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Law Practice Magazine


Extending the Practice of Nonlawyer-Owned Law Firms

Lucian T Pera


  • Explore the expansion of nonlawyer-owned law firms in U.S. jurisdictions since Washington, D.C.'s 1991 decision.
  • A “mixed environment” is a growing trend in legal practice, where some jurisdictions embrace nonlawyer ownership while others maintain traditional rules.
  • Can a lawyer practicing with a nonlawyer-owned law firm, operating lawfully in Washington, D.C., Utah or Arizona, and licensed in the jurisdiction, appear pro hac vice in litigation in a Model Rules Jurisdiction?
Extending the Practice of Nonlawyer-Owned Law Firms Studio

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Last time in this space, I explored one of the ways that a nonlawyer-owned law firm, operating lawfully in one of the three U.S. jurisdictions that now permit them in one way or another, might extend its reach into other U.S. jurisdictions. This time, we look at two more.

A few months after Washington, D.C., became the first jurisdiction in the country to permit nonlawyer ownership of law firms in 1991, the ABA and other jurisdictions began to erect a wall to contain those firms to that jurisdiction.

Build the Wall

ABA Formal Opinion 91-360, Prohibition of Partnership With Nonlawyers: Extrajurisdictional Effect (July 11, 1991), interpreted the ABA ethics rules, then in place substantively in every U.S. jurisdiction, to bar a Washington, D.C., nonlawyer-owned law firm from opening an office outside of Washington, D.C. That precedent has been consistently interpreted to bar lawyers licensed and practicing in jurisdictions that have in place the traditional ban on nonlawyer ownership and fee-sharing with nonlawyers (Model Rules Jurisdictions) from practicing as part of a Washington, D.C., nonlawyer-owned law firm, probably no matter where they practice.

More Nonlawyer Ownership Permitted

In 2021, two other states joined Washington, D.C., in permitting nonlawyer ownership.

Under 2021 rule reforms, any Arizona lawyer may now share fees with nonlawyers or pay for recommendations. Separately, Arizona permits nonlawyer ownership of Arizona Supreme Court–approved alternative business structures (ABSs).

Also in 2021, Utah began to allow fee-sharing with nonlawyers in a regulatory “sandbox,” but not more generally.

So, the current consensus is that the logic of that old 1991 ABA opinion applies with equal force to nonlawyer-owned law firms in Washington, D.C., Arizona and Utah, as well as Arizona firms sharing fees with nonlawyers under their revised rules.

An Old Footnote

Careful readers of that 33-year-old ABA opinion will notice a footnote that provides some flexibility to lawyers practicing with a nonlawyer-owned firm who want to handle cases in Model Rules Jurisdictions.

So, here’s the question: Can a lawyer practicing with a nonlawyer-owned law firm, operating lawfully in Washington, D.C., Utah or Arizona, and licensed in the jurisdiction, appear pro hac vice in litigation in a Model Rules Jurisdiction? To make it simple, let’s say the lawyer is licensed only in that one jurisdiction, and not in any Model Rules Jurisdiction.

Oft-overlooked footnote 3 to that 1991 ABA opinion answered this question, “Yes.” The footnote indicated this was “[a] situation likely to arise with some frequency without, as a practical matter, raising any serious question of disciplinary proceedings” in the Model Rules Jurisdiction.

Applying a Choice-of-Law Rule

Fast-forward three decades. In 2023, the ABA Standing Committee on Professional Responsibility’s ABA Formal Opinion 504, Choice of Law (March 1, 2023), agreed with the same Committee’s 1991 answer, grounding the conclusion in a careful choice-of-law analysis under ABA Model Rule 8.5(b). (Of course, that choice-of-law rule didn't even exist when the 1991 opinion was issued.)

The Committee reasoned that the law properly governing the structure of an Arizona law firm under Rule 8.5(b) would be that of Arizona, not the law of the Model Rules Jurisdiction where the case is pending and where the Arizona lawyer is admitted pro hac vice.

This conclusion was also premised upon the absence of any provision in the Model Rules Jurisdiction’s pro hac vice admission rule barring admission of lawyers who, for example, practice in law firms that lawfully include nonlawyer owners or lawfully share fees with nonlawyers. The Committee pointed to the lack of any such provision in the ABA’s model pro hac vice rule.

Careful readers can correct me, but I have never seen a pro hac vice rule, in any jurisdiction, that denies permission to participate in a particular jurisdiction to lawyers whose firms lawfully have nonlawyer ownership under their home jurisdiction’s rules or lawfully share fees with nonlawyers under those same rules.

Same Answer in Federal Court?

The answer above assumes the litigation in the Model Rules Jurisdiction is in state court. But as a practical matter, the answer would likely be the same in a federal court that sits in that Model Rules Jurisdiction.

Federal district courts have the authority to adopt their own rules of professional conduct; almost all do so in their local rules, and most adopt the current rules of professional conduct of the jurisdiction in which they sit. Some also specially adopt particular, individual rules to replace particular rules in force in that jurisdiction. Thus, in many cases, the answer in a particular federal district court may well mirror the answers reached under that jurisdiction’s own applicable rules of professional conduct.

What About Transactional Lawyers?

But what about lawyers who do work outside of pending cases––whether preparing to file cases or doing transactional or counseling work?

Set aside nonlawyer ownership for a moment. ABA Model Rule of Professional Conduct 5.5(c) permits out-of-state lawyers to practice in the adopting jurisdiction on a temporary basis in a number of defined situations––with assistance from local counsel, in work preparing or connected to a case where the lawyer will be admitted pro hac vice, in connection with an ADR matter, or in many jurisdictions in matters reasonably related to the lawyer’s practice back home or for clients of that practice. Versions of that Model Rule are in place in most jurisdictions.

While these permitted areas of temporary practice vary a bit, I am not aware of any of these rules denying this permission to lawyers whose firms lawfully have nonlawyer ownership under their home jurisdiction’s rules or lawfully share fees with nonlawyers under those same rules.

But to my knowledge, there is also no ethics authority out there that specifically blesses the application of ABA Model Rule 5.5(c)’s temporary-practice provisions to lawyers with nonlawyer-owned firms.

Even without express opinions on this subject, we have to assume that this temporary-practice permission will apply equally to an Arizona, Washington, D.C. or Utah lawyer practicing with an ABS, just as it would to a lawyer with a traditionally organized law firm in a Model Rules Jurisdiction.

A Few Caveats

So, it would seem that lawyers practicing with a nonlawyer-owned law firm can probably be admitted pro hac vice in Model Rules Jurisdictions. Further, they can probably avail themselves of the temporary-practice permission afforded in so many jurisdictions under versions or ABA Model Rule 5.5(c).

Of course, perhaps jurisdictions hostile to nonlawyer ownership might try to restrict availability of these authorizations. None have yet, to my knowledge. (Wouldn't there be constitutional problems with such restrictions?)

Further, any lawyers practicing under these provisions would be well advised to be vigilant about their compliance with the rules of the Model Rules Jurisdiction in which they may be working temporarily.

Finally, some lawyers in this situation (and their firms) have decided to give up (or make inactive) their law licenses from jurisdictions other than the jurisdiction that permits nonlawyer ownership. They worry that, for example, if they practice with an Arizona ABS and have an Arizona and Tennessee license, any activity they undertake in Tennessee may lead Tennessee to believe its rules govern the organization of their law firm. There is very little authority on this, and no one knows how real this concern should be. Still, in a time of uncertainty, conservativism is comforting.

What’s Left of the Wall

While the old 1991 ABA opinion continues to hold sway, nonlawyer-owned law firms continue to be barred from opening offices in Model Rules Jurisdictions. And they continue to be barred from bringing into their firms and practices lawyers licensed and practicing in Model Rules Jurisdictions. But we’ve seen here two examples––practice under pro hac vice admission and under temporary practice authorized by versions of ABA Model Rule 5.5(c)––that seem to work as limits to or breaches in the wall.

Practicing in a Mixed Environment

I’ve come to believe that one of the dominant features of lawyer regulation for at least the next few years will be that we will all live and practice in a “mixed environment” ––a world where some jurisdictions allow nonlawyer ownership, fee-sharing and other variations from traditional rules, and many that do not.

That mixed environment will make our lives as lawyers a bit more interesting and might be a reason to keep your own friendly ethics lawyer on speed-dial.