Corporate Structure Is More Then Liability Protection

Business is for the enrichment of the owners. Philanthropy is for the enrichment of others. They are as different as night is to day but they are compatible and do co-exist just as night and day in our 24hr experience. The corporate structure has proven to be excellent for the success at both objectives. If your vision for your law practice lists the enrichment of others as the number one priority and the enrichment of yourself second your decision making process will be markedly different then another who’s vision is self enrichment first and enrichment of others second. Either way both are necessary components for the success of those visions. Even the best run, most respected philanthropies find it necessary to account for how they spend the money they are given in order to be given more to do their work. Similarly, businesses for self enrichment are accountable to market forces to earn income through the patronage of happy customers.

Accountability is everywhere no matter what the size, shape or form of your endeavor. Professional legal services are vital to the fabric of our society. It would be my hope that each and every organization delivering such vital necessities would, for very practical reason, commingle business and philanthropy. If you review this blog site for even a moment you will see that I strongly believe two things. First, law firms should be a safety net for those engaging in the practice of law. Secondly, the “ownership imperative” permeates the partnership structure wasting the rare resources of our legal community leading to some of the major dissatisfactions for both practitioner and consumer.

When I speak of “the corporate structure” I don’t focus on the legal implication of corporate protection. Those already exist in LLC (Limited Liability Corporation) which law partnerships avail themselves. I support and encourage those protections for law firms as I support them for “S Corps”, “C Corps”, etc. as a matter of public policy. No matter what the formation of a profit or not for profit venture they should always seek to secure these protections. So you see, it is not the formation platform that matters to my proposition that partnerships are bad, rather it is the internal operational “rules” by which partnerships conduct their business and pursue their vision.

“A rose by any other name is just as sweet” or to me a partnership by any other name is just as flawed. I need not remind anyone that the ethical codes of conduct clearly sum up that attorneys must only engage in the “business of law” with other attorneys. It is up to each their own conscious whether there can be value in changing the internal motivations and operational rules of their organization to manifest a new effect on the consumer, future practitioners and the fabric of our society. No matter if for profit or non-profit or as I hope the commingled of both visions, lay advice is only advice till you actively begin to introduce the possibilities.

Some of the possible effects of internally adopting a “corporate reality” to your organization:

• Introduction of “valued” non-partner tracks
• Introduction of “valued” part time or project based positions
• Introduction of flat fee billing
• Introduction of employee ownership (aka: Associate ownership, class B stock)
• Introduction of “micro-practice” opportunities within the organization
• Introduction of “transparent” economics

“A rose by any other name is just as sweet” or to me a corporation by any other name is just as sweet. I understand it is too radical an idea to eliminate “partnerships” from the practice of law today but try to continue to adopt the manifest good that the structure offers not just the liability protection it affords.