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Last Post 23 Jun 2020 09:44 AM by  Yolanda Fox
R-20-0034 Petition to Restlye and Amend Supreme Court Rule 31; Adopt New Rule 33.1; and Amend Rules 32, 41, 42 (Various ERs from 1.0 to 5.7), 46-51, 54-58, 60, and 75-76
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Author Messages
Jennifer Albright
New Member
Posts:3 New Member

30 Jan 2020 01:03 PM
    Dave Byers
    Executive Director, Administrative Office of Courts
    Member, Task Force on the Delivery of Legal Services
    State Courts Building
    1501 West Washington
    Phoenix, Arizona 85007
    Telephone: (602) 452-3301

    Petition to restyle and amend Rule 31; amend Rules 32, 41, 42 (ERs 1.0, 1.5-1.8, 1.17, 5.1, 5.3, 5.4, 5.7), 46-51, 54-58, 60, 75 and 76, Ariz. R. Sup. Ct.; and adopt new Rule 33.1, Ariz. R. Sup. Ct. This petition proposes substantial rule changes to implement recommendations resulting from the Task Force on the Delivery of Legal Services extensive review, fact-finding and analysis of the changing consumer legal market and the well-documented access-to-justice gap. This petition includes rule changes developed through a subsequent workgroup on entity regulation established at the recommendation of the Task Force.

    The bulk of this petition focuses on the Task Force’s recommendation that the Court eliminate Ethical Rule (ER) 5.4 of the Arizona Rules of Professional Conduct, Rule 42, Ariz. R. Sup. Ct. and develop a regulatory structure for regulation of legal services businesses that involve nonlawyer owners, managers, and decision-makers. This petition also proposes expanding the universe of legal professionals in Arizona by adopting a new category of nonlawyer legal-service provider: the limited license legal practitioner (“LLLP”). Finally, the petition includes a proposed restyling of Rule 31 as recommended by the Task Force.

    Petitioner requests that a staggered comment period as follows be ordered: (a) initial comments due on March 30, 2020; (b) response to initial comments on April 27, 2020; (c) second round comments due on May 26, 2020; and (d) reply and final amended petition due on June 22, 2020.

    Would amend Sup. Ct. Rules and ethical rules to facilitate the delivery of legal services.

    ******The original 'Appendix 1 Various ERs 1.0 through 5.7' and
    'Appendix 2 Proposed Rules 31 through New Rule 33.1' are available upon request******

    Filed January 30, 2020

    March 30, 2020: First set of comments are due.

    April 27, 2020: Petitioner’s Response and, if needed, an Amended Petition are due.

    May 26, 2020: Second set of comments are due.

    June 22, 2020: Petitioner’s final response and, if needed, a Second Amended Petition are due.

    ORDERED: Petition to Amend Rules 31, 32, 41, 42 (ERs 1.0-5.7), 46-51, 54-58, 60, 75 and 76, Arizona Rules Supreme Court, and Adopt New Rule 33.1, Arizona Rules Supreme Court = ADOPTED as modified, effective January 1, 2021.

    See Petitioners Final Reply and Final Amended Petition at the end of page 13.
    For additional information contact Jennifer Albright, Sr. Policy Analyst, AOC at jalbright@courts.az.gov.
    Michael Kielsky
    New Member
    Posts:4 New Member

    13 Feb 2020 01:31 PM
    These proposed changes are long overdue -- the work-product presented here is very well thought-out, thorough, relevant, and timely. I urge the adoption of these proposed changes, if possible on an expedited basis, so that barriers to Access to Justice may be further diminished sooner rather than later. Creating ABS and LLLP options will expand the delivery of legal services, spur innovation, and improve the quality legal counsel in the aggregate.

    Michael Kielsky
    Attorney At Law
    480.461.5309 Direct | 480.461.5300 Main | 480.833.9392 Fax
    1138 N. Alma School Rd., Suite 101 | Mesa, AZ 85201
    MK@USazLaw.com | MK@UdallShumway.com | http://UdallShumway.com/
    Michael Kielsky
    New Member
    Posts:4 New Member

    13 Feb 2020 02:11 PM
    This Rule Petition is succinct, well-thought-out, researched, timely, and relevant. I urge adoption of this petition, preferably on an expedited basis.

    Michael Kielsky
    Attorney At Law
    480.461.5309 Direct | 480.461.5300 Main | 480.833.9392 Fax
    1138 N. Alma School Rd., Suite 101 | Mesa, AZ 85201
    MK@USazLaw.com | MK@UdallShumway.com | http://UdallShumway.com/
    New Member
    Posts:1 New Member

    13 Feb 2020 03:25 PM
    David Francis
    541 W. Palm Lane, Phoenix, AZ 85003
    Bar no. 029799

    I oppose the proposed creation of the Limited License Legal Practitioner (LLLP) for the following reasons:

    First, the very premise for a need to create an entirely new profession within the Bar is suspect. The Petition claims that "[t]he purpose of creating this new tier of licensed legal service provider is to fill a gap that exists between medium- and low-income individuals needing legal services and the cost of securing those services from the traditional legal market." What indication is there that the same barriers preventing bar-licensed attorneys from filling this gap would not also serve to prevent LLLPs from profitably providing these lower-cost services? That traditional law firm cost structures may prevent firm attorneys from profitably providing these services is entirely irrelevant; rather, the appropriate inquiry is twofold – first, whether this gap can be filled by small-firm, solo, and even newly licensed attorneys; and second, if not, what can the Bar do to assist its existing membership in order to help them fill that gap themselves. The Bar should remember, in addition to its mission to serve the public, its obligation to its supporting membership.

    Second, the Petition claims that "no jurisdiction that allows certified nonlawyers to provide limited legal services has reported any diminution in lawyer employment," but this question is less relevant than determining the extent to which the creation of LLLPs and the like has diminished earning potentials for those lawyers who, by choice or necessity, have endeavored to perform legal services within the so-called justice gap. The Petition claims that the Task Force was not able to find “empirical” evidence of economic harm from LLLPs, but it is unclear what parameters were used to make that determination, and the Petition's focus on aggregate lawyer employment (while ignoring the basic economic fact that increasing the supply of professionals performing the services "targeted for LLLPs" will necessarily reduce rates for, and thus harm the livelihoods of, Arizona attorneys working in the so-called justice gap) calls into question the veracity of its research on this point.

    Third, the Petition claims that "the legal needs targeted for LLLPs involve routine, relatively straight-forward, high-volume but low-paying work that lawyers rarely perform, if ever" while simultaneously failing to define what precisely are "the legal needs targeted for LLLPs." Aside from ignoring the obvious question (why the fact that a task is "rarely" performed by lawyers should have any bearing on the question whether to amend a rule allowing only lawyers to perform it), this statement lays bare the pointlessness in asking for comment on the creation of a new class of membership whose privileges have not been defined with any specificity.

    Kevin Ganser
    New Member
    Posts:1 New Member

    14 Feb 2020 08:36 PM
    Kevin Ganser
    3333 N. Hayden Rd.
    Scottsdale, AZ 85251
    Subject: RE: R-20-0034 Petition to Restlye and Amend Supreme Court Rule 31; Adopt New Rule 33.1; and Amend Rules 32, 41, 42 (Various ERs from 1.0 to 5.7), 46-51, 54-58, 60, and 75-76

    I would like to register my opposition to the proposed rule change.

    While I appreciate the desire to expand access to legal services to low income or indigent clients, particularly with respect to repetitive or less desirable high volume legal work (and do not oppose "paralegal type" representation for such matters), I strenuously oppose the premise that non-lawyers should be allowed to own an economic interest in law firms. In reality, I have personally witnessed the bending or outright disregard of the preexisting rules to effectuate this result, where the "tail" of financial institutions/advisors and other outside financial interests "wag the dog" with respect to the exercise of independent legal judgement of attorneys owning to financial incentives for such attorneys to do engage in such behavior. Estates and Trusts practices are particularly rife with this type of arrangement (and it merely requires an observation of an social security recipient's physical mailbox to see that this is true), wherein the estate attorney is financially incentivized to recommend or coax lay clientele to utilize certain affiliate financial products or services provided by non-lawyers through explicit or implicit arrangements that necessarily interferes with an attorney's independent legal judgement, fiduciary duties to their clients which, in some cases, should be certainly be subject to attorney discipline. The proposed rule codifies this arrangement as presumptively ethical and legal, and while there is a patina of regulatory control to prevent such financial arrangements from interfering with independent judgment, practically speaking this proposed rule destroys any ethical disincentive or reservation that a lawyer might otherwise have to participate in facially self-dealing arrangements, lest they be caught, and indeed puts the non lawyer financial industry in the driver's seat to directly effect the lawyer's advice on the basis of outsized financial returns to the attorney, separate and apart from legal fees for services rendered.

    Moreover, the idea outlined in the petition that legal technology is being impaired on hindered by current rules, in my opinion, is not based in reality. In practice, services like Rocket Lawyer, LegalZoom, Avvo and Certified Legal Document Preparers, among many others, have arguably filled this gap with respect to financial or testamentary documents for clientele that feel confident enough to "do it yourself". With that said, in my practice, these services, while low cost, often result in a) higher expenses to resolve financial affairs at death due to poor drafting or the use of "one size fits all" inflexible documents, and b) the veneer of the non lawyer service provider refraining from providing legal advice, when the preparation of such documents necessarily require the exercise of legal judgement and the rendition of legal advice to adequately address client needs. Indeed, I would argue that lawyers who wish to participate in the provision of legal services vis a vis legal technology companies are largely already doing so.

    Finally, the proposed rule acts to make a lawyer out of anyone who chooses to be one (similar to the referenced real estate agency model where the barrier to entry is extremely low - the participation in a 90 hour school program -- while the overwhelming majority of transactions are done by a very small percentage of licensed agents), when practically speaking, this country's legal education system has overproduced both barred and unbarred lawyers that could clearly fill this access gap by simply liberalizing recognition of law school graduates, whether to practice in a limited or unlimited capacity, who were trained outside the state (i.e. California). A rule along these lines (i.e. the requirement of a minimum amount of acceptable legal training to provide limited legal services), rather than adoption of the proposed rule, would ensure a modicum of protection to the public for the rendition of educated legal advice that is otherwise arguably defanged by the proposed rule.

    In short, I do not believe the preexisting rule is not outmoded or outdated due to protectionism of the practice of law -- its a reflection and protection of the public to prevent unqualified or minimally qualified individuals from affecting citizens against adverse legal outcome. Moreover, I do not believe the State Bar or judicial branch current has, or will, in the future have, sufficient allocated financial resources to adequately police misbehavior or bad outcomes that will inevitably grow out of this proposed rule.

    Thank you for your consideration.
    New Member
    Posts:1 New Member

    15 Feb 2020 02:02 PM
    While I am for access to justice, I am very concerned about lifting the prohibition on lawyers and non-lawyers jointly operating a law as a means to accomplish this goal.
    Throughout my career, I have had the opportunity to represent numerous plaintiffs and defendants within the personal injury arena.

    From a defense perspective (excluding an in-house perspective), hired outside counsel has the duty to operate in the best interest of the client, which can sometimes conflict with what an insurance company perceives as a threat to its bottom line. As an example, insurance carriers (ultimately assuming and paying for the defense of its insured) could issue global requests to use certain court reporters or liability or damages experts that they consider to be cost effective (but not necessarily the best or appropriate for a particular case). These types of broad requests (made by a non-lawyer business entity) could affect the outcome of a case if such provider of services was not the best approach to build a defense for the third-party defendant.

    From a plaintiff perspective, non-lawyer investors/managers could hypothetically similarly make decisions to affect overall profitability of an entity that again does not reflect acting in the best interest of an individual client. Examples would include cost cutting of services and expenses (such as the examples listed above in the previous defense paragraph) that would reduce a lawyer’s ability to effectively give the best representation to an individual client or clients.

    For these reasons, I am against lifting the prohibition on lawyers and non-lawyers jointly operating a law unless these types of flaws (as addressed above) could be overcome by the language of such a significant rule change in the practice of law.

    Ann Geisheimer, Esq.
    Bar No. 022871
    PO Box 25428
    Scottsdale, Arizona 85255
    (480) 467-8800
    Matthew Fendon
    New Member
    Posts:1 New Member

    18 Feb 2020 10:18 AM
    I oppose the created LLLP for multiple reasons including but not limited to a non lawyer practicing law, lack of oversight on a non lawyer practicing law, and complete watering down of the legal profession - you're essentially giving paralegals the ability to practice law.

    I also vehemently oppose fee sharing with non lawyers - can you imagine the venture capitalists, major corporations and other wealthy entities frothing at the mouths to have ownership in law firms? You will essentially have non lawyers supervising the work of attorneys; these non lawyers are not held to our high standards of ethics.

    In addition, I can already see law firms hiring "runners" aka non lawyers to go around town soliciting cases for commissions. It will turn our profession into a horrid joke.

    For all these reasons, and many more, I strongly oppose these provisions.
    Matt Fendon
    Managing Partner, Matt C Fendon PLC dba Matt Fendon Law Group
    Geoff Trachtenberg
    New Member
    Posts:3 New Member

    18 Feb 2020 04:51 PM
    Geoffrey M. Trachtenberg
    Levenbaum Trachtenberg, PLC
    362 N. 3rd Avenue
    Phoenix, AZ 85003
    Bar No. 19338

    I am a former President of the State Bar of Arizona and, while I applaud attempts to legitimately increase access to justice, I'm strongly opposed to the Petition, particularly the amendment eliminating ER 5.4, in order to permit nonlawyers to own or manage law firms, or make decisions concerning legal disputes. To quote Judge Peter B. Swann, who elegantly wrote in opposition to the original proposal submitted by the Task Force, “bad legal advice is never a bargain,” no matter the price, and that assumes the price of legal services will actually decrease. Setting aside the conspicuous lack of any empirical support for such a speculative proposition, experience with analogous changes in the medical profession reveals that costs have increased at a rate that far outpaces inflation. Some would also point out that the quality of healthcare services has suffered too.

    But regardless, the entire purpose of ER 5.4 is to "ensure the independence and ethical conduct of lawyers.” E.g., Jacoby & Meyers, LLP v. Presiding Justices of the First, Second, Third & Fourth Departments, Appellate Div. of the Supreme Court of New York, 852 F.3d 178, 181 (2d Cir. 2017). Indeed, the title of ER 5.4 is the “Professional Independence of a Lawyer,” and the Comment to the rule states that it is to protect the lawyer’s "professional judgment.” Simply put, the rule promotes quality and ethical lawyering. It is as well-grounded in the practice of law as is the universal requirement that those who practice law must be minimally educated and licensed before being allowed to dispense legal advice to the public. Surely, the cost of legal advice would be less expensive to the public, at least on its face, if anyone could practice law despite their lack of education or competence—but it wouldn’t take long to see that the reduced upfront cost came at another price.

    Whether or not the proposal actually decreases the cost of legal services, there’s no question that the proposal undermines the special fiduciary relationship between an independent attorney and their client. In doing so, it puts the public at risk. See New York State Bar Association: Report of the Task Force on Nonlawyer Ownership, 76 Alb. L. Rev. 865, 877 (2013) (concluding that “nonlawyer control of legal practice presents considerable risks to the legal system and the justice system . . . and should not be permitted in New York.”). Since the Task Force itself claims that our rules must only be changed “in a way that continues to protect the public,” see pg. 12, it’s baffling the Task Force summarily rejected a “sandbox” approach, favored by other jurisdictions considering such a change, which would at least give some empirical basis for whether the proposal was effective and whether the proposal poses, as Judge Swann observed, “a serious threat to the long-term health of the justice system.”

    In my view, the Petition proposes a “pound of cure” without even an “ounce of prevention.” Common sense tells us that a nonlawyer entity likely to be attracted to investing in a law firm would be financially dominant and have its own conflicting duties to shareholders or other owners. It’s also logical to conclude that such entities would not put their money to work in smaller, rural, and poorer communities, but would target taking over prosperous law firms in well-served urban markets or developing "law firms" in those well-served areas.

    Moreover, even with a “compliance attorney,” as suggested by the Petition, standing between the “nonlawyer owners and managers,” common sense tells us such an inherently-conflicted employee is nothing more than an artificial strawman. Do we really think a business’s “compliance attorney” will stand as a genuine barrier to profit-hungry owners who seek to interpose their views into an attorney's independent professional judgment?

    And, setting aside inherent conflicts, how exactly would a "compliance attorney" work? What are the indicia of nonlawyer influence on the professional judgment of a lawyer? At what point does the behavior of a nonlawyer rise to the level of inappropriate interference with the practice of law? And how does such inappropriate interference get remedied? Is the compliance attorney supposed to turn his nonlawyer employer into the Bar? Will the client be informed that their lawyer was subject to improper influence and that the same lawyer is still employed by the nonlawyer who tried to exert such influence?

    The Petition is a recipe for mischief—and in this regard a personal anecdote is instructive. I take very good care of my teeth and, a few years ago, I was sitting in a dentist’s chair at a new dental office where the dental hygienist began recommending various types of expensive dental procedures that seemed suspiciously unnecessary to me. Thereafter, the dentist came in a dutifully agreed with the hygienist’s suggestions. After some digging, however, I was shocked to learn the dentist was only an “employee" of the dental office and that the dental practice was, in fact, owned by the hygienist. I then went to an independent dentist and was assured that all the recommended procedures were, in fact, unnecessary.

    Needless to say, this revelation radically undermined my trust in the dental profession in Arizona and, had I not done the digging myself, I’d have thought that the dentist’s opinions were those of an independent professional. The same is undoubtedly going to be true of the legal profession if this Court permits the abrupt erosion of lawyer independence by experimenting with the entire justice system in Arizona and allowing nonlawyer investors to own any type of law practice. Although I’d hope the Court rejects the Petition insofar as it eliminates ER 5.4, if the Court truly wants to venture into this fray I’d respectfully suggest piloting it in a limited practice area which is underserved, such as landlord-tenant disputes, or some similar “sandbox” approach.
    Theodore Julian
    New Member
    Posts:1 New Member

    19 Feb 2020 11:25 AM
    Theodore A. Julian, Jr.
    702 E. Osborn Rd, Suite 200
    Phoenix, AZ 85014
    SBA# 012765

    I oppose the Petition which would eliminate ER 5.4 and 5.7 and allow non-lawyers to co-own law firms. I'm a 3rd generation lawyer and have been practicing in Arizona for over 30 years. The Petition may have been intended to increase access to legal services, but at what cost for those who are in need of competent legal counsel and have no idea they just walked in the front door of a "mill" for legal services? I've seen it happen in the medical profession where unlicensed people own medical clinics. Not only does the quality of care suffer, but the services are often more expensive given the clinic's business operations. We should not allow the legal profession to devolve to the point that it is a business run by non-lawyers; it hurts the legal profession and the clients we serve.
    New Member
    Posts:3 New Member

    25 Feb 2020 09:56 AM
    I respectfully oppose the proposed rule. When I went to law school, the professor of my ethics course, and the dean of the law school, instilled heavily among the class, and myself, that the practice of law is a profession, rather than a business. It is my belief that allowing non-lawyers to own law firms would put an undue burden on lawyers by creating added business pressures and potential conflicts that I believe would arise if non-lawyers are permitted to own law firms. Also, I do not believe the public would easily be able to make informed-choices when trying to determine what representation is needed and by who.

    Randal Hutson
    22849 N. 19th Avenue, Suite 135
    Phoenix, AZ 85027
    SBA #028522
    George Riemer
    New Member
    Posts:3 New Member

    25 Feb 2020 10:16 AM
    I appreciate that this rule petition has multiple comment and response periods built in. The following are my initial comments and questions concerning the proposed rule changes set forth in the petition. I look forward to a robust discussion of these proposals over the course of time.

    George A. Riemer
    Arizona Bar Member No. 017034

    The American Bar Association (ABA) still has Model Rule 5.4 as do most states. If the rule was blatantly protectionist from the beginning, why is it still on the books in most jurisdictions? Is it because it has been effective in protecting the independent professional judgment of lawyers on behalf of their clients? It is worthwhile noting that the ABA House of Delegates recently passed Resolution 115 resolving that the ABA “encourages U.S. jurisdictions to consider innovative approaches to the access to justice crisis . . .”, but the resolution also states “That nothing in this Resolution should be construed as recommending any changes to any of the ABA Model Rules of Professional Conduct including Rule 5.4, as they relate to nonlawyer ownership of law firms, the unauthorized practice of law, or any other subject.”

    What evidence-based data exits to support the establishment of Alternative Business Structures (ABS)? What data has been obtained from Washington, D.C., Canada, Australia, England, and Wales? How effective have New Jersey and New York’s law firm regulations been to date? Data appears to have been a consideration of the Task Force when it concluded it “was not able to find empirical evidence that lawyers are at risk of economic harm from certified LLLPs who provide limited legal services to clients with unmet legal needs.” What empirical evidence exists to support that ABS will help close the “access-to-justice gap” without also creating myriad new ways to take advantage of the public? As mentioned above, ABA House of Delegates Resolution 115 goes on to resolve “That the American Bar Association encourages U.S. jurisdictions to collect and assess data regarding regulatory innovations both before and after their adoption to ensure that changes are effective in increasing access to legal services and in the interest of clients and the public[.]” (emphasis added).

    While I appreciate that the Task Force on the Delivery of Legal Services considered and rejected a pilot program approach to the elimination of Rule 5.4, California’s Task Force on Access Through Innovation of Legal Services appears to be in the process of recommending that the State Bar of California Board of Trustees “consider possible changes to existing laws that would permit innovative legal services delivery systems, including technology driven legal advice and services, within the constraints of a regulatory sandbox, pilot program or other similar time-limited approach that will provide data on any potential benefits to access to legal services and any possible consumer harm when prohibitions on the unauthorized practice of law, fee sharing, nonlawyer ownership, and other legal restrictions are relaxed or completely suspended for the sandbox or pilot program participants.” (emphasis added). I believe insufficient consideration has been given to a pilot program approach to the elimination or modification of Rule 5.4. Public protection must be the paramount consideration in making such an important change. Another critical consideration must be whether ABS will actually provide increased access to affordable legal services.

    Who will pay for the regulation of ABS and LLLPs? It appears the great bulk of the cost will be incurred by Bar members unless extraordinary costs are incurred on a case by case basis? What will constitute an extraordinary cost subject to recoupment? What procedures will be adopted to ensure that recoupment?

    Will clients of LLLPs be entitled to file Client Protection Fund claims? How about clients of ABS? If they will, where will the funds to pay such claims come from?

    What consideration has been given to the impact of the duty to regulate ABS and LLLPs on bar counsel, the probable cause committee, the presiding disciplinary judge, and the Supreme Court?

    It is proposed that complaints against ABS must be established by a preponderance of the evidence for sanctions to be imposed. Complaints against lawyers must be established by clear and convincing evidence for sanctions to be imposed. Has this difference been thought through for purposes of the consistency of enforcement of the applicable rules?

    What evidence-based data exists to support the establishment of another tier of legal service provider (Limited License Legal Practitioner (LLLP))? What has been the actual effect on the “access-to-justice gap” on the licensure of Legal Document Preparers in Arizona since 2003? What data exists that Washington and Utah’s similar licensure regimes have helped close the “access-to-justice gap” in those states?

    Why does the justification for the establishment of a LLLP regime include that it will not “undermine the employment of lawyers”? Isn’t the principal goal closing “the access-to-justice gap”? Worrying about the impact of the regime on the employment of lawyers seems anti-competitive. If impact on employment is a legitimate consideration, what about the impact of the proposed new regime on legal document preparers?

    How are nonlawyers to be sanctioned if they do not comply with “appropriate nonlawyer ethics procedures”?

    Does the attorney-client privilege protect client information concerning nonlegal services provided by a nonlawyer within an ABS?

    Are disbarred lawyers nonlawyers for purposes of participation in ABS?
    Jeffrey Marks
    New Member
    Posts:4 New Member

    25 Feb 2020 04:36 PM
    I have been practicing in Tucson since 1978, so I have seen just about everything. I would want to STRONGLY suggest against allowing non-lawyers and lawyers going into business together to provide legal services. The thought that it could bring cheaper legal services to the masses is totally misplaced. What it will do is cause a deluge of chiropractors and heavily advertising PI law firms to go into business together to further attempt to corner the market. When O'Steen was decided, the hope was that it would open the doors to the public understanding their options. Instead all we have is endless television ads and billboards for PI lawyers. I have yet to see a billboard for a discount probate lawyer. For the sake of leaving some honor with the profession rather than a charade that mega chiropractic-lawyer practices are in the public's best interests, I would urge that the proposed rule NOT be amended.

    As for limited practitioners, we have all seen the complete mess that document preparers have caused. I believe that if you want to practice law you need to go to law school rather than letting an uneducated person appear in court and decimate a case. The remedy to providing services to low income people \ is to allow qualified law students, those awaiting to take the bar exam or receive the results, or those who are licensed to practice in other states do that job without supervision. I fear that a "limited legal provider" will just gum up the system and trials, as persons attempt to do what they have no business doing. Even the most simple OTA can draw in constitutional, juvenile, guardianship,, etc. issues that a non-lawyer would never spot nor know how to resolve.

    Jeffrey A. Marks, PC
    4773 E. Camp Lowell Drive
    Tucson, AZ 85712
    Bar No. 005670

    Jeffrey Marks
    New Member
    Posts:4 New Member

    25 Feb 2020 05:28 PM
    I have practiced law in Tucson since 1978, so I think I have some very germane comments to add to the proposed rule changes.
    First, I would strongly urge the considered change allowing lawyers and non-lawyers to go into business together be declined. When O'Steen was decided, the hope was that it would permit the public to better understand what legal services are available and how to better choose a lawyer. Instead, we have incessant media advertisements and billboards everywhere pushing personal injury law firms. I am genuinely afraid that all the proposed rule would do is allow for the formation of large chiropractor-lawyer personal injury firms to try to corner the market, without adding any benefit to the general public. The only benefit would be to the chiropractors and advertising PI law firms who would be in a race to see who could spend the most money to corner the market. True, we live in a free market society, but I see nothing but gimmicks and bad motives coming from the proposed rule. Lawyers hold a sacred trust with the public and I do not see that being furthered with lawyers going into business with non-lawyers to provide services or referrals. Lawyers can still refer clients to preferred providers and lawyers can still rent space in Wal-Marts or Costcos without making their landlords part of a legal practice. As an aside, supporting my assertion is that the proposed rule would be utilized by no one other than lawyers and those trying to form a cottage industry within the PI field, one can recognize that rarely does one see an overwhelming number of billboards or media spots touting probate lawyers. Second, I also strongly urge the court to decline to allow non-lawyers from providing legal counseling or in-court representation. It is a nice thought, but we've already seen the constant problems that legal document preparers are causing. My thought is that if one is to provide genuine legal services, the services should be provided by someone knowledgeable. We are running the real risk of having those uneducated in the law gumming up the system and throwing it into chaos. If lower priced options are necessary for the public, the answer is to allow qualified law students to practice family law without supervision, allow law students waiting to take the bar exam or waiting for the bar results to handle simpler matters, or by allowing persons licensed in other states but not Arizona to do the same. The issue of providing services to lower income persons will not be met by allowing non-lawyers to attempt to practice law. Even a simple family law OTA can include constitutional issues as well as matters such as guardianships, juvenile law, evidence, emancipation, procedure etc. that a lay person would never spot or understand.

    Jeffrey A. Marks
    4773 E. Camp Lowell Drive
    Tucson, AZ 85712
    Bar No. 005670
    Sai Manthra
    New Member
    Posts:1 New Member

    26 Feb 2020 09:25 AM
    Sai Manthra

    I would like to plead that this petition be denied. I plan to provide detailed comments.
    Jacque Rambo
    New Member
    Posts:1 New Member

    26 Feb 2020 02:50 PM
    Jacqueline Rambo (SBN 023414)
    11811 N. Tatum Blvd., Ste. 3031
    Phoenix, AZ 85028

    I have volunteered at the bankruptcy court's self help center for over a decade. Many of the folks who come to us (often sent to us by the judges and/or the bankruptcy trustees) need help fixing the mess created by legal document preparers. And often times, the amount of money they lose in bankruptcy as a result of not having proper legal guidance from the outset is significantly more than they would have paid for an attorney, who would have been able to prevent the loss. Most of the time, the damage can't be reversed once it's done. That's not SERVING people; that's HARMING people. And it's utterly traumatizing for them. I spend more time helping people cope with the trauma of this type of thing than I do practicing law.

    Similar results happen in family law, as well. People wind up with legally insufficient consent decrees or judgments (or whatever), and then it comes back to bite them down the road.

    I've seen the painful consequences of many issues, over and over again. The idea of having inexpensive legal assistance is great in theory. But the reality is, it causes more harm than good in the end in too many cases.

    And, people have no idea whatsoever the risk they're taking in using someone unqualified. They have a false sense of security that the person is competent since surely the State of Arizona wouldn't allow an unqualified person to do the work, just like a physicians assistant would surely not be allowed to perform surgery. Both the client and the doc preparer simply don't know what they don't know, and many clients wind up stepping on unforeseen landmines as a result.

    Allowing the unlicensed practice of law is misleading the public and luring them into a false sense of security. That's NOT in the best interest of the public.

    In terms of non-lawyer owned firms, corporatizing the legal industry would be just as tragic as the corportization of the veterinary industry is. Bottom line profits become the priority so there's going to be a huge conflict between the profit driven motives of the non-lawyers and the ethic rules lawyers are bound to, and the quality of work clients receive. Money always wins, so it's just inviting an increase in ethical rule violations and a compromised quality of work. That's NOT in the best interest of the public.

    The idea of having a non-lawyer investor help me build my firm has crossed my mind many times over the years. But I realized that the rule against it served a very valid purpose. As someone who has owned a variety of businesses over the years, I was very aware of how drastically different business practices are for law firms compared to other businesses. I could foresee the many struggles and conflicts that would occur having a non-lawyer partner because they simply don't understand what's required of lawyers, and they would never be willing to limit themselves (and their profits) to that degree. That union would be a ticking time bomb. That's NOT in the best interest of the public.

    And on top of that, it will probably put many small firms out of business. I paid $300,000 for my education, which I'm STILL paying for 16 years later. I invested 19 years of my blood, sweat and tears into law school, my small business, and continuing legal education. I've done thousands of hours of pro-bono and other legal volunteer work. And now some non-lawyer investor who has no clue what's going on can swoop in and put me out of business by providing sub-quality service, and who will likely NEVER provide pro bono service. That's NOT in the best interest of the public. And it's a huge slap in the face to lawyers who have invested their lives in this industry.

    If the bar truly wants to help and serve the "public," these ideas are NOT the way to do it. These ideas only help and serve profit-making. Surely there are other more effective ways we can help the public.
    Dianne Post
    New Member
    Posts:6 New Member

    27 Feb 2020 12:59 PM
    Dianne Post, 1826 E Willetta St Phoenix, AZ 85006-3047
    602 271 9019, postdlpost@aol.com, Attorney

    We do need access to justice for poor and moderate-income people. We also need drastic measures taken to equalize income in this country as we soar to the top in income inequality. Then we would have fewer poor and moderate-income and more people who could afford the services of a lawyer. The best way to deliver quality legal services to the poor and moderate income is to fund legal services. Give CLS 10 times more money and let them go to town. Take off the shackles that prohibit them from doing class actions or suing the government. Fund public defenders the same as prosecutors. That would help.
    Secondly, we can simplify the process.
    Third, if non-lawyers own some or all of a firm, they have to be held to the same professional code lawyers are. There is simply no other way to do it and maintain any trust in the legal profession. I recall when we needed a law – not so long ago- to tell financial advisors that their first duty was to their client - shouldn't it have always been that way? What kind of complete nonsense says a financial advisor or lawyer should have loyalty to something else - like money or a corporation.
    Corporatization of the law has brought us the problems we have and we do not need more of it - we need less. The race for the bottom – Walmart style – results in inferior product, abuse of those producing the product, taking advantage of those buying the product, and huge profits for corporations and families that need zero more money.
    In addition, I find it very disconcerting that family law is always put into the mix as an area where people can do it themselves or use a non-lawyer. What it indicates is that the drafters think, as many lawyers do, that family law is not important. Yet it often means life or death for a battered spouse. Life or death for children of that couple. It means poverty or a decent living regarding property and debts and child support and spousal maintenance. It may mean violence and being stalked the rest of a person's life or sharing custody with your rapist rather than some semblance of peace. These issues are certainly as important as those in criminal law and much more important than questions in business law about who owns a patent or where is the comma in an agreement. Those have to do with money and power - not life and death. Often such “important” lawsuits turn out to mean nothing like a huge law suit of Exxon v. Mobil that I was invited to work on when I first started practicing law and declined only to see them merge a few years later. So what was all the money spent for?
    Even in property issues family law practitioners need to know many things such as pensions and federal benefits, insurance and social security, taxes and bankruptcy, not to mention the right to move, the right to change your name or that of the child etc. Change and technology brings us difficult questions regarding custody of sperm and egg, same sex marriage, gender surgery for minors etc. Knowledge of all of these issues is necessary to give proper legal advice. Most lawyers cannot do this let alone non-lawyers.
    A recent immigration case is an illustration - the defendant was not advised by his lawyer that to plead guilty made him subject to deportation when he got out of prison. Knowing criminal law was not enough, one had to know immigration law too. Non-lawyers are not going to be able to navigate this space.
    If you want to provide services for poor and moderate income, require 100 hours of pro bono a year , mandate a sliding scale fee, and prohibit lawyers from charging the ridiculous hourly rate they do now.

    Frank Verderame
    New Member
    Posts:3 New Member

    27 Feb 2020 04:57 PM
    Frank Verderame
    Address: 316 E Flower St
    Phoenix, AZ 85012
    Phone: (602) 266-2002

    I'm strongly opposed to the Petition, particularly the amendment eliminating ER 5.4, in order to permit non-lawyers to own, manage, and make decisions concerning legal disputes. I do not want to repeat all of the objections raised by others, but will say that I do agree with them.
    I believe there is a great potential for conflicts of interest to arise, and there may well be conflicts of interest that are undetectable without significant investigation. For example, imagine the circumstance where a major insurance company creates a corporation for the purpose of purchasing a law firm. Once created, that corporation then buys a law firm, or a significant equity position in a law firm. When a client is injured in an automobile collision, they could well find themselves being represented by a firm that is owned by a corporation that is tied to the insurance company that is on the other side of the lawsuit. This situation is not limited to tort claims, these problems will exist with real property disputes, contract disputes, and a myriad of situations.
    When we consider the fact that multiple levels of corporate ownership can be used to conceal, or at least make it difficult, to identity of the true owners and decision makers, there may be conflicts that exist but will be difficult to identify. I believe this will create many problems for the bench and the bar.
    The rule appears to put forth an idea without adequate protections for the public. What type of investigation will need to be made in every instance to determine that conflicts of interest do not exist? Also, how will the bar monitor this situation? Will law firms owned by corporations and non-lawyers be required to identify those owners, and will those corporations be required to disclose other relationships with corporations and individuals related to those owners?
    Non-lawyers and corporations are not required to attend mandatory CLE on ethics. What requirements will be imposed upon the non-lawyer owners? We used to be a profession. We hear complaints from the bench and bar about a lack of civility and professionalism by lawyers. Does anyone think that adding non-lawyers as owners will improve that problem? If non-lawyers own law firms, they will likely push back when the lawyers in the firm insist on conduct required by the ethics rules. Ethical lawyers will follow the rules, but they may face pressures—including the loss of their job—if the firm is owned by a non-lawyer. The non-lawyers could terminate the lawyer, bring in a new lawyer, and conceal the information that created the conflict or ethical violation from the new lawyer.
    This rule change is fraught with peril and should not be adopted. Arizona should let some other state that is imprudent enough to pass this new rule do it first. Arizona should not be on the bleeding edge of this change. We should learn from the experience of others on this novel concept and only consider the rule when we have a better idea of the problems that will surface.

    Yolanda Fox
    Basic Member
    Posts:158 Basic Member

    28 Feb 2020 08:19 AM
    Arthur E. Lloyd
    AZ Bar No. 010049
    113 East Frontier
    Payson, AZ 85541

    I would like to express my opinions about the proposed rule to allow now-lawyers to have an ownership interest in Arizona law practices. To do so, I would like to tell you of an experience I had shortly after I started practicing law in Payson.

    There was a well-known local doctor who brought a new doctor into his family practice and shortly thereafter moved out of town. I became friends with the new doctor and did some minor legal work for him and his wife (who was a nurse). One day, a year or so later, the doctor came into my office very worried and told me his story.

    We had all assumed he had bought the medical practice from the first doctor, but he explained that, to the contrary, the first doctor had sold the practice to a group of investors from California who decided medical practices could be good investments for their corporation. My friend was just an employee of the practice, but none of the patients knew it.

    About six months before the doctor came into my office, the corporation ran into financial difficulties and stopped paying the bills of the medical practice. For the last three months, none of the labs would process patient samples without upfront payment and all the medical supplies were COD. The doctor got tired of bill collectors harassing him, even though the bills were not his responsibility. He finally quit, moved down the street and opened his own clinic.

    He came to see me because the corporation had filed a lawsuit against him for violating the non-competition clause in his employment agreement, and they were seeking a temporary restraining order. A hearing was set the following week. I represented him at the hearing, and the TRO was granted by the court because the contract plainly prohibited him from practicing medicine within 25 miles of Payson for a period of 2 or 3 years as I remember.

    As a last-ditch effort to keep his practice open so his patients could continue seeing their family doctor, I put him into a Chapter 11 bankruptcy. To make a long story shorter, the corporation eventually got tired of paying the attorney’s fees to fight him after the bankruptcy court refused to lift the stay blocking enforcement of the TRO, and it dropped the lawsuit.

    I had no idea that a non-doctor could own and operate a medical practice, and I was so happy that the law profession saw the folly of permitting non-lawyers to own law practices. Apparently, the ethics are changing. If this petition is approved, what will keep insurance companies from operating their own law firms and requiring their insureds to use those firms? Or hospitals from opening law practices and requiring, as a condition of treatment, for patients to use their law firms if there are any disputes? Farfetched? I don’t think so once that pandora’s box is opened. Take a look at admission papers at hospitals or uniform real estate purchase contracts, they all have mandatory arbitration clauses that are obviously one-sided.

    Our courts can’t even effectively enforce the unauthorized practice of law by non-lawyers, so why would we seriously consider allowing non-lawyers to own legal practices when the non-lawyer is not subject to the regulations of the bar?

    This petition should be denied.
    Yolanda Fox
    Basic Member
    Posts:158 Basic Member

    28 Feb 2020 09:21 AM
    Jason M. Kelly, Bar Number 020525
    4747 N. 7th St., Ste 402
    Phoenix, AZ 85014
    (602) 595-9299
    Email: jkelly@fblegalgroup.com

    Access to competent, affordable legal representation has, and always will be, an issue that society at large – and attorneys in particular – must address. We should always be looking for new and better ways to deliver quality services at more affordable prices. The question therefore becomes, "How best to address this?" Rather than suggest an incremental approach, which permits changes to be studied and analyzed, the October 4, 2019 report from the "Task Force on the Delivery of Legal Services," proposes a wholesale restructuring of important aspects of the business side of the legal practice in a move reminiscent of Representative Pelosi's famous line that, "We need to pass the bill so you can find out what is in it."

    This letter primarily addresses non-lawyer ownership of a firm and unlicensed persons practicing law; it briefly addresses advertising issues. Particular ethical concerns have been voiced, and are being voiced, by Judge Swann and other members of the Bar. I will not endeavor to repeat them, because, while I share their concerns, I cannot improve upon what they have already said. I write with my concern that this has moved far too quickly and without nearly enough analysis.

    The Task Force's hurried rush is highlighted by disturbing language on page 2 of the Report:

    "Due to the number and complexity of topics the task force was charged with addressing and the limited time it had to explore those topics, task force members divided into two workgroups."

    (emphasis added1).

    I do not doubt that the Task Force members spent a great deal of time and energy on this project. I question, however, the wisdom of assigning the members such a large, complex task with a short time fuse. This flies in the face of centuries of collective legal experience which suggests that we address narrow issues, learn from experience, and then build upon that experience.

    On page 3, in Abbreviated Recommendation #1, in which the Task Force recommends that non-lawyers be permitted to own law firms it incomprehensibly recommends that we put the cart before the horse: "In anticipation of these rule changes, the Supreme Court should immediately convene a group to explore regulation of legal entities in which nonlawyers have a financial interest." Should not this group exist before any nonlawyer has a financial interest in a firm?

    Abbreviated Recommendation ## 7 and 8 appear to address a narrow issue of domestic violence advocates. Having no experience in that area of law, I am unable to directly comment on the propriety or advisability of such recommendations. Similarly, Recommendation #9 appears to be a targeted approach to declared concerns. I would contrast what appears to be narrow exceptions in the domestic violence and LDP areas to the wholesale changes reflected in my previous paragraph. The contrast highlights the Task Force's inability to adequately address the sweeping nature of the proposed changes as to non-lawyer ownership and un-licensed practitioners.

    1 See also, page 14: "Given the limited time afforded to the task force for its work, it did not explore the advisability of legal entity regulation or what such regulation would entail." (emphasis added). And see, footnote 56 to Judge Swann's opposition at page 57: "The task force modestly supported having court-employed navigators but lacked sufficient time to formulate a recommendation." (emphasis added).

    2 I know that Judge Swann has issued an objection to this Recommendation. My point is simply that the Task Force has taken a measured approach in this instance.

    Further, not all concerns about access to justice should are properly addressed by the Judicial Branch. Unfairness in the legal schemes of evictions, foreclosures, and debt collection 3 are legislative concerns. What purpose is served by allowing the businesses that funded their lobbyists to enact the complained-of legislation to own law firms? Is anyone so naïve to think that persons looking to invest in law firms are looking to invest in low-cost legal representation for those looking to stay in their homes or apartments? Although "small firm lawyers" likely struggle to earn a living representing the under-privileged,4 does anyone actually believe that allowing for-profit corporations to run these firms would actually result in services being provided? Why, exactly, would a fund manager with fiduciary duties to his investor seek to invest in a law firm with a low profit margin?
    3 See Report at pp. 6-7.

    4 See Report at pp. 7-8.

    Other aspects of the proposal appear laudable – such as providing more information and education to self-represented parties. This, of course, begs the question of why the laws, regulations, and rules are so difficult to navigate. I would submit that the rising cost of legal services is not being driven by the current ethical rules, but that the largest driving force is the legislative and procedural scheme in which we operate.

    Nor should we forget that the Arizona Constitution already provides non-lawyers with a limited ability to practice law. Article XXVI allows licensed real estate agents and brokers to prepare instruments incidental to property transactions. Therefore, the discussion pages 15-16 of the report simply sets up a straw-man argument. If there truly are concerns about the ability of consumers to refinance home loans, stop foreclosures, or participate in short sales, those concerns can be dealt with narrowly in the legislature.

    Page 16 continues with a discussion of the alleged benefits of elimination of ER 5.4. These simply offer solutions to problems that do not exist. Officers (such as a CFO or CTO) are typically employees of a corporation and not owners, and non-lawyers are currently permitted to offer non-legal assistance to consumers. The only truism in the middle of page 16 is that elimination of ER 5.4 would allow a non-lawyer to own a partnership interest in a law firm, but there is no discussion as to how that will provide greater public access to legal services.

    Recommendation #6 proposes the creation of a system with un-licensed attorneys providing legal services with a "steering committee" to determine what that may look like in the future. The recommendations as to domestic violence survivors (Recommendation #7) appears to me based on University work that was compiled by research, study, and experience. I cannot fathom why needs in other discrete areas of law should not be subjected to the same academic rigor. I am suggesting that such licensing occur only if and when there is a demonstrated need, and corresponding benefit, to allowing the same. This type of thorough analysis would then provide the framework for the program – rather than the other way around. And, again, this can be dealt with legislatively as necessary and appropriate.

    As you can see, my main concern was the non-lawyer ownership of firms. Advertising and referral fees must also remain at the forefront of ethical concerns. I fear that the Task Force has not fully addressed the impact of fee-sharing with non-lawyer agencies. In this area, I do not know much, but I know two things. First, all costs are eventually borne by the client. Currently, when there is fee sharing between lawyers, the referring lawyer simply shares in a portion of the typical fee. It is not clear to me where this protection remains in place for the client in the new advertising rules. Second, we must take measures to protect privacy. There are numerous reports and studies as to how best to address privacy protection for consumers who participate with referral sources, and I will not attempt to recreate any of that here. I simply suggest that the ethical rules as they related to advertising incorporate current realities and put the burden on lawyers to comply.
    Yolanda Fox
    Basic Member
    Posts:158 Basic Member

    28 Feb 2020 09:51 AM
    Carl A. Piccarreta
    State Bar #007151
    3507 N. Campbell Ave. Ste. 111
    Tucson, AZ 85719

    I write you today in opposition to the above Petition, in general and the Amendment eliminating ER 5.4, in particular. I do not believe non-lawyers should be allowed to own, manage or make decisions involving legal disputes.

    I have been a practicing lawyer for nearly 40 years. In that time, I have regularly and routinely attempted to counter the negative public image of lawyers. Specifically, I have been actively involved in both the legal and non-legal community always attempting to advance/improve the public perception of attorneys. I have done this through numerous speaking engagements, including at both the middle and high school levels. I have been actively involved in Community Boards. I have taught at the University of Arizona law school emphasizing ethics and professionalism.

    I see the Petition as a significant threat to all our efforts to improve the image of attorneys. Although I join in the comments and opinion expressed by former State Bar of Arizona President Geoffrey Trachtenberg, I add my concern over our future image. I see the Petition allowing law clinics being operated by non-lawyers such as Walmart, Walgreens, Costco, etc. I see non-lawyers skirting ethical and professional concerns with profit “coaching” legal advice being given, emphasis on quantity over quality, etc.

    Justices, as an attorney, I take pride in my professionalism, ethics and those of the vast majority of my colleagues. I am proud to be an attorney. I will continue to sing the praises of our profession. However, adopting the Petition will make my efforts near-futile and will ultimately allow further embarrassment to our profession.

    Please do not hamper our collective efforts to improve the image of attorneys with the adoption of Petition #20-0034.

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