreneurial responsibilities—created a service-delivery super-standard for a client community. The State Bar hates this kind of contract. In this, the State Bar freezes a status quo of 'law as business.'

Tight restriction of lawyers' quasipartnership agreements harms the profession in other ways. When a lawyer who actually controls an office must be a lawyer and a businessman, law becomes as much a business as a profession. The traits that inherently mark the businessman rather than the lawyer proliferate among the profession. Many of the disagreeable characteristics of lawyers owe to the personalities of businessmen. Businessmen want to be bosses — to boss other people around. The administrative side of the law office is the side where you order people about, hire them, and fire them. Often, power-hungry people aspire to this station.

The unity of law/administration/entrepreneurship, ensconced in a broadly interpreted anti-partnership law, inescapably picks a particular template for the lawyer personality. The profession should not foster this alien template, as essence or public appearance.
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