Two States Vote to Allow Nonlawyer Ownership or Investment in Law Firms

nonlawyerThe supreme courts of Arizona and Utah have approved far-reaching modifications to court rules aimed at addressing the access to justice gap. On August 27, the Arizona Supreme Court announced that it will eliminate the rule prohibiting fee sharing and prohibiting nonlawyers from having economic interests in law firms.

The announcement follows that of the Utah Supreme Court, which voted on August 13 to establish a regulatory sandbox that will allow lawyers and non-traditional legal providers and services to explore creative ways to practice law and promote their services, including entities with nonlawyer investment or ownership.

Over the past couple of years, state task forces and bar associations across the U.S. have been exploring how the regulation of legal services could be impeding access to justice for Americans, who are increasingly forgoing legal representation or representing themselves in court. The COVID-19 pandemic and nationwide uprisings against injustice have further highlighted weaknesses in U.S. legal systems. As courts shift through a backlog of cases online, the public has cited concerns about the fairness and accessibility of the current civil process, increasing the pressure to make the legal system more affordable and responsive to changing needs.

Arizona

In Arizona, the Supreme Court unanimously approved modifications to Court rules regulating the practice of law, allowing for two significant changes. The first is a licensure process that will allow nonlawyers, called legal paraprofessionals (LPs), to provide limited legal services to the public, including going to court with their clients. LPs will be able to practice in administrative law, family law, debt collection, and landlord-tenant disputes, with limited jurisdiction in civil and criminal matters, according to the ABA Journal.

Washington and Utah approved similar programs to allow nonlawyer practitioners to provide legal advice in limited circumstances. However, the Washington Supreme Court voted to end its program in June, citing the “costs of sustaining the program and the small number of interested individuals.”

The second change eliminates the rule prohibiting fee sharing and prohibiting nonlawyers from having economic interests in law firms. The Court-appointed Task Force on the Delivery of Legal Services argued that eliminating the prohibition on nonlawyer investment in law firms would pave the way for capital supporting the invention of new technology or the adoption of existing technology in the legal industry, the ABA Journal said.

In addition, permitting alternative business structures would strengthen access to justice by promoting free-market competition and allowing legal service providers to form multidisciplinary practices with other professions, according to a June filing highlighted by the ABA Journal.

The changes, which were based on recommendations from the task force, will go into effect on January 1, 2021. The application processes for these new regulatory programs are in development.

Utah

In another unanimous vote, the Utah Supreme Court authorized a two-year pilot program that will establish a regulatory sandbox for lawyers and non-traditional legal providers and services to test new ways of delivering and marketing legal services in a controlled environment. This includes entities with nonlawyer investment or ownership.

The proposal establishes an Office of Legal Services Innovation within the Supreme Court that will assess and recommend sandbox applicants to the Court, as well as oversee those applicants that are authorized by the Court to offer legal services. At the conclusion of the pilot, the Supreme Court will evaluate whether the program should continue.

The pilot program is the result of two years of research from a Court-appointed task force. The task force developed a model for new and creative legal business models, services, and providers—under careful oversight—to offer safe and innovative legal services to Utahns.

Illinois

Illinois is also advancing initiatives to address the growing disconnect between the legal profession and public demand. After nine months of work, the Chicago Bar Association/Chicago Bar Foundation Task Force on the Sustainable Practice of Law & Innovation released a report and recommendations for modernizing rules regulating the delivery of legal services. The recommendations fall into three categories:

  • Helping lawyers connect to potential clients and offer affordable and accessible solutions.
  • Helping people recognize they have a legal problem and identify where they can turn for affordable and reliable legal help.
  • Spurring innovation in the legal profession and the delivery of its services.

In each category, the task force suggested changes to the existing Rules of Professional Conduct and/or the adoption of new regulatory models to help achieve the goal.

A 30-day public comment period ended on August 21, 2020. The task force is in the process of reviewing the comments. The next steps include approval by the Chicago Bar Association and the Chicago Bar Foundation. They expect to make formal recommendations on modernizing the rules to the Illinois Supreme Court this fall.

Staying up to date on issues impacting the legal profession is vital to your success. Subscribe here to get the Commission’s weekly news delivered to your inbox.

Laura Bagby
As Communications Director, Laura develops and executes strategy to elevate the Commission among attorneys and judges in Illinois. Laura leverages communications channels to educate and engage with the legal community in support of the Commission’s mission of increasing civility and professionalism to enable the administration of justice. When she’s not in the office, you’ll find Laura taking in a show at one of Chicago’s top-notch theatres, planning her next international trip or hanging out in Lincoln Park with her one-eyed Chihuahua, Manny.
Laura Bagby

Share this:

Laura Bagby
As Communications Director, Laura develops and executes strategy to elevate the Commission among attorneys and judges in Illinois. Laura leverages communications channels to educate and engage with the legal community in support of the Commission’s mission of increasing civility and professionalism to enable the administration of justice. When she’s not in the office, you’ll find Laura taking in a show at one of Chicago’s top-notch theatres, planning her next international trip or hanging out in Lincoln Park with her one-eyed Chihuahua, Manny.
Laura Bagby

Leave a Reply

Your email address will not be published. Required fields are marked *