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“Arizona becomes the First State to Eliminate Ban on Non-lawyer Ownership of Law Firms”
Team SoOLEGAL 3 Sep 2020

“Arizona becomes the First State to Eliminate Ban on Non-lawyer Ownership of Law Firms”

Last week's two-page order from the Arizona Supreme Court reads as simple as any regular court order, but its effect is likely to change the practise of law and the access to justice. The order of the court released in August 27,2020 removes the ban on non-lawyers having economic interests in law firms and the ban on the sharing of legal fees between non-lawyers and lawyers. With this, Arizona becomes the first state to eliminate Rule 5.4 of the Rules of Professional Conduct.

This Order also allows the licensing of non-lawyers as "legal paraprofessionals" with the authority to offer restricted legal or judicial services to the public, including the representation of clients in court. Although the order, which will come into force from 1 January 2021, gave very less indication towards its importance, the court was less guarded in its statement announcing the decision, describing its move as a far-reaching reform that could transform public access to legal services.

Chief Justice, Robert Brutinel said that the main objective of the court will be to improve the approach of justice and also to encourage new inventions in distributing of legal services. Court should adopt a task force for the people to access more legal services and also to gain more legal knowledge and advice. The task force to which he referred is the task force on the provision of legal services, which issued its report last October calling for fundamental changes to the regulation of legal services. With regard to the removal of a prohibition banning lawyers and non-lawyers from co-owning companies engaged in the practise of law, the Task Force reported that the prohibition was not based on public safety but totally on protection of economy.

According to the report, the law profession cannot continue to pretend that lawyers operate in a vacuum, are surrounded and supported only by other lawyers, or that lawyers practise law in a hierarchy in which only lawyers should be owners. Non-lawyers are the people who can help the lawyers in giving more appropriate legal services and also can bring innovative skills.

Following Utah’s changes -

The order of the Arizona Supreme Court comes just two weeks after the approval by the Utah Supreme Court of sweeping reforms to the control of legal services in that state. Utah's move established a two-year test of a regulatory sandbox — a regulatory body under the jurisdiction of the Supreme Court, to be named the Office of Legal Services Innovation, which is responsible for licencing and regulating new types of legal service providers. The Utah Court argued that these changes would allow individuals and entities to explore creative ways of enabling lawyers and non-lawyers to practise law in a secure manner and to reduce restrictions on how lawyers market and promote their services. In offering a forum for non-traditional legal service providers, the Utah pilot requires non-lawyer investment or ownership organisations. But it does not eliminate the ban on non-lawyer ownership outside the sandbox.

Arizona’s further orders –

The Arizona order goes further, completely eliminating the professional conduct rule 5.4, which prohibits non-lawyers from sharing legal fees or having an economic interest in a law firm. It introduces a separate class of approved professionals, "alternative business models," which would have to be certified by the court.

With regard to the proposed licencing scheme for legal paraprofessionals (referred to by the task force as a restricted licence for legal technicians), the court said that they will be a legal structure comparable to a nurse practitioner in the medical sector.

The conception that the task force responsible for recommending amendments to the regulation was that lawyers had an ethical duty to guarantee that legal services are accessible to the public and that if the laws get in the way of making such services available, the laws could change.

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