What’s Law Got to Do with It: Arizona and Utah Legal Practice Reform

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    For decades, legal and ethics review organizations and entities have tightly regulated the practice of law. These entities have constructed a list of rules that dictate how a legal professional, specifically an attorney, may practice law. These are called the Professional Responsibility Rules, and they’ve been in place for a very long time. However, two states are shaking things up in the name of innovation and advancement of the legal arena. The Supreme Courts of Arizona and Utah have both re-evaluated certain prohibitions made in the Rules and have chosen to begin allowing certain situations that the general legal community have long considered unethical. All this in the name of better serving citizens in need of legal services. Could these changes be the spark that ignites the wildfire of widespread legal reform?

    Arizona’s Changes

    Arizona has now altered these regulations to:

    • Allow partnership and fee-sharing between lawyers and non-lawyers.
    • Allow non-lawyers to invest in law firms.
    • Create and regulate “alternative business structures” (ABSs) in which lawyers and non-lawyers operate a business together. ABSs are subject to a regulatory board, and lawyers within an ABS are still held accountable to rules of ethics and professional discipline. Regulations also require ABSs to designate a “compliance lawyer” who assures legal ethics are followed.
    • Allow the practice of law by certain previously prohibited legal professionals including “certified legal document preparers” and “legal paraprofessionals.” Non-legal professionals are still prohibited from practicing law.

    Utah’s Changes

    Utah has altered these prohibitions in their own unique way as well. Now, Utah regulations state:

    • Lawyers can pay for referrals.
    • The reform has created a new business classification and regulatory entity known as the “legal regulatory sandbox.”
    • Lawyers and non-lawyers can partner and fee-share within the “regulatory sandbox.”
    • Non-lawyers can invest in law firms as long as the firm is within the “regulatory sandbox.”
    • Lawyers can provide legal advice in any context within the “regulatory sandbox” so long as they do not experience interference with their professional judgment, duty to the client, protection of client confidence, or general legal ethics and professional responsibility.

    These regulations do not affect lawyer-owned and -operated law firms in Utah.

    What About California (And the Rest of the Country)?

    So far, no other states have made moves toward the same or even similar legal reform, but that doesn’t necessarily rule it out in the future. Because this change is so new, the results are still a mystery. Currently, legal regulatory entities in the rest of the country are watching Arizona and Utah with much interest as this great legal experiment unfolds. If it proves successful, other states in the western United States may follow suit. To date, the Association of Professional Responsibility Lawyers have formed a Future of Lawyering Committee to assess how legal practice should be reformed (or not be reformed) in the coming years.

    For now, California remains the same as always. Attorneys are the only ones who may provide legal advice. Legal document assistants are still unable to provide any legal direction for our clients.