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Arizona Allows Nonlawyers Ownership of Law Firms
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Arizona has become the first state to officially allow nonlawyers to co-own or invest in law firms, a concept that has been long scrutinized and rejected in the United States.

The Arizona Supreme Court unanimously voted last week to make extensive changes and approve regulatory reforms that could transform the public’s access to legal services, allow for more innovation, and make legal services more affordable while still protecting the public.

“The Court’s goal is to improve access to justice and to encourage innovation in the delivery of legal services. The work of the task force adopted by the Court will make it possible for more people to access affordable legal services and for more individuals and families to get legal advice and help.” Arizona Supreme Court Chief Justice Robert Brutinel said in a statement. These new rules will promote business innovation in providing legal services at affordable prices. I thank and commend the Task Force and its chair, Vice Chief Justice Timmer for their groundbreaking work.”

  
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The state’s highest court scrapped the ethics Rule 5.4, which bars nonlawyers from both fee sharing and from having an economic interest in a law firm. The Court also approved a new licensure process that will allow nonlawyers, called “Legal Paraprofessionals” (LPs), to provide limited legal services to the public, including being able to go into court with their clients. 

“The legal profession cannot continue to pretend that lawyers operate in a vacuum, surrounded and aided only by other lawyers or that lawyers practice law in a hierarchy in which only lawyers should be owners,” the report said. “Nonlawyers are instrumental in helping lawyers deliver legal services, and they bring valuable skills to the table.”

Those who want to become LPs, “would have to meet education and experience requirements, pass a professional abilities examination, and pass a character and fitness process,” the Arizona Supreme Court said in a statement. LPs will be able to practice in family law, administrative law, debt collection, and landlord-tenant disputes, with limited jurisdiction in criminal and civil matters.

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“A sentiment driving the task force responsible for proposing the rule changes was that lawyers have an ethical obligation to assure that legal services are available to the public and that if the rules stand in the way of making those services available, the rules should change,” the court’s statement said. “At the same time, the changes must maintain the professional independence of lawyers and protect the public from unethical and unprofessional conduct.”

The regulatory reforms effective Jan. 1, “will make it possible for more people to access affordable legal services and for more individuals and families to get legal advice and help,” said Arizona Supreme Court Chief Justice Robert Brutinel in a statement.



Earlier this month, Utah made similar changes when the state Supreme Court unanimously approved a regulatory “sandbox” for nontraditional legal services entities to test new business models, including entities with nonlawyer investment or ownership.



 

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