Arizona approves nonlawyer ownership, nonlawyer licensees in access-to-justice reforms
Arizona has become the second state in recent weeks to approve opening its doors to nonlawyer ownership or investment in law firms, concepts that previously have faced strong resistance in the United States.
The Arizona Supreme Court announced Thursday its unanimous vote to eliminate its ethics rule barring nonlawyers from having an economic interest in a law firm or participating in fee sharing, one of two major rules changes it adopted this week in hopes of expanding access to justice.
The court also approved a new category of nonlawyer licensee called “Legal Paraprofessionals” who will be able to represent clients in court, joining a couple other states in broadening the pool of permitted legal practitioners.
Both regulatory reforms, which were recommended by Arizona’s Task Force on the Delivery of Legal Services, take effect Jan. 1.
“The court’s goal is to improve access to justice and to encourage innovation in the delivery of legal services,” Arizona Supreme Court Chief Justice Robert Brutinel said in a statement.
Earlier this month, the Utah Supreme Court announced it had approved a series of reforms that included permitting nonlawyer ownership or investment in law firms and allowing legal services providers to try new ways of serving clients during a two-year pilot period that began Aug. 14. In that state, nontraditional legal services entities must seek approval to operate in a regulatory sandbox the Utah Supreme Court has established.
Arizona will not establish a sandbox, but will require proposed alternative business structures to go through what the task force has described as a “rigorous application process.” The nontraditional legal businesses also will have to comply with a code of conduct that mandates they have an internal compliance attorney.
In an amended petition advocating for eliminating the prohibition on nonlawyer investment in law firms, the Arizona task force argued doing so would likely pave the way for capital supporting the invention of new technology or the adoption of existing technology in the legal industry. Permitting alternative business structures also would strengthen access to justice by promoting free market competition and allowing legal service providers to form multidisciplinary practices with other professions, the task force’s June filing said.
“I’m sure there will be models tried that will be less expensive than hiring a lawyer in a traditional way and having them take care of your entire case,” says Dave Byers, a task force member and director of Arizona’s Administrative Office of the Courts. “I’m looking forward to seeing these become a reality.”
Byers says a date for when alternative business structure applicants can begin applying for licensure has not yet been set, but the court system will work as expeditiously as possible to make that happen.
Meanwhile, Arizona’s new Legal Paraprofessionals will be known as LPs and practice as affiliate members of the state bar who are subject to the same ethical rules and discipline process as lawyers. The Arizona Supreme Court said those interested in becoming LPs “would have to meet education and experience requirements, pass a professional abilities examination, and pass a character and fitness process.”
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.
Washington state began allowing nonlawyer practitioners to provide legal advice after its state supreme court voted in 2012 to create the Limited License Legal Technicians initiative, and Utah followed suit in recent years with its Licensed Paralegal Practitioner program. But the Washington Supreme Court voted in June to sunset the LLLT program, citing cost concerns and an apparent lack of applicant interest.
In the Arizona task force’s amended petition to the court seeking a new category of legal practitioner, it said the panel “deliberately did not pattern its paraprofessional proposal on Washington’s LLLT program, in part because of that program’s high experiential learning requirement.”
Byers says Arizona’s LPs will also be able to do more than limited licensees in other states, and he is excited about the initiative’s potential to provide members of the public with more affordable legal help.
“We hope for a lower cost than a lawyer who has had the expense of going all the way through law school and incurring the debt from law school,” he says.
Arizona’s regulatory reform actions have quickly drawn praise from national advocates for such efforts, much as Utah’s recent reforms did.
“The Utah and Arizona models offer a way forward and out of our crisis in access to affordable legal services,” Zachariah DeMeola, director of legal education and the legal profession at the Institute for the Advancement of the American Legal System, wrote in an email. “Both states are showing bold leadership at a time when it is needed the most!”
Denis Fitzgibbons, president of the State Bar of Arizona, also sounded a supportive note about his state’s reforms.
“The state bar stands ready to assist the court in implementing these changes in a manner that protects the public, promotes innovation in the provision of legal services and enhances access to justice in Arizona,” Fitzgibbons said in a statement.