Non-Lawyer Ownership Writing
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Arizona recently made history when it became the first state to allow non-lawyers to obtain partial ownership of law firms, previously prohibited by Ethics Rule 5.4. Effective January 1, 2021, these new measures will allow lawyers to partner with non-lawyers, opening up a wide range of opportunities for the public, investors and attorneys.
Referred to as an Alternative Business Structure (ABS), these new kinds of entities are the first in recent U.S. history to grant non-lawyers the right to invest in a business that supplies legal services. The direct result of an unanimous vote in the Supreme Court, these changes aim to make legal services more affordable and available to the general public. Through increased capital and streamlined operations that will result from non-lawyer firm ownership, legal entities will be able to lower their costs and advance technological innovation more rapidly. This will make it possible for critical legal services to be more widely accessible to the American public in the near future.
Although there are reasonable concerns that non-lawyer firm ownerships could result in less business for small firms, we believe attorneys will continue to be successful by adapting and transforming their practices to differentiate themselves through originality, authenticity, and local referrals. We feel these new measures will give businesses the opportunity to refine their strategies, establish trust and build long standing relationships. Non-lawyer law firm investment opportunities are already commonplace around other parts of the world such as Australia and the United Kingdom.
Is it possible for an Alternative Business Structure (ABS) to be exclusively owned by non-lawyers?
No, at least one owner must serve as the Compliance Lawyer and be registered as a licensed attorney in the state of Arizona.
What is the application process like for an ABS license?
Individuals interested in an ABS license will need to submit an application and undergo an investigation process. For detailed information about how to apply, please see Code section 7-209(E) and G(1).
What are the necessary disclosure requirements in regards to submitting an ABS application?
All applicants are required to disclose their identities on application forms if they meet the criteria for an “authorized person” stipulated in Code section 7-209. An “authorized person” is a non-lawyer with economic interest of at least 10% or more in the ABS entity, or is a licensed Arizona attorney with any amount of economic interest in the ABS. The application will also request disclosure of other details such as practice areas of the firm.
Who will decide whether an application is accepted or rejected?
An ABS Committee created by the Supreme Court will suggest approval or rejection of the application, and then the Supreme Court will choose to either accept or deny the license.
For more information, please visit the official website of the Arizona Judicial Branch.
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