First Alternative Business Structures approved in USA

The first two fully licenced alternative business structures (ABSs) have been approved by the state of Arizona. On the 17th March 2021, two businesses, Trajan Estate LLC and Gilbert and Payne Huebsch PLC received their ABS license after the State Supreme Court approved their bids. Trajan Estate is a legal service provider focused on estate planning while Payne Huebsch provides transactional legal services paired with tax and accounting advice.

Last year Arizona became the first state to fully allow alternative business structures and non-lawyer ownership in law firms,  revoking state professional conduct rule 5.4 which barred nonlawyers from fee-sharing and holding an interest in law firms. The change came into effect in January 2021, allowing business to begin the approval process.

The licenses follow the approval of the first non-lawyer owned law firm in Utah, as part of the state’s two-year regulatory sandbox. Law on Call opened at the beginning of March 2021, allowing consumers unlimited over the phone access to lawyers, in a business entirely owned by non-lawyers. The business will however be subject to license reviews, as per the conditions of the sandbox.

Read more about the Arizona licences here, or the Utah licences here.

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Arizona to Allow Non-Lawyer Ownership

The Arizona Supreme Court has approved rule changes allowing for non-lawyer ownership of law firms in the state. The rule change comes in the wake of the two-year sandbox announced in Utah, however, the Arizona courts went one step further, opting to make the changes permanent.

The recommendations for the rule change were first proposed by the court’s Task Force on the Delivery of Legal Services, have focused around improving public access to affordable legal services and promoting legal innovation. The changes in state’s rules are set to become effective as of January 1st 2021. The changes include the removal of ER 5.4 the rule barring nonlawyers from fee sharing and barring nonlawyers from having an economic interest in a law firm. As well as this the changes also allowed for the licensing of legal paraprofessionals, as well as changes to lawyer advertising rules.

Arizona Supreme Court Chief Justice Robert Brutinel said of the development, “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. 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.

Read the full report from the Arizona Supreme Court. 

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Arizona set to become first state to allow ABSs

Arizona has become the first state in the US to formally file for the introduction of Alternative Business Structures (ABSs) in the US. The Arizona task force on the delivery of legal services has filed a petition with the Arizona Supreme Court which suggests eliminating rules which prevent fee sharing with non-lawyers and entering into a partnership with non-lawyers.

The petition is quoted as saying “Eliminating the rule would mean, for example, that a professional nonlawyer administrator in a law firm could have an ownership interest or that a Fortune 500 company could be a passive investor. It also could mean that a law firm could attract nonlawyer talent… by providing equity in the firm”.

The petition has also suggested introducing limited license legal practitioners to the state, filling a gap for lower-cost legal services and helping to bridge the justice gap in the state.

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An Australian Study on Lawyer Vulnerability & Legal Misconduct

Vulnerability to Legal Misconduct: Qualitative Study of Regulatory Decisions Involving Problem Lawyers and Their Clients

An emerging body of scholarship discusses ‘vulnerability’ as an antecedent of legal misconduct. One conceptualization of vulnerability indicates that an individual has greater susceptibility to risk of harm, and safeguards may protect against that risk of harm. This empirical study adds to the normative research with a qualitative analysis of 72 lawyers with multiple complaints and at least one hearing, paid financial misconduct claim, or striking from the roll (“problem lawyers”) in Victoria, Australia, between 2005 and 2015 through 311 regulatory decisions. We found that problem lawyers were disproportionately likely to be male, over age 45, and work in a sole or small practice. A quarter of these lawyers suffered from health impairments and among the clients harmed, half had cognitive impairments, were older age, or non-native English speakers. These findings underscore the need to better understand vulnerabilities to promote lawyer well-being, protect exposed clients, and reduce lapses in professionalism.

Access Full Report Here

Authors: 

  • Tara Sklar, University of Arizona – James E. Rogers College of Law
  • Jennifer Schulz Moore, University of New South Wales (UNSW) – Faculty of Law
  • Yamna Taouk, Melbourne School of Population and Global Health
  • Marie M Bismark, University of Melbourne
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Is Diversion a Viable Alternative to Traditional Discipline?: An Analysis of the First Ten Years in Arizona

This paper, by Diane Ellis, was first published in 2002 in The Professional Lawyer by the American Bar Association.

It was presented, with permission, at the 2016 International Conference of Legal Regulators.

Session title: Diversion dos and don’ts

Arizona diversion

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