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US has ‘no appetite’ for ABSs, says new ABA president

Legal market is 'years away' from introducing external ownership

30 September 2013

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By Manju Manglani, Editor (@ManjuManglani)

The US is "years away" from allowing non-lawyer ownership of law firms and it "would never be passed" if proposed today, the American Bar Association's new president has said.

Speaking with Managing Partner this afternoon, James Silkenat said that only the conversion of a magic circle firm to an alternative business structure (ABS) would convince the US legal market to consider introducing it.

"By and large, I think it's a losing argument," he said. "But, if contrary to their current predictions a magic circle firm decides that this is useful to what they do and strengthens the firm and what they can do for clients, I think that may change how folks look at the issues in the US," said Silkenat.

"But currently there is no appetite for it at all."

ABSs 'would never be passed'

Silkenat said he would not support the introduction of ABSs in the US at this stage because "it would never be passed".

"The ABA, has no appetite for it - it would lose 90 to 10," he said. "And, since the ABA drafts and prepares the ethical rules that are then adopted by various states, it's not going to come up," he added.

"I think it's worth considering if, after we've seen the experience in the UK and Australia, we find that the protections that are at least described in the laws are effective - and I think US lawyers are not yet convinced of that - and that the ethical considerations don't arise, and that there are good business reasons to do it, we might take another look at it again.

"But it's going to be a number of years before that happens because the negative reaction was so strong this time around," said Silkenat, citing client confidentiality, client service and ethical issues as key concerns.

Creating modern law firms

Instead of looking to obtain external ownership, Silkenat believes US law firms - large and small alike - should focus on client service to become more competitive and modern.

"If you can keep clients happy and your lawyers busy, that's a modern law firm," he said.

"Going back, Abraham Lincoln was a lawyer, maybe he didn't have to worry about timesheets and billable hours, but he had to worry about collecting from clients and serving clients in an effective way, those are still the same issues that exist today.

"We now have a more complicated world in which to live, in part because of technology and in part just because of the pace of things but, in balance, I think they are the same issues."

Silkenat, who grew up in Kansas, is currently a partner in Sullivan & Worcester's New York office.



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