Question

I have heard about proposals to allow nonlawyers to be partial owners of a law firm. What is the latest about this?

Answer

There is a lot of talk about changing the Rules of Professional Conduct to allow people who are not lawyers to be part owners in law firms. There is no such proposal pending before the Wisconsin Supreme Court but there is talk in other states about allowing individuals who are not lawyers to invest in law firms. The talk focuses on making changes to the Rules of Professional Conduct that may assist in making legal services more affordable for the public.

The leader in this area is the state of Arizona. On Aug. 27, 2020, the Arizona Supreme Court adopted two orders, which did the following:

• Eliminated Arizona Rule 5.4, which prohibits the sharing of fees between a lawyer and a nonlawyer;

• Created a certification and licensing program that would allow for alternative business structures, defined as “a business entity that includes nonlawyers who have an economic interest or decision-making authority in the firm and provides legal services”;

• Created a committee to develop rules and procedures for regulating this new business entity and to provide for the investigation and discipline of this new entity and individuals who participate in this entity the same as the regulation of lawyers; and

• Eliminated the language in Rule 7.2 that prohibited lawyers from paying nonlawyers to recommend their services.

The focus of these Arizona court orders is to expand opportunities for people who are not lawyers to participate in law firms and encourage law firms to develop new techniques and business plans that would expand the availability of legal services to more individuals. Much of the discussion focuses on using technology and consumer business practices to expand legal services.

Those who oppose these types of changes are very concerned that the legal profession will be swamped by people who are not lawyers and the practice of law will become commercialized to the point that it is no longer considered a profession. This concern is offset by various consumer organizations such as Legal Zoom that provide legal services in a different model and large accounting firms that provide advice to businesses.

The future of the practice of law will be debated in many forums over the next several years. Arizona has taken the first step to look at alternatives that might or might not make sense.

Cite to 93. Wis. Law. 18-35 (December 2020).