LEGAL TRENDS
New Laws Allowing Non-Lawyer Ownership of Law Firms
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The Houston Lawyer
By Ruby L. Powers
he concept of non-lawyer ownership of law firms is foreign to most in the United States, but recent court rulings in Utah and Arizona have us rethinking this standard, partly in response to calls for criminal justice reforms, innovation, and increased access to justice concerns. Arizona was the first state to allow nonlawyers to own law firms. They will allow legal paraprofessionals (LPs) to provide limited legal services to the public, including going to court with their clients. 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.1 Utah followed soon after with changes that allow non-lawyers to own or invest in law firms with a two-year pilot program that will establish a regulatory sandbox for lawyers and non-traditional legal providers and services to test new ways of delivering and marketing legal services in a controlled environment.2 This includes entities with non-lawyer investment or ownership. The Utah court wrote “what has become clear during this time is that real change in Utahns’ access to legal services requires recognition that we will never volunteer ourselves across the access-to-justice divide and that what is needed is market-based, far-reaching reform focused on opening up the legal market to new providers, business models, and service options.”3 In other jurisdictions, Washington state “sunsetted” their Limited License Legal Technicians program that permitted non-lawyers to perform some legal
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tasks within family law. The Washington Supreme Court cited costs of sustaining the program and the small number of interested individuals for reasons to end the program.4 In July 2019, the California State Bar began considering allowing nonlawyers, as well as artificial intelligence (AI) programs, to legally “practice” law. Those against the idea argued it would impact the small and solo law firms who often serve the lower- to middle-class income markets5 defeating the access to justice argument. If this change were to take place in more states, there could be a tipping point for many areas of law. For now, this will be an experiment in Utah and Arizona and potentially for Federal law practices like tax, patent, and immigration, depending on the details of the states that experiment in this arena. From Lawline v. American Bar Association6 to Florida Bar v. Glueck 7 and Reus v. Tilp 8, along with countless other decisions, the court has frowned upon nonlawyers forming a partnership with lawyers and sharing fees with non-lawyers. In each of these cases, parties have either shared the profits, jointly provided legal along with non-legal services to clients, or directly involved nonlawyers as alleged owners and operators of law firms. If we look beyond the United States, common law jurisdictions such as England and Australia have already taken measures to lift the prohibition on nonlawyer ownership.9 While innovation is invited in the hopes of modernizing and bringing the practice of law into the 21st century, some change may be too much for lawyers and law firm owners as well as impact the quality of service and disrupt the market. Although to a lawyer this paradigm shift may take time to fathom, there are several benefits for non-lawyer ownership.10 One benefit includes a more diverse approach to thoughts and ideas of
providing legal services from operations, marketing, and service delivery. It could bring out-of-the box thinking to a field in need of ingenuity. Second, this gamechanger could allow a more unique pool of employees and team members and incentivize those traditionally not in the legal field to enter with their expertise and capital. More importantly, the goal for those who tout this change is the increased access to justice. According to the World Justice Project, 77% of legal problems don’t receive legal help.11 At the same time, record-breaking unemployment rates, economic slowdowns, and reduced court services have only increased the barriers to legal services.12 Advocates for this change argue that the gap between those who are served and those who are not justifies trying to solve this matter in a new way. As for the drawbacks of non-lawyer ownership, lawyers can see many initial problems, hence all the prior litigation and why this hasn’t changed on a widespread scale in the United States. A nonlawyer would have a steep learning curve in understanding the legal field they are in. The concern for professional independence for example, if non lawyers make legal decisions in running the law or are perceived of unauthorized practice of law, will be of great concern to the legal community and confusing to the nonlegal community. In conclusion, what is the right answer? Amidst advancements in technology and societal shifts, it is hard to ignore the legal market’s climate is changing. The debate over the legal industry becoming available to non-lawyers has long been a point of contention. Ultimately, time will tell with this experiment. Arizona and Utah are pioneers in the pursuit of justice but also could be seen as disruptors in the legal field. It will take a few years to see the results of this experiment. When other states take notice of the results, they could ultimately follow and create a
