Arizona retracts RPC 5.4 - allows non-lawyer ownership of firms

Rule 5.4: Professional Independence of a Lawyer

  Law Firms And Associations

(a) A lawyer or law firm shall not share legal fees with a nonlawyer, except that:

(1) an agreement by a lawyer with the lawyer's firm, partner, or associate may provide for the payment of money, over a reasonable period of time after the lawyer's death, to the lawyer's estate or to one or more specified persons;

(2) a lawyer who purchases the practice of a deceased, disabled, or disappeared lawyer may, pursuant to the provisions of Rule 1.17, pay to the estate or other representative of that lawyer the agreed-upon purchase price;

(3) a lawyer or law firm may include nonlawyer employees in a compensation or retirement plan, even though the plan is based in whole or in part on a profit-sharing arrangement; and

(4) a lawyer may share court-awarded legal fees with a nonprofit organization that employed, retained or recommended employment of the lawyer in the matter.

(b) A lawyer shall not form a partnership with a nonlawyer if any of the activities of the partnership consist of the practice of law.

Arizona Supreme Court Questions-and-Answers re Alternative Business Structures

The Supreme Court unanimously adopted changes to its rules to encourage business innovation in providing legal services at affordable prices. The Court further adopted modifications to the court rules regulating the practice of law and eliminating the rule prohibiting fee sharing and prohibiting nonlawyers from having economic interests in law firms. The regulatory framework addressing this change requires businesses, called “Alternative Business Structures,” to be licensed. The changes came into effect January 1, 2021.

The Committee on Alternative Business Structures will review applications for licensure under Arizona Supreme Court Rule 33.1 and Arizona Code of Judicial Administration (ACJA) § 7-209 and will make licensure recommendations to the Supreme Court.