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Two more US states eye allowing ABSs

Utah: Access to justice priority

The idea of alternative business structures (ABSs) is starting to gain a foothold in America after working parties in two more states joined California in recommending non-lawyer ownership of law firms.

Both the Utah work group on regulatory reform and Arizona task force on delivery of legal services identified increase access to justice as the core justification for their recommendations.

The Utah group – which was heavily influenced by the experience in England and Wales – said ABSs, backed by a new regulatory regime, would help foster innovation and promote other market forces “so as to increase access to and affordability of legal services”.

Arguing that innovation “will be the solution to the access-to-justice problem that plagues our country”, the group’s report said that without such reform, “the American legal system will continue to underserve the public, causing the access-to-justice gap to expand”.

It said eliminating or substantially relaxing the rule allowing lawyers and non-lawyers to share fees was “key to allowing lawyers to fully and comfortably participate in the technological revolution”.

The report explained: “Without such a change, lawyers will be at risk of not being able to engage with entrepreneurs across a wide swath of platforms.”

It said the new regulatory structure “should also solicit non-traditional sources of legal services, including non-lawyers and technology companies, and allow them to test innovative legal service models and delivery systems through the use of a ‘regulatory sandbox’ approach, which permits innovation to happen in designated areas while addressing risk and generating data to inform the regulatory process”.

The final report of the Arizona task force has yet to be published but minutes of its meeting from last month confirm that it supported the introduction of ABSs along with entity regulation.

The task force also backed introducing licensed non-lawyers to provide legal services to clients within specific limits.

The State Bar of California last month issued a public consultation [1] on “tentative” recommendations of its task force on access through innovation of legal services, which included allowing non-lawyer owners of law firms.

Washington DC permits non-lawyer ownership if the law firm has as its sole purpose the provision of legal services, all owners agree to abide by the rules of professional conduct for lawyers, and the managing lawyers undertake to be responsible for the non-lawyers.