Articles Posted in Rules That Protect Lawyers from Competition

The Point

My previous article reported that an internationally prominent alternative legal services provider (ALSP), Axiom, had launched a law firm as its wholly-owned subsidiary in Arizona — with operations and offerings of both ALSP and law firm fully integrated into each other. Last year, Elevate Services, another internationally prominent ALSP, launched its own, wholly-owned and fully-integrated law practice in Arizona under the same regulatory reform that Axiom enjoys.

(An ALSP is typically owned by a legal entity such as a corporation, and offers automated business processes and technologies that do routine and recurring legal tasks more efficiently, more cheaply and more accurately than law firm attorneys or in-house counsel typically can.)

In considering the implications for businesses located outside of Arizona (and outside of Utah, which has enacted similar reforms relating to law firm ownership), I saw two possibilities.

First, might the other 48 states adopt reforms like Arizona’s and Utah’s that allow a business entity like a corporation operating an ALSP to own a law firm? Very unlikely any time soon, I suggested. In the U.S., our legal profession’s opposition is too united — and too vehement.

Second, might integrated ALSP / law firm services authorized by Arizona or Utah law be offered outside of those states under the existing regulatory framework that has long enabled, say, a New York-headquartered law firm to service clients throughout the U.S.? This looks a lot more feasible. Continue reading

The Point

In every U.S. jurisdiction except Arizona and Utah: “A lawyer or law firm shall not share legal fees with a nonlawyer ….” (With exceptions set forth here that don’t apply to this discussion).

In plain terms, American Bar Association Rule 5.4, and its counterparts in the legal “ethics” canons of the other 48 states, says that lawyers — and no individual or entity other than lawyers — may have any ownership interest in a law practice.

Not a Big Four accounting firm that fields its own teams of attorneys. (In contrast with England & Wales, or Singapore, or Spain, or Canada).

Not an alternative legal services provider (ALSP) that “segments” services ranging from the most sophisticated one-on-one legal advice to automated business processes that do routine and recurring legal tasks more efficiently, more cheaply and more accurately than law firm attorneys or in-house counsel. (Again, in contrast with England & Wales ….) Continue reading