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Ethics Rule 5.4 in Arizona

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 a 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 longstanding relationships. Non-lawyer law firm investment opportunities are already commonplace around other parts of the world such as Australia and the United Kingdom.

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