Arizona Legal Innovation: ABS and Licensed Paraprofessionals Overview
Explore the evolving legal landscape in Arizona, where Alternative Business Structures (ABS) and Licensed Legal Paraprofessionals are reshaping traditional legal services. Learn about the implications, regulations, and opportunities in this dynamic legal environment.
Download Presentation
Please find below an Image/Link to download the presentation.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author. If you encounter any issues during the download, it is possible that the publisher has removed the file from their server.
You are allowed to download the files provided on this website for personal or commercial use, subject to the condition that they are used lawfully. All files are the property of their respective owners.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author.
E N D
Presentation Transcript
New York University School of Law Reunion Weekend April 26, 2025 9:3O 10:30 Stephen Gillers
TIMED AGENDA 9:30: 9:35: Introduction KPMG can practice law in Arizona: What does that mean for you? The effect of AI on the law marketplace Trump v. the Bar: What to do? Throughout 9:55: 10:10: Q@A 2
ALTERNATE BUSINESS STRUCTURES (ABS) and LICENSED LEGAL PARAPROFESSIONALS IN ARIZONA (and elsewhere) And the national implications thereof 3
Ariz. R. Sup. Ct. 31.1 (c) Alternative Business Structure (ABS). An entity that includes nonlawyers who have an economic interest or decision-making authority as defined in ACJA 7-209 may employ, associate with, or engage a lawyer or lawyers to provide legal services to third parties only if: (1) it employs at least one person who is an active member in good standing of the State Bar of Arizona under Rule 32 who supervises the practice of law under ER 5.3; (2) it is licensed pursuant to ACJA 7-209; and (3) legal services are only provided by persons authorized to do so and in compliance with the Rules of Supreme Court. 4
N.Y. Rule 5.4 (a) A lawyer or law firm shall not share legal fees with a nonlawyer [with minor exceptions] (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 . (d) A lawyer shall not practice with or in the form of an entity authorized to practice law for profit, if: (1) a nonlawyer owns any interest therein 5
AZ RULE 5.4 Arizona deleted its rule 5.4 when it s Supreme Court adopted rules for alternative business structures. 6
In Arizona A non-lawyer can be a passive or active investor in an entity that provides legal services. Law firms can offer non-legal services through investors in the entity who are not lawyers. The entity must have at least one lawyer responsible for compliance. Only lawyers can practice law through the entity, but see licensed legal paraprofessionals, infra. Lawyers and non-lawyers alike can share in the profits of the entity. Non-lawyers can manage the entity but cannot supervise legal work. The entity lawyers and the entity must comply with professional conduct rules. 7
Alternate Business Structures in Arizona Sources of Information Search Arizona alternate business structures Arizona legal paraprofessionals (or ACJA 7-210) In order to get or link to the key statutory, judicial orders, and professional conduct rules that will be referenced in the CLE. Selected documents are also included with the CLE material. 8
From Bloomberg Law 1-14-25 KPMG won preliminary approval Tuesday to form a legal services arm in Arizona, moving it closer to becoming the first Big Four accounting firm to practice law in the US. The Arizona Supreme Court should grant KPMG Law US a license, the Committee on Alternative Business Structures found. The court will decide Jan. 28 whether to grant KPMG s license, deny the application, or send it back for more information, said Aaron Nash, the court s director of certification and licensing. 9
OOPS Not so fast. 10
From Bloomberg Law 1-28-25 The Arizona Supreme Court on Tuesday requested more information on KPMG s application to practice law in the state, declining for now to approve the company s request. 11
APPROVED From Bloomberg Law on 2/27/25 The Arizona Supreme Court today granted KPMG a license to operate a so-called alternative business structure. KPMG Law US will be an independent law firm operated as a wholly-owned subsidiary of the company. 12
From Wikipedia KPMG is a multinational professional services network, based in London. KPMG is a network of firms in 145 countries with 275,288 employees affiliated with KPMG International Limited KPMG has three lines of services: financial audit, tax, and advisory. Its tax and advisory services are further divided into various service groups.
From KPMG Law Website To KPMG Law US plans to deliver a focused set of technology-enabled legal services powered by artificial intelligence and KPMG Digital Gateway, building upon the firm's established Legal Business Services practice. The new law firm will collaborate with the KPMG global network of law firms already operating in more than 80 jurisdictions. Together, KPMG Law US and KPMG will provide legal managed services, legal operations consulting, and advanced legal technology innovation, to help clients gain efficiencies and empower their legal teams to concentrate on strategic priorities. Building on the established presence of KPMG in Arizona, where more than 100 clients are currently being served, KPMG Law US will operate as an independently managed subsidiary of KPMG and maintain strategic alignment with the KPMG Tax practice. technological capabilities into new domains to keep our clients at the forefront of innovation. At KPMG Law US, we are dedicated to upholding KPMG values and culture, so every interaction is driven by integrity, excellence, and a deep commitment to our clients' success. embrace the legal department of the future, KPMG Law professionals provide General Counsel and Heads of Legal with holistic approach that integrates legal advice with other business and financial services. To help address the challenges faced by a rapid evolving business landscape and embrace the legal department of the future, KPMG Law professionals provide General Counsel and Heads of Legal with holistic approach that integrates legal advice with other business and financial services.
Small Law competitors Approved as ABS Jacoby & Meyers Mass Torts Law Firm, PLLC
What Is the Extraterritorial Reach of the Arizona Rule? This is the central question. Can the Arizona rule be nationalized? Can non-AZ law firms or lawyers create an AZ ABS and use the AZ ABS to do what they cannot do back home? Can a New York lawyer be a partner in an AZ (or any) ABS? What if an ABS lawyer practicing in NY is also authorized to practice in AZ? Can a New York lawyer in a traditional law firm divide fees with an ABS that has nonlawyer members? 16
N.Y. Rule 8.5 (b) In any exercise of the disciplinary authority of this state, the (b) In any exercise of the disciplinary authority of this state, the rules of professional conduct to be applied shall be as follows: rules of professional conduct to be applied shall be as follows: (1) For conduct in connection with a proceeding in a (1) For conduct in connection with a proceeding in a the rules to be applied shall be the rules of the jurisdiction in which the court sits applied shall be the rules of the jurisdiction in which the court sits ; ; and and (2) For any other conduct: (2) For any other conduct: ( (i i) If the lawyer is licensed to practice ) If the lawyer is licensed to practice only shall be the rules of this state, and shall be the rules of this state, and (ii) If the lawyer is licensed to practice in this state and another jurisdiction, the (ii) If the lawyer is licensed to practice in this state and another jurisdiction, the rules to be applied shall be the rules of the admitting jurisdiction in which the rules to be applied shall be the rules of the admitting jurisdiction in which the lawyer lawyer principally principally practices; provided, however, that if particular conduct practices; provided, however, that if particular conduct clearly has its clearly has its predominant predominant effect in another jurisdiction in which the lawyer is effect in another jurisdiction in which the lawyer is licensed to practice, the rules of that jurisdiction shall be applied to that licensed to practice, the rules of that jurisdiction shall be applied to that conduct. conduct. the rules to be only in this state, the rules to be applied in this state, the rules to be applied 17
Whose Rules Govern: Key Ethics Opinion For NY Lawyers NYS Op. 1234 (2021) NYC Op. 2015-8 NYS Op. 911 (2012) NYC Op. 2020-1 NYS Op. 889 (2011) ABA Op. 13-464 ABA Op. 91-360 18
AZ RULE 5.5 Who can have an Arizona law office? (d) A lawyer admitted in another United States jurisdiction, or a lawyer admitted in a jurisdiction outside the United States, not disbarred or suspended from practice in any jurisdiction may provide legal services in Arizona that exclusively involve federal law, the law of another jurisdiction, or tribal law . (f) Any attorney who engages in the authorized multijurisdictional practice of law in Arizona under this rule must advise the lawyer's client that the lawyer is not admitted to practice in Arizona, and must obtain the client's informed consent to such representation... (h) Any attorney who engages in the multijurisdictional practice of law in Arizona, whether authorized in accordance with these Rules or not, shall be subject to the Rules of Professional Conduct and the Rules of the Supreme Court regarding attorney discipline in Arizona. 19
Licensed Legal Paraprofessional 20
ARIZONA CODE OF JUDICIAL ADMINISTRATION Section 7-210: Legal Paraprofessional Licensed legal paraprofessionals can perform defined services in each of the following areas: civil law, family, law, criminal law, administrative law, juvenile law. There are 6 routes to becoming a licensed legal paraprofessional through a combination of education and experience. The paraprofessional may but need not work in a traditional law office or under the supervision of a lawyer. There is an experiential requirement for the area of law the paraprofessional will practice. The paraprofessional will be governed by a code of conduct similar, but not identical to, the rules of professional conduct. There are CLE requirements. 21
Colorado Supreme Court Rule 207 Licensed Legal Paraprofessional (LLP) An LLP may represent a client to perform tasks and services in a legal separation, declaration of invalidity of marriage, or dissolution of a marriage or civil union. in an initial allocation of parental responsibility ( APR ) matter, including parentage determinations, that is not part of a dissolution of a marriage or civil union. in a matter involving modification of APR regardless of whether the initial APR was part of a dissolution of a marriage or civil union, or modification of child support and/or maintenance. in any of the following matters: protection orders, name changes, and adult gender designation changes. EFFECTIVE 7/1/23 22
AIS EFFECT ON PARALEGAL LICENSING As confidence in generative AI s accuracy increases, courts will be encouraged to license appropriately educated and tested paralegals for defined tasks. They will be bound rules of ethics. They will have to take a course in legal ethics. CLE requirements that include substantive areas of practice and legal ethics will be required. They will be subject to malpractice liability. 23
The effect of paralegal licensing on the legal marketplace and lost schools What will be the market effect have paralegal licensing . On the cost of legal advice? On jobs for new and not so new law graduates? On law school applications? Will the best legal professionals outearn lawyers? 24
Trump v. The Bar What to do
Executive Order 14230 Perkins Coie https://www.akingump.com/en/insights/blogs/trump-executive- order-tracker/addressing-risks-from-perkins-coie-llp
Sources A handout accompanying the slides
Settlement with Kirkland, A&O Shearman, Latham, Simpson Law Firms will provide an aggregate total of at least $____ in pro bono, and other free legal services, during the Trump administration and beyond to causes that President Trump and the Law Firm both support and agree to work on, including in the following areas: assisting veterans and other public servants, including, among others, members of the military, Goldstar, families, law enforcement, and first responders; ensuring fairness in our justice system; and combating antisemitism. . Law Firms will take on a wide range of pro bono matters that represent the full political spectrum, including conservative ideals. What counts a pro bono? Why it does not matter.
NY Rule 5.6 (a) A lawyer shall not participate in offering or making: (1) a partnership, shareholder, operating, employment, or other similar type of agreement that restricts the right of a lawyer to practice after termination of the relationship, except an agreement concerning benefits upon retirement; or (2) an agreement in which a restriction on a lawyer s right to practice is part of the settlement of a client controversy.
Why do we want a moat between DOJ and enforcement agencies and the WH? The former norm against White House interference with DOJ and enforcement agencies served several goals. First, it reduced the likelihood of politicizing, or weaponizing, the law. Second, it thereby gave the public reason to trust DOJ and agency decisions as driven by law, not politics. Third, it tended to ensure that DOJ and agency decisions would be consistent across different administrations, even when controlled by different parties. That is the meaning of "equal" in the phrase "equal justice under law."
