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.
A California State Bar working group established to study access to justice innovations held its first public meeting on the 14th January 2021. The State Bar’s Closing the Justice Gap Working Group, created by the Board of Trustees to carry on with important recommendations from the State Bar’s Task Force on Access Through Innovation of Legal Services (ATILS), has been established with the objective of:
- Investigating the development of a regulatory sandbox to foster experimentation with innovative systems for delivery of legal services
- Exploring amendments to the Rules of Professional Conduct regarding the ability of lawyers to share fees with nonlawyers
- Examining the addition of rule 5.7 to the Rules of Professional Conduct addressing the delivery of nonlegal services by lawyers and businesses owned or affiliated with lawyers
- Considering amendments to the Certified Lawyer Referral Service statutes and Rules of the State Bar to enhance efforts to expand access to legal services.
The task force chair Justice Alison M. Tucher, Associate Justice of the California Court of Appeal, First Appellate District, Division 4, in San Francisco has said “The immense challenges of the past year have only heightened the needs that this group’s work is intended to address. Fortunately, meeting virtually enables us to bring together a truly remarkable working group, all of whom are volunteering their expertise to help California move forward. We are honored and excited to get started.”
The working group is made up of 20 state, national, and international experts an is expected to submit recommendations to the Board of Trustees no later than September 2022. Each recommendation is expected to balance the dual goals of public protection and increased access to justice.
Read more about the meeting here.
The Board of Trustees of the State Bar of California took a 9-2 decision on the 14th May 2020 to form a working group to look into forming a regulatory sandbox in which innovative legal service providers would be subject to fewer regulations. This could include limiting unauthorised practice of law rules, as well as removing limits on fee sharing and partnership between lawyers and non-lawyers.
The decision is a major step forward in a potential move towards innovative business structures in California, following a vote to delay the decision by the Board in March, with board members saying they needed more time to consider the proposals.
Following the board meeting, which was held over Zoom, Chairman Alan Steinbrecher (who as Chairman did not vote) said: “This is a significant step and I think it will lead to an exciting future,”.
For more information see:
The regulatory framework relating to the legal professions in Québec reached a turning point in the 2000s, following the adoption of the Règlement sur l’exercice de la profession d’avocat en société et en multidisciplinarité. More than a decade later, this article examines the negotiation surrounding the drafting of the Règlement, and the various arguments put forward by the Barreau du Québec and other professional corporations to justify its adoption. Data from the registre des entreprises are then used to examine the extent to which Quebec law firms have taken advantage of the diverse legal options at their disposal to organize their activities.
Paquin, Julie, Practising As a Lawyer in a Partnership and Multidisciplinary Practice in Québec: Progress and Prospects (L’exercice de la profession d’avocat en société et en multidisciplinarité au Québec : bilan et perspectives) (september 1, 2017). Les Cahiers de droit, Vol. 58 (3), 2017, 383-607 .
Available from the SSRN site.