Innovation is taking shape in the legal industry and Arizona is leading the way.

Only lawyers could own and make decisions in law firms before January 1, 2021. Now non-lawyers can have an interest in an entity that provides legal services. This is a game changer for how firms operate, reach, and shape a client’s experience.

The Arizona Supreme Court abrogated former Ethics Rule 5.4, which previously barred: a) fee-sharing with lawyers and non-lawyers; b) partnering of lawyers and non-lawyers to practice of law; and c) working in or working with a law-practicing entity owned by non-lawyers.

Alternative Business Structures, (“ABS”), under Arizona Code of Judicial Administration, (“CJA”), Section 7-209, are regulated as practices owned in whole or in part by non-lawyers. Joint ventures, attorneys, and those with non-legal expertise can now join forces.

The CJA’s application and licensure process allows entities to submit articles of incorporation from the Arizona Corporation Commission or otherwise demonstrate authorization to do business in Arizona. What remains to be seen is if entities that are non-registered in Arizona will be granted licenses. Once approved, an ABS is required to have a compliance officer, whose task is to ensure compliance with all ethical and professional responsibilities.

Arizona was the first state to allow for non-lawyer ownership of firms. The goal was to increase access to justice, make services more affordable, and stimulate innovation.

One can envision a myriad of innovative legal service models. Accountants and lawyers. Financial planners and lawyers. Marketers and lawyers. Tech? Insurance? What’s next?