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(Reuters) – When it comes to embracing change, law enforcement is like my 93-year-old grandmother, who believes that boats are not meant to rock.
That’s what keeps Utah and Arizona’s trials and leavening lawyers’ rules in place to spur innovation.
No need for holding pearls though. According to my colleague Karen Sloan, a new Stanford Law School study shows that the programs are giving lawyers “a lot of new ways to expand their horizons” without increasing complaints. of customers.
According to the report, 58 legal service providers took advantage of the new programs – Utah’s legal “sandbox” that was launched in August 2020 and will be legalized in 2027 with the “different business structure” option. Arizona, which took effect in 2021 will remain in effect. .
Bar ethics rules prohibit non-lawyers from having an interest in law firms. According to the report, these restrictions are meant to protect clients from money-minded outsiders that “repeal the independence and credibility of lawyers with clients, thereby will drive a ‘race to the bottom'”
But the report also points to an “equity gap” in the provision of legal services, with many people unable to afford legal aid. Relaxed bar rules are expected to increase competition, allowing more providers to offer lower-cost assistance.
I visited half a dozen firms that have adopted new ownership structures to include non-lawyer shareholders, why they changed and how they did it.
For some, it’s a big change.
“This is going to change the way we do business,” attorney Steve German, head of the Scout Law Group in Phoenix, told me.
Focusing on complex insurance, disability and personal injury litigation, Scout is primarily owned by Miami-based investment firm 777 Partners. According to a Sept. 21 statement announcing the agreement, the partnership “will continue to create one of the best-funded plaintiffs’ law firms” in the country.
With a portfolio that includes professional football teams and budget airlines, the 777 has also become an active fundraiser. Here, instead of lending out capital held on the promise of unrealized returns, 777 owns Scout itself, bankrolling its expenses and sharing its profits.
Germany is currently the plaintiff in the Camp Lejeune water contamination lawsuit, as well as mass tort cases related to the drug Elmiron and necrotizing enterocolitis related to the model.
“All the decisions are my decisions,” he said.
For other professionals, the structural changes are smaller but still run their business well.
Michael Payne, an attorney and CPA, has operated a private law and accounting firm in Arizona since 2017.
He combined the two to create BOSS Consultants. “We don’t have two calendars, two emails, two websites,” he said. “We are one in front.”
It’s a job that’s hard to fill. For example, Payne said in the mergers and acquisitions he’s handled as an attorney, “there have been some big tax breaks.” Also, tax practices can raise legal questions, such as whether someone is properly classified as a contractor.
Now, experts from both industries are “all under one roof,” he said.
Indeed, Big Law has long been concerned about potential competition from the four accounting firms in this matter.
That’s not the case in Arizona or Utah, and it hasn’t been. Although accounting firms “seem to take advantage of the regulatory changes in the U.S. legal markets, none have sought certification in Utah or Arizona,” the Stanford report says, adding that accounting giants “may not see Utah and Arizona as enough. big legal markets” to fix the deal.
Asset management and estate planning are another area of ​​overlap.
Attorney Kent Phelps told me that with over 25 years of experience as a trust and estate attorney, he established a consulting relationship with financial advisor Jeff Junior, owner of Trajan Wealth.
They co-founded the Trajan Estate law firm, which they described as the first legal services provider to operate in Arizona and Utah. (Trajan Wealth is privately held.)
Phelps said that consumers “like to think that if something happens, then it’s over.”
For Arizona-based Singular Law Group, the new law means non-lawyer Allen Rodriguez, who founded the marketing law, design and web development firm ONE400, will become a co-owner, not an employee.
At the Utah labor law firm Davis & Sanchez, former owner Halston Davis said the sandbox program allowed him to retire by selling the business to his non-lawyer son-in-law, who which was managed by five lawyers. u for years.
The business is still operating “as usual,” Davis told me, adding that the sale to a family member made him believe the business was doing well.
However, the programs are not without problems. A Utah candidate, the owner of Blue Bee Bankruptcy Law, Chip Parker, wanted to give 10% ownership in his business to a legislature in recognition of his contributions and retention assistance.
The agency’s request to do so “has been on hold for several months,” pending approval by the Utah Supreme Court, he told me. This time, he said, “they wanted us to continue to report customer data, and it was very difficult.”
As a result, the agency abandoned its search. Parker said it was “unfortunate and a waste of our resources.”
A Sandbox representative did not respond to a request for comment.
Aside from the hiccups, most of the corporate experiences I’ve had are small wins. It does not appear to change access to justice, but to show that countries can loose their ability to control legal institutions.
According to the grandmother, it is easier to accept if the changes are small.
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