Scrutiny grows over Arizona’s non-lawyer-owned law firms

A 2021 Arizona program allows non-lawyers to own law firms called “Alternative Business Structures“. It’s a policy experiment through the Arizona Supreme Court allowing investors and other non-lawyers to own law firms.

Arizona is the only state in the country with a program like this, except for Utah, which scaled the effort back significantly in 2024 after it ran into problems.

An investigation led by “The Arizona Republic” uncovered that several Arizona regulators who helped oversee this program also made money counseling the firms by applying for licenses. Part of the report details how legal loopholes are letting operators turn law firms into nationwide call centers, turbo-charging a new class of legal middlemen.

Laura Gersony, the politics reporter behind the investigation at “The Arizona Republic” and azcentral.com, joined us to discuss the scrutiny.

“In almost every single U.S. state only a lawyer is allowed to own a law firm and there’s a reason for that rule,” Gersony said. “It’s a long-standing ethics rule in every business, and the idea is that you want the person at the very top of the law firm to know what they’re doing, to know the law. ANd also you wan them to have a law license that you can revoke if things go sideways.”

Since Gersony’s initial report the Arizona Supreme Court signaled that they will tighten the rules around this program. One of the reforms would be to crack down on the legal ‘call centers’, and would require licenses to do actual legal work, not just advertise on billboards.

“What I found looking into this program were stunning oversights in the implementations of this program,” Gersony said “First of all, the program has become a nationwide epicenter for consumer complaints.”

Gersony found more than a dozen licensees within the program that were accused in court of hurting ordinary consumers by breaking consumer protection rules. She also found that, although this business model is only legal in Arizona, consumers in any state are exposed to these practices.