Navigating the Changing Tides in the Legal Service Landscape: An Assessment of Alternative Business Structures
ABSTRACT
In the vast ocean of the legal industry, it has always been an established
principle those who sail the legal seas are only those who are licensed to
practice law. These aspiring sailors in the United States go through an
extensive process of passing intense admission exams, completing
challenging years of legal studies, and passing the dreaded bar examination.
While a select few countries have allowed non-lawyer professionals on
board some of their legal ships, the United States has stuck to their Code,
ABA Rule 5.4, prohibiting anyone else from participating in sailing the legal
seas.
But the tides are changing in the United States. In 2020 Arizona and
Utah made groundbreaking reforms, with Arizona abolishing the Code, and
Utah revising the Code to allow non-lawyers to navigate the legal seas of
their jurisdictions. These newly structured ships have taken the name
Alternative Business Structures, allowing non-lawyers to invest, take
ownership, or even join as co-captain alongside lawyers.
Arizona and Utah have raised their sails and begun the course of
navigating unchartered territory in the legal service landscape. And other
states are watching their voyage to decide whether to join this new quest.
The waters are choppy and murky, with conflicting interests and duties
presenting areas of concern. But Alternative Business Structures offers
promises of spurring innovation, revolutionizing the delivery of legal
services, and increasing access to justice.
This Note is the first to empirically assess the impacts of the licensed and
active Alternative Business Structures in the United States. Arizona and
Utah’s regulatory reforms to ABA Rule 5.4, Arizona’s repeal of Rule 5.4 and
Utah’s regulatory “Sandbox”, led to 108 currently licensed and active
Alternative Business Structures between the two jurisdictions. These 108
existing firms fall into three typologies of Alternative Business Structures:
“Traditional Law Firms Remodeled”, “One-Stop Shops”, and “Alternative
Legal Service Providers”. While the data on each type’s impact has some
limitation in that it cannot fully answer the larger question about the impact
on the access to justice crisis, this Note provides insight into each Alternative
Business Structure’s impact on innovating the delivery of legal services and
promoting access to affordable legal services, and how they can be regulated
more efficiently to improve access to justice, spur innovation, and
prevent consumer harm.