Lori Zucco, on behalf of the Cochise County Bar Association, PO Drawer CA, Bisbee AZ 85603, 520-432-8700, [email protected], Bar #017572

Submits the following from the Cochise County Bar Association's Ad Hoc Committee to Comment on Petition for Rules Changes:

We write in strong opposition to Recommendations 1, 6, and that portion of 9 that would allow legal document preparers speak in court. We do so not because we want to oppose the goal of improving access to justice. Quite the contrary. We oppose these proposals because they are simply bad plans – plans that will not improve anyone’s access to genuine justice. These plans, if adopted, will in all likelihood work to the detriment of those without effective access to the justice system.

The three of us are retired judges, all with substantial experience serving on the bench of the Superior Court in Cochise County. We have been authorized by the Cochise County Bar Association, on its behalf, to submit a comment in opposition to the proposed rule changes.

We agree with many of the thoughtful statements that have been offered in opposition to these recommendations, particularly those of Judge Peter Swann, Geoffrey M. Trachtenberg, Dev Sethi, and Ilya Elena Lerma.

Recommendation 1 would apply the Golden Rule to the Arizona legal system. And no, we don’t mean the good version of the Golden Rule (“Do Unto Others As You Would Have Them Do Unto You”); rather, we mean the good version’s evil counterpart (“Them’s As Gots the Gold Makes the Rules”).

Recommendation 6, and that part of Recommendation 9 that would allow document preparers to speak in court, would not improve access to justice for anybody. Rather, they would extend the reach of incompetence so that more a far greater segment of the public can be victimized. Recommendation 6, if adopted, would set Arizona on a path to permit minimally-trained non-lawyers to give advice, counsel, and in-court representation to people who may not grasp the implications of these non-lawyers’ limitations. LLLPs will market their services to those of limited means who seek legal assistance in a vast array of significant matters with potentially serious consequences. Undoubtedly, some of the clients of such LLLPs will get what they pay for. But it seems highly probable to us that many vulnerable people in stressful situations will be preyed upon by ill-trained or unscrupulous LLLPs.

Regarding that portion of Recommendation 9 to allow document preparers to speak in court, no one should be lulled into a false sense of security just because the document preparers will only be able to speak if “authorized” by the court. Is there anyone who doubts that non-lawyer justices of the peace – and even a few law-trained superior court judges – will freely “authorize” document preparers to say anything they want?

Karl Elledge
State Bar No. 005844

Wallace R. Hoggatt
State Bar No. 006012

Charles A. Irwin
State Bar No. 010301

Cochise County Bar Association
Ad Hoc Committee to Comment on Petition for Rules Changes
C/O Wallace R. Hoggatt

Lincoln Combs
602-530-8022
[email protected]
Gallagher & Kennedy
2575 E. Camelback Road, Suite 1100
Phoenix, AZ 85016-9225
Main: 602-530-8000
www.gknet.com

I oppose the Petition for all of the reasons expressed in other comments, and likewise join in Judge Swann's eloquent dissent from the Task Force's recommendations. The Task Force's recommendations and resulting Petition would enact sweeping changes to the practice of law in Arizona, but appear to be based solely on a single academic study. I strongly disagree that allowing non-lawyers to essentially practice law and own law firms will have the intended result of increasing access to justice, and the unintended consequences of deregulation are likely to be both massive and harmful to both that goal and the legal profession generally.

The tone of the Task Force's recommendations addressing the very real problem of increasing access to justice and supportive comments like our Welsh colleague Mr. Passmore's statements are to the effect of "innovation and change will make it better!" But who will be doing the innovating? Surely the change will be led by profit-seeking corporations unbound by ethical standards seeking to maximize revenue from their clients. The ethical failings of lawyer that exist under the current ethical regime and that Mr. Passmore highlights do not justify destroying that regime. Indeed, it seems like a strange remedy for the problem of increasing access to ethical, competent attorneys by abrogating the ethical rules and replacing them with the profit motive.

It is worth noting that the California State Bar recently rejected a much more limited deregulatory proposal that is not nearly as broad as the Petition.

https://www.law.com/legaltechnews/2020/03/13/state-bar-ices-proposed-regulatory-sandbox-legal-referral-rule-changes-397-31789/?slreturn=20200220172851

The Court should follow suit. Ideological experiments in free market access to legal services should be at most very limited in scope and subject to intense long-term study before being imposed on the entire Arizona legal system. The Petition skips those steps and proceeds right to massive change.

Finally, I plead with the Court not to consider such an enormous change during the current pandemic crisis. Change to all aspects of life in America and Arizona is already being imposed by the coronavirus and resulting necessary governmental efforts to combat its spread. The unintended consequences of the current crisis will not be fully realized for months or years to come. Now of all times is not the time for the Court to experiment with a radical alteration of the practice of law in Arizona.

Respectfully, the Petition should be denied.

First, I'd normally not say anything, but it's troubling when those who urge for an ethical rule change before this Court do not themselves appear to be following existing ethical rules. Skymark Advisors Law Group, LLC is an example. The entity, whose principal lawyer commented in favor of the Petition, is currently owned and controlled by a lawyer and a non-lawyer.

This is revealed on the website listed in the comment itself, skymarkadvisors.com, which notes the "principles [sic] of this firm [are] Jared Farnsworth CFP® and Daniel Esparza Esq.,” and confirmed by public filings with the Arizona Corporation Commission (the “Commission”) for Skymark Advisors Law Group, LLC. [Footnote: To be sure, there are two business entities the Commission’s website—Skymark Advisors Law Group, LLC and Skymark Advisors, LLC—but both list the same lawyer and non-lawyer principals at the same address.]

Unless I’m misunderstanding something, this business arrangement violates our existing rules. To that extent, this Court and its rule-making process should not be used or blindly influenced by those who merely seek to sanction their desired business models, especially by those who seem to have already disregarded the Court’s rules.

Second, I’d like to point out that a much less radical approach to the current Petition was being considered in California, which was contemplating a “regulatory sandbox” to allowing non-lawyers to own and operate law firms. This more conservative proposal was just recently “put on ice" for additional study after more the 3,000 lawyers and trade groups criticized the proposed changes as posing potential dangers to the justice system and legal consumers. Arizona should do the same.

Third, the article linked below is instructive in that it shows what happens when private equity took over the dental profession, something I’d raised in my initial comment. In my view, the “access to justice” mantra is being co-opted as Trojan Horse; it’s being used by private equity and hedge funds who desire to squeeze every last dollar out of the legal practice—it has nothing to do with providing legal services at a lower cost or to the underserved.

https://www.usatoday.com/in-depth/news/investigations/2020/03/19/dental-chain-private-equity-drills-healthy-teeth-profit/4536783002/?fbclid=IwAR3PnDBpO3y6e50LYivYgnOy2NtNNv5B0aaJJispspbQDw-W4edBN6FQVes

And fourth, this Court recently decided Ansley v. Banner Health, 2020 WL 1126300 (March 9, 2020), which ended a lengthy dispute with Arizona hospitals seeking to "balance bill” AHCCCS patients. The matter was essentially handled pro bono on the expectation that attorneys’ fees, if any, would be awarded under the private attorney general doctrine. They were and the Court recognized that the effort was “unquestionably of great societal importance.” My firm was the primary vehicle for this litigation and, while we are truly grateful for the award of fees, the simple fact is that we could never have undertaken this costly, decade-long project if we were beholden to non-lawyer shareholders or business people. Those kinds of people would not have seen the value in assisting these impecunious clients. Putting those types of business-people at the helm of law firms will kill our kind of socially-responsible law practice.

Again, I’d urge you to please study this more (or pilot a sandbox approach) before experimenting with Arizona’s entire justice system by allowing non-lawyers to own or operate law firms.

Geoffrey M. Trachtenberg
Levenbaum Trachtenberg, PLC
362 N. 3rd Avenue
Phoenix, AZ 85003
602-271-0183
Bar No. 19338

Gary L. Stuart
Arizona Lawyers Foundation Board of Trustees
7000 North 16th Street, Ste. 120
Phoenix, AZ 85020
602-281-1111
[email protected] or [email protected]

The State Bar of Arizona hereby gives notice that it will file its comment during the second comment period. Further, the State Bar respectfully asks that the comment periods for this Petition and Petition R-20-0030 be aligned. Finally, on behalf of staff and its constituency, the State Bar requests a 60-day enlargement of time, or more as circumstances related to COVID-19 may warrant. This request for extension is made based on 1) the complexity of the proposed rule changes and associated ACJA code provisions, including still TBD portions, 2) stakeholder desire to provide meaningful input to the Court, and 3) curtailed meetings and shifted priorities during the prior and coming weeks due to the COVID-19 pandemic.

Lisa M. Panahi, Bar No. 023421
General Counsel
State Bar of Arizona
4201 N. 24th Street, Suite 100
Phoenix, AZ 85016-6288
(602) 340-7236
[email protected]

Mark Sippel
707 E Beale St
Kingman, AZ 86401
Phone: (928) 753-2889

How does non lawyer members managers etc who have the profit motive foremost help the "access to justice gap" The many other comments are on target. I cannot help but wonder if those who are in favor of this have little to no experience in mall firm, rural poverty practice. I seem to recall the bankruptcy and divorce firm debacle with non lawyers running the show. This rule change should be rejected.

Matthew S. Mueller, Assistant City Prosecutor II
On behalf of Luis Santaella, Acting City Prosecutor
City of Scottsdale
3700 N 75th Street #B
Scottsdale, AZ 85251
(480) 312-2710

The City of Scottsdale Prosecutor’s Officer strongly opposes the proposed Supreme Court Rule 31.3(c)(3) as it applies to municipal courts. The proposed change would vastly expand the existing rule to allow non-lawyers to represent a business or legal entity in not just Justice Court, but also in municipal courts where both civil and criminal cases are heard. Legal entities would be allowed to be represented in municipal courts in all circumstances under the proposed rule, which is contrary to Arizona case law and the general principle followed in federal courts and, frankly, the United States as a whole. See Rowland v. California Men’s Colony, Unit II Men’s Advisory Council, 506 U.S. 194, 201-02, 113 S.Ct. 716, 121 L.Ed.2d 656 (1993) (“It has been the law for the better part of two centuries… that a corporation may appear in the federal courts only through licensed counsel.”), and Jadair Inc. v. U.S. Fire Ins. Co., 209 Wis. 2d 187, 205, 562 N.W.2d 401, 408 (1997) (“A corporation is not a “natural person,” and therefore, Blueprint cannot fall within the term ‘any suitor’ for purposes of corporate self-representation.”).

Courts have recognized that the principle that a corporation must represented in court by an attorney has its basis in common law. See Nixon, Ellison & Co. v. Sw. Ins. Co. of Cairo, 47 Ill. 444, 446 (1868) (“We find that as early as Lord Coke's time it was the recognized doctrine that a corporation aggregate could not appear in person to an action. 1 Coke Litt. 66 b. And we find the same rule announced in Comyn's Digest, Pleader 2, B. 2, where it is said, speaking of a corporation aggregate: ‘But the corporation must appear by attorney, appointed under their common seal.’ And Chitty, vol. 1, p. 551, lays down the rule, that ‘A plea by a corporation aggregate, which is incapable of a personal appearance, must purport to be by attorney.’”). This general rule is followed by federal as well as State courts.

The Arizona Supreme Court has long held that, “Absent statutory authority a corporation cannot practice law even in its own behalf. A corporation cannot appear in court by an officer who is not an attorney, and it cannot appear in propria persona.” Ramada Inns, Inc. v. Lane & Bird Advert., Inc., 102 Ariz. 127, 128, 426 P.2d 395, 396 (1967), citing Paradise v. Nowlin, 86 Cal.App.2d 897, 195 P.2d 867; Tuttle v. Hi-Land Dairyman's Ass'n, 10 Utah 2d 195, 350 P.2d 616; Nicholson Supply Co. v. First Federal Savings, Fla.App., 184 So.2d 438; Niklaus v. Abel Construction Co., 164 Neb. 842, 83 N.W.2d 904. Additionally, “Until a corporation appears in court by counsel, its appearance is defective.” State v. Eazy Bail Bonds, 224 Ariz. 227, 229, 229 P.3d 239, 241 (Ct. App. 2010), citing Boydston v. Strole Dev. Co., 193 Ariz. 47, 50, ¶ 12, 969 P.2d 653, 656 (1998) (“a corporation may cure its defective appearance after being given a reasonable opportunity by the court to do so”).

Consistent with this principle, the current Supreme Court Rule 31(d) provides for only a limited number of exceptions to the practice of law by non-lawyers. It should be noted that none of these exceptions concern criminal proceedings. In fact, Rule 31(d)(3), which the proposed Rule 31.3(C)(3) would significantly expand, only applies to Justice Courts and police courts, not municipal courts, and even then, in very limited circumstances. The current requirement that the legal entity must be “an original party to or a first assignee of a conditional sales contract, conveyance, transaction or occurrence that gave rise to the cause of action in such court, and the assignment was not made for a collection purpose” makes clear that the rule only anticipated legal entities participating in civil proceedings in Justice or police courts through a non-lawyer. AZ ST S CT Rule 31(d).

The proposed Rule 31.3(c)(3) contains no such limiting language and would completely overturn this longstanding precedent. Under the proposed rule, a corporation cited with a criminal violation or made a party to a civil action can represent itself in municipal court in any proceeding. Such an expansion would create confusion, particularly for larger corporations: what proof must the court require of the corporate representative to show that he has authority to represent the corporation or his or her business partners under proposed Rule 31.3(c)(3)(B)? How, or should, municipal courts protect the interests of the legal entity against a representative who lacks the legal skills, character, or basic competence to appear in court? Would municipal courts find themselves compelled to give more leeway to non-lawyer representatives of corporations regarding poorly drafted pleadings or arguments or behavior in courts? How would these non-lawyer representatives be held responsible for what would be considered unethical behavior if committed by attorneys, especially in criminal matters?

This additional confusion and burden on municipal courts is unnecessary and should be avoided at all costs. Allowing those that do not have sufficient legal knowledge to represent businesses and other legal entities in court will create significant inefficiencies for municipal courts as they attempt to address their cases without a full understanding of in civil or criminal procedures. We therefore strongly oppose this proposed rule change.

Interestingly, the State Bar's own "Arizona Attorney Daily 5" daily email included the following article:

"Dental chain overbites in bid for profits

"Private-equity firms have bought dental offices and drilled down on dentists to floss more profits out of patients – leading to overtreatment allegations. One company may take the crown, though. Its patients say dentists told them they needed fillings for several cavities – when they had none. One woman sued after a dentist did seven root canals on her 3-year-old son. Former employees say they were pressured to bridge the gap between financial targets and scheduled treatments. Regulation of these chains is nonexistent or toothless. Though unheard of 20 years ago, private-equity dental chains now make up 16% of the market."

It linked to the full story at https://www.usatoday.com/in-depth/news/investigations/2020/03/19/dental-chain-private-equity-drills-healthy-teeth-profit/4536783002/.

Certainly the expansion of these dental offices increased consumer access to dental services and increased competition. But at what cost to the consumers and their trust in, respect for and reliance upon the professionalism of the practitioners in the profession?

This should serve as a cautionary tale and should make any supporter of the proposed Rules changes have serious second thoughts.

Victor Garnice
Arizona Bar No. 004485
14648 N Scottsdale Rd Ste 130
Scottsdale, AZ 85254
Phone: (480) 556-5800

Commenter:
James W. Rappaport

Committee:
Pima County Bar Association, Rules Committee

Mailing address:
177 North Church Avenue
Tucson, AZ 85701

Phone Number:
520-623-8258

Email address:
[email protected]

Bar Number:
031699

I have been a proud member of the State Bar of Arizona since 1978. I have been active in both the State Bar Sections, serving as Chair of the Employment & Labor Section and Co-Chair of the Workers’ Compensation Section, and State Bar CLE, serving as a frequent presenter and co-chairing a track at CLE by the Sea as well as being an author of the Arizona Employment Law Handbook. I am honored to have won the Member of the Year award in 1999 and the Employment & Labor Section Member of the Year award in 2014.

I am respectfully opposed to Supreme Court Rule Change Petition R-20-0034 (“Petition”) Section VI with respect to “expanding the universe of legal professionals” to create the Limited License Legal Practitioner or LLLP.

I have been hearing about an “access to justice gap” ever since my law school days. The Petition and the Task Force make the assumption that there are too many pro per litigants because they cannot afford legal services. Indeed, Arizona’s poverty rate exceeds 20% of the population and the lack of sustainability rate (families earning less than the social services safety net costs) is even greater. There is no cost for lawyers for those indigent eligible for government-subsidized services, other than waiting in line due to underfunding of legal services agencies. The major concern is with the vast middle class whose wealth index has been decreasing over the decades.

I wonder if the plethora of unrepresented parties is due strictly to the unaffordability of legal help or whether other factors have been investigated. In my career representing employees, small businesses, association members, and injured workers, it appears that an overwhelming number of people want “their day in court” and will not accept legal advice. An overriding American cultural icon is individualism or Do It Yourself. The courts understand this by providing helpful information in kiosks and online.

Another cultural icon is the concept that services are free. The healthcare industry is continuously challenged by this issue. In other words, it is probable that the simple cost of legal services, of which many in what remains of the middle classes can pay, is not the sole driver behind the unrepresented parties. I believe many Arizonans simply do not want to pay a lawyer to help them or are frustrated when a lawyer tells them something they do not want to hear. This is not an access to justice gap – this is a choice. And, providing another tier of legal professional will not have any impact upon this issue.

I am concerned that the Task Force and the Petition did not mention the State of Washington’s eight-year failed experiment with Limited License Legal Technicians as outlined in Rebecca Donaldson, “Law by Non-Lawyers: The Limit to Limited License Legal Technicians Increasing Access to Justice," 42 SEATTLE U. L. REV. 1 (2018). I understand that the LLLTs in Washington are struggling to earn a living, charging by the hour just like the lawyers, and not increasing the access to justice by the marginalized. There appear to be less than 50 of these LLLTs after eight years. I must ask why we are reinventing the wheel, especially because the Washington wheel appears to be broken.

As a member of the American Bar Association, I know that the House of Delegates recently endorsed regulatory innovations to improve access to justice. However, ABA Resolution 115 contains two cautions:

FURTHER RESOLVED, That the American Bar Association encourages U.S. jurisdictions to collect and assess data regarding regulatory innovations both before and after the their adoption of any innovations to ensure that changes are effective in increasing access to legal services and are in the public interest of clients and the public; and
FURTHER RESOLVED, That nothing in this Resolution should be construed as altering 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.

The Petition does not provide for the collection of data. Rather, it passes off the “details” of the LLLP program to working groups (see footnote 20 on page 33). Politicians call this “kicking the can down the road.” Additionally, the Petition requests specific changes, contrary to ABA Resolution 115, to Rule 5.4 and the unauthorized practice of law.

Some of those LLLP “details” are critically important to the public as well as to the members of the State Bar. If these “professionals” are going to give advice and appear in court or before administrative agencies, what kind of education will they be required to have? Please remember that about one-half of the teachers in Arizona do not have basic qualifications because of the underfunding of schools, poor teacher pay, and few barriers to entry to that profession. Some of those teaching have no college degree.

Who will pay for the LLLP education and training? How will the limited practice areas be chosen? Who will pay for their licensing and discipline? Will they have to undergo testing? There is evidence that the Washington LLLT program has failed to achieve the access to justice which ostensibly is the reason for the creation of the LLLP.

The Petition states that there is no evidence that LLLPs will hurt the income potential of lawyers. However, there is no citation to the Seattle University law review article or empirical market evidence from an eight-year timeframe in Washington. I am also concerned about the creation of a new bureaucracy to license and discipline LLLPs.

There is an important social justice aspect to this situation. It is blatantly unfair to the poor and marginalized to give them “help” from unqualified people who are not real lawyers. To say that it is “innovative” and “assisting the little guy/gal” to give them poor help rather than no help, is to perpetuate the gap between the classes in modern America. If one has no money, one can only afford an individual who never went to law school and is just trying to make a buck like everyone else. This is unfair – to the law schools, to those of us who went to law school and passed the bar, to those of us who give pro bono services, and to the poor and marginalized who will just have to be satisfied with “half a loaf.”

Please do not approve Section VI. Thank you for your consideration.

Denise M. Blommel, Attorney
Denise M. Blommel, PLLC
6945 E. Sahuaro Drive, Suite 125
Scottsdale, AZ 85254
480-247-7477
[email protected]
www.azlaborlaw.com

Rohan Pavuluri
Upsolve, CEO
1180 6th Ave. New York NY 10036
Phone: (646) 653-0918

I am writing to support the elimination of ER 5.4 and the introduction of a new category of nonlawyer legal-service provider, the limited license legal practitioner (“LLLP”). These measures would allow for Arizona to responsibly introduce new kinds of free and low-cost assistance for low-income and working-class families who cannot afford lawyers.

My name is Rohan Pavuluri, and I’m the CEO of Upsolve, a nonprofit that helps low-income families who cannot afford lawyers file bankruptcy for free, using an online document assembly tool. Over the last four years, Upsolve has become the largest bankruptcy-related nonprofit in the United States, relieving nearly $200 million in debt for thousands of low-income families. Since January 1, 2019, Upsolve has relieved over $5.3 million in debt for Arizona residents, making Upsolve one of the largest nonprofits for bankruptcy in Arizona.

I co-founded Upsolve during my time at the Harvard Law School Access to Justice Lab. Upsolve has raised nearly $3 million in funding from organizations that include the Legal Services Corporation, Hewlett Foundation, and Public Welfare Foundation. Along with my day job, I hold volunteer positions on the legal innovation committee of the American Academy of Arts and Sciences and the Emerging Leaders Council of the Legal Services Corporation.

There are not enough free or affordable lawyers in America to meet the demands of poor and working-class families who require civil legal assistance. And there never will be, given just how much the demand for free and low-cost lawyers exceeds the supply. It is not a political reality that we’ll ever have enough funds to support a free legal aid lawyer for everyone who needs one.

The current state of regulations means that poor and working-class families, by and large, cannot get meaningful assistance to solve their legal problems from any person or company that is not a lawyer. These regulations may seem reasonable, but they are, in reality, one of the greatest civil rights injustices of our day. They limit the supply of help available. They ensure that countless poor and working-class families cannot access their basic legal rights. They guarantee that Arizona residents do not have equal protection under the law.

The Supreme Court of Arizona is in a unique position to do something similar to those who first spoke up against Separate but Equal, a policy that at the time appeared reasonable to many in power, just as today’s policies against non-lawyer assistance seem reasonable. The truth of Separate but Equal is that it ensured unequal access to democracy for black people. The truth of today’s regulation on the practice of the law is that it ensures unequal access to democracy for poor and working-class people.

Think about having to go see a doctor for every small ache or pain rather than being able to go buy Advil yourself. In the law, we must encourage people to use more affordable limited license legal practitioners when they have a problem where limited license legal practitioners will do. Telling a poor person to go find a lawyer they obviously can’t afford is out-of-touch, unjust, and just doesn’t make sense. We must not let perfect be the enemy of good.

Consumer protection is important. All the other concerns on this forum are reasonable. That is the purpose of thoughtful regulations proposed by the Petitioner. Nobody is suggesting we immediately open the floodgates to unregulated interventions with regards to Alternative Business Structures and Limited License Legal Practitioners. Indeed, lawyers will always be at the center of these interventions. The legal fees that poor people must pay today to preserve their life, liberty, and property resemble the poll taxes that used to stop people from voting. One of the only ways to get rid of these modern-day poll taxes is to allow new kinds of regulated non-lawyer assistance, working side-by-side with lawyers, to provide meaningful legal assistance at lower costs or for free.

At Upsolve, I have spent the last four years of my life dedicated to providing a technology solution to low-income families trapped in debt who need access to our bankruptcy system. Our free internet application uses technology to gather and input user’s information into the standard Chapter 7 bankruptcy forms. We do not provide legal advice or representation. 98 percent of the people who file for bankruptcy using our document assembly tool are able to obtain a discharge. This is about the same rate of success for attorney-represented debtors, and it’s far above people who file for bankruptcy on their own without any kind of assistance.

My lived experience, combined with the data we’ve collected, has taught me that for certain areas of the law non-attorney assistance can provide access to justice at scale for poor people who can’t afford lawyers, achieving similar outcomes in the routine, simpler, more non-adversarial parts of poverty law, which is where Alternative Business Structures and LLLPs would shine. While Upsolve is a non-lawyer document assembly tool that is able to operate in the existing regulatory framework, there are numerous forms of effective, safe non-lawyer assistance that cannot exist in Arizona. The latitude the Arizona provides to its estate agents serves as a powerful precedent for what’s possible and what the public wants. I have no doubt that if these measures were a ballot initiative in Arizona, they would pass in a landslide.

Lawyers will always be at the center of our justice system. I personally love our lawyers! But the promise of equal justice under the law is too big for lawyers alone. The only way we’ll ever have equal justice is if we allow other professionals, nonprofits, and private companies to take on the challenge, led by lawyers, and to do it in a responsible, accountable, and safe way. That’s the purpose of Alternative Business Structures and Limited License Legal Practitioners.

Best,
Rohan Pavuluri
Upsolve, CEO

National Center for Access to Justice
150 W 62nd St, Suite 7-165
New York, NY 10023
(646) 636-6997
[email protected]

Comment on Petition to Restyle 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


The National Center for Access to Justice (www.ncforaj.org) is an independent, non-profit organization housed at Fordham Law School. We define “access to justice” as the meaningful opportunity to be heard, secure one’s rights and obtain the law’s protection. Using research, data and analysis, we identify ways the justice system fails to stand up for that ideal, and we support the most promising policy solutions.

We write to express our strong support for the Task Force on the Delivery of Legal Services’ proposal that Arizona move forward toward creating a new, authorized class of Limited Licensed Legal Practitioners (LLLPs). We believe that this model of non-lawyer service delivery should be taken up in all states as a key component of the broader efforts that are necessary to increase access to legal services. Careful deliberation will be needed when defining the areas of practice that will be open to LLLPs, and the specific qualifications necessary to obtain a LLLP license in Arizona. The rule changes currently under consideration would establish the basic infrastructure necessary to allow consideration of the model to move forward.

NCAJ takes no position at this time on the proposal to eliminate rule 31 or on the larger question of whether to permit non-lawyer ownership of or investment in law practices.

In modern life, “the law is all over.” The law mediates people’s interactions with government, corporations, and each other. The Task Force’s report summarizes the literature establishing that access to legal services, whether from the private bar or the legal aid community, is beyond the reach of millions of Americans. Lawyers alone could never meet the tremendous scale of unmet need. It is intolerable that existing rules so broadly prohibit others—no matter how well equipped, and no matter how pressing the need—from stepping into the breach.

In 2019, when California invited public comment on proposals for licensing non-lawyer providers, we read and analyzed hundreds of lawyers’ comments, most of them opposing the idea (we have not seen any non-lawyers oppose the proposed reforms in either state). In both California and Arizona, there have been three main lines of argument made against the licensing of non-lawyer providers. None are backed by any sort of evidence or data, and all are unpersuasive.

First, opponents argue that an LLLP model will lead to dangerously incompetent legal assistance. Although this is an important concern, no empirical evidence establishes that a JD degree is essential to provide competent assistance with all legal problems. In Washington, the only state with a longstanding limited license practitioner program, there is no evidence of incompetence or unethical behavior by LLLTs. An LLLP program would not dispense with rigorous training but would tailor it to specific, urgent and relatively uncomplicated forms of legal assistance in defined areas of law.

Second, opponents argue that a LLLP model will be ineffective as a response to unmet legal need. Somewhat ironically, many of these opponents point to Washington State, whose pioneering Limited License Legal Technician (LLLT) program has attracted fewer than 50 active practitioners. However, the LLLT program’s growth appears to have been curtailed because of its extremely burdensome licensing requirements— framed in part to assuage lawyers’ concerns about the competence of non-lawyer practitioners. The LLLT program’s requirements put a license beyond reach for many, and limit the prospects for low-cost or not for profit models of LLLT service delivery. The lesson, though, is that Arizona should take care to impose credentialing requirements that are truly necessary to LLLPs’ work.

Third, some lawyers argue that the creation of an LLLP program will expose them to harmful economic competition. We agree with the Task Force that there is absolutely no evidence of this in either Washington or Utah—the only two states that have already adopted similar programs. We also believe that this view, insofar as it elevates concerns about lawyers’ incomes over concerns of people who are certain to be harmed because they are denied access to the courts, is irrelevant. The law does not belong to lawyers, and the ability of ordinary people to access legal help is a far weightier policy goal than the economic interests of the legal profession.

An LLLP program would not “solve” the justice gap in Arizona. It represents one modest and essential step towards building the larger, multi-layered policy approach states need if they want to address the access to justice crisis. Some comments in response to the present petition argue that instead of embracing an LLLP program, the state should make its laws and its courts less mystifying and more accessible to ordinary people. Additionally, a growing movement urges (as the law in Arizona has already begun to recognize) the importance of providing a right to counsel in civil matters implicating people’s basic life needs. But there is no tension between these ideas and approaches—they are each core components of a larger reform agenda.

Arizona need not look far to find an inspiring example of the kind of potential the LLLP program hopes to tap into. The state’s own pilot Licensed Legal Advocate (LLA) program is training and empowering advocates who already work with victims of domestic violence to provide legal advice. The program is an excellent example of how states can authorize, train and empower appropriately qualified non-lawyers to address people’s urgent, unmet legal needs. Plans to carefully evaluate the LLA program’s impact will allow states across the country to draw lessons from it as well.

Many members oppose the proposed rule changes because they fear personal financial loss. Their fears are theoretically logical, factually unfounded (according to the report of the task force), and deeply offensive. Theoretically, even if not factually, allowing alternative business structures in the legal profession and opening up certain legal services to nonlawyers could cause some customers to take their legal matters away from traditional (and expensive) lawyers, and instead to newly allowed business models and providers that offer better value. A great many more customers who could never afford legal services from traditional lawyers will theoretically AND in fact be availed of the opportunity to benefit from some legal assistance. Greater access to justice, even by a marginal amount, is certainly worth the sacrifice of inflated profits for traditional lawyers. According to the comments here, some lawyers expect the Arizona State Bar to "serve" its members by working to continue limiting potential competitors and excluding structures that might result in a better value for consumers of legal services. But economic protectionism has no place in the Arizona legal profession. Lawyers have no right to exclude potential competitors from their practice.

As licensed professionals, we would all like to believe that we are uniquely qualified to serve our clients (after all, we acquired the skills we have today because we successfully endured a lengthy, costly, and intense experience -- completing years of academic study, scoring high enough on a multiday exam, and surviving an in-depth character assessment). Many of us would be wrong. Often, we are not, in fact, uniquely qualified to provide all of the legal services we offer. If we are honest, we can identify plenty of paralegals, legal assistants, exceptionally bright babysitters, and others nonlawyers who, with proper training far short of a law license, could easily exceed the level of service currently offered by some licensed attorneys. Those nonlawyers should be permitted to offer affordable options to the public.

Likewise, nonlawyers should have the opportunity to participate in the legal profession at the structural level. As others have emphasized, the ethical rules will continue to impose weighty responsibilities on attorneys, who already routinely suppress their interests in profit-sharing, bonuses, billable hours, and other incentives in order to successfully fulfill their duty to their clients. Members who oppose the new rule changes because they are concerned about successfully navigating the ethical implications, need not join in them. They should not, however, presume their colleagues are as easily swayed. The rules should be swiftly changed to reflect the task force's recommendations.

Carrie Ann Donnell
President & CEO
American Juris Link
7000 N 16th St. Suite 120-155,
Phoenix AZ 85020
[email protected]

Tom Gordon
Responsive Law
1380 Monroe St, NW, #210
Washington, DC 20010
202-649-0399
[email protected]


We have attached Responsive Law's comments in support of the petition.

Melissa Spiller-Shiner
State Bar # 028975
320 N. Commerce Park Loop, #100
Tucson, AZ 85745
520-276-3398

This comment is submitted to respectfully oppose the petition to terminate ER 5.4 ad create a new category of nonlawyer legal service provider. Based on my decade of experience delivering legal services to the low-income population in Pima County – the exact population this petition proposes to assist – I believe that the changes will have a substantial negative impact on our vulnerable neighbors.

As outlined, this proposal would create a class structure in the Arizona legal system. People with means get lawyers. People without means get less than. Less than a lawyer. Less than the knowledge gained from acquiring a law degree and the expertise that comes with the subsequent practice of law. Less than the standard to which we as lawyers should all hold ourselves.

I’ve seen – and have had to try and reverse – the damage that a paraprofessional can cause in a self-represented litigant’s case. The people who most often use these services are desperate for assistance, turning to anyone who might help them navigate our complex legal system. The client pays the paraprofessional, who then drafts deficient legal documents such as petitions for dissolution or final decrees that cause a person to lose rights. In family law, this could be rights to the client’s children, or financial rights that come from properly calculated child support or a correctly prepared Qualified Domestic Relations Order. In minor guardianship cases, improperly completed documents can cause a proposed guardian to lose valuable time – disrupting their ability to enroll a child in school, or – for a sick child – get the child to the doctor on time. For a debtor facing a collections lawsuit, a deficient response could cause the debtor to be garnished in higher amounts than if a lawyer were able to advise them about garnishment and exempt property.

The proposal for an LLLP suggests that that this potential treatment is okay for people who can’t otherwise afford a lawyer. And, that at least low-income people will receive something, even if it’s not at the same level of expertise as someone who may be able to retain a lawyer.

Perhaps we could focus on innovative ways to make it easier for private practitioners to volunteer their time to fill the justice gap. There are many qualified legal services organizations in Arizona that need their help! These organizations depend on volunteer attorneys to serve low-income clients who have legal needs. Perhaps the legal community could funnel time, energy, and resources to bolster qualified legal service organizations, so that we’re able to recruit and manage more private bar involvement? The State Bar is taking steps to engage additional volunteer lawyers – such as retired and inactive lawyers – but there is more we can do as a profession that does not include reducing the standards of practice.

Finally, for bar membership to properly consider and evaluate the proposed rule change, more information is needed. Specifically, how were the credentials for LLLP licensing determined? And, was this process for determining credentials transparent to the bar as a whole? What research was conducted to show that the suggested number of training hours would ensure the proper limited practice of law? Who will be responsible for any malpractice committed by the LLLP’s? Will the LLLP’s be required to obtain malpractice insurance? If carriers won’t cover them (because they are not licensed attorneys), where does that leave the general public? Who will oversee the discipline, when necessary, of the LLLP’s?

We need to hold ourselves to a higher standard. Therefore, I oppose the current petition to terminate ER 5.4 and create a new category of nonlawyer legal service provider.

Scott Bales, Bar. No. 010147
[email protected]
(303) 871-6600
Zachariah J. DeMeola
[email protected]
(303) 871-6611
IAALS
John Moye Hall
2060 South Gaylord Way
Denver, Colorado 80208



ARIZONA SUPREME COURT

In the matter of: )
)
RESTYLE AND AMEND RULE 31; ) Supreme Court No. R-20-0034
ADOPT NEW RULE 33.1; AMEND )
RULES 32, 41, 42 (VARIOUS ERs FROM ) COMMENT
1.0 TO 5.7), 46-51, 54-58 AND 75-76 )
____________________________________)

We write on behalf of IAALS, the Institute for the Advancement of the American Legal System at the University of Denver, in support of the Petition to Amend Rules 31, 32, 41, (ERs 1.0-5.7, 46-51, 54-58, 60, 75 and 76, Ariz. R. Sup. Ct., and Adopt New Rule 33.1, Ariz. R. Sup. Ct. (the “Petition”). We urge the Arizona Supreme Court to eliminate Ethical Rule 5.4 and adopt the framework proposed in the Petition for regulating alternative business structures (ABSs). Doing so will facilitate the development of new, innovative business and service offerings, permit outside investment and/or multi-professional business models, and expand Arizona attorneys’ ability to offer legal services to their clients. Such a change could benefit the bottom line for Arizona attorneys and their firms, in addition to potentially expanding the reach of legal services to accommodate many unmet needs.

A Consequential Rule Unsupported by Evidence

Arizona Ethical Rule 5.4, identical to ABA Model Rule of Professional Conduct 5.4, ostensibly exists to preserve lawyers’ independent judgment, but it does very little to offer such protection. Many other rules already protect a lawyer’s independence in exercising professional judgment on a client’s behalf and free from control of others—a bedrock of any attorney’s ethical obligations. Instead, Rule 5.4 principally exists only to constrain business practices. Most of Rule 5.4’s provisions are not directed toward ethical behavior at all, but instead are economic rules that dictate how lawyers are allowed to structure their business with other lawyers and allied professionals.

The rule prohibits lawyers from sharing legal fees with other others, prohibits others from having any financial interest in law firms, and prohibits lawyers from forming partnerships with anyone other than a lawyer if any of the partnership’s activities consist of the practice of law. These business practices are linked to independent professional judgment by the thinnest of unsupported assumptions. In fact, IAALS has not identified any evidence that these business practices inherently compromise the independent judgment of lawyers, and certainly not in any way that requires their categorical prohibition. And when the rule was originally drafted, there was no evidence that the corporations then supplying lawyers to clients were harming the public. Today, lawyers currently work within corporations, insurance companies, and accounting firms and have been doing so for years. There is no evidence that this arrangement destroys these attorneys’ independent judgment. Absent the need for Rule 5.4 to protect the independent judgment of a lawyer—protection amply afforded elsewhere in the rules—the lack of any real evidence behind Rule 5.4 is alarming, given that the rule’s economic restrictions have had severe consequences for lawyers and for people in need of legal services.

Rule 5.4’s Detrimental Effects on Attorneys

For example, the Rule has condemned law firms to systemic inefficiency. Lawyers are not allowed to bring in business partners with expertise in business, marketing, or technology. Instead, many lawyers spend much (if not most) of their day-to-day time on administrative tasks and work related to marketing and earning new clients. One report suggests that some solo and small firm practitioners earn just 1.6 hours in billable work per day, after factoring in the number of billable hours that never make it to an invoice and the amounts forfeited by unpaid bills. This restriction puts lawyers in the unenviable position of having to run a business with structural impediments to making services more efficient—a detriment unique to the legal profession.

To make matters worse, lawyers’ ability to innovate or scale the services they provide is hampered by Rule 5.4’s prohibition on taking capital investments from sources outside lawyer partnerships. And because Rule 5.4 restricts lawyers to organizing legal services in sole proprietorships, legal partnerships, or LLCs, money paid for services is received as fees and profits are distributed to partners/owners at the end of the fiscal year, offering little in the way of incentive to forego distributions and invest in technology or other long-term solutions to better serve clients. In fact, while nearly every other industry is taking advantage of new technology, multi-disciplinary collaboration, and the ability to leverage to scale services, lawyers remain woefully behind.

Handicapped by structural inefficiency and unable to leverage modern tools for growth, lawyers are at a severe disadvantage to competitors in an economy characterized by technologically adept consumers expecting solutions to be readily available and accessible. According to the 2019 Altman Weil Law Firms in Transition study, 63 percent of attorneys indicated their firms were losing business to corporate law departments and 14 percent reported losing business to alternative legal providers. And unregulated companies such as LegalZoom or Rocket Lawyer have the ability to scale in a way lawyers do not.

Rule 5.4’s Detrimental Effects on Consumers

The movement toward regulatory reform of the legal profession, a movement now reaching across multiple states, is driven not only by the need for a more sustainable model of practice for lawyers, but also the recognition that the American legal system faces a crisis in terms of public dissatisfaction and disengagement. The inefficiency of Rule 5.4’s economic regulations has significantly contributed to an environment where lawyers must charge fees that most people in the United States simply cannot afford.

The United States ranks 99th out of 126 countries for accessibility to legal services, and the problem reaches far up the income scale. It is not only the poorest who lack access to legal services, it is also the middle class and small businesses. According to the ABA, in some jurisdictions over 80 percent of the civil legal needs of lower- to middle-income individuals are unmet. People want legal help, and they are not getting the help they need. When this reality collides with our ideal of “equality under the law” the sustainability of the legal system is threatened.

Whether by choice or by circumstance, the American public is increasingly turning away from the legal system. Americans seek lawyers for help or consider doing so for only 16 percent of the civil justice situations they encounter, and 76 percent of cases in state courts involve at least one self-represented party. In his study on the legal services landscape, Professor William Henderson noted that “As society becomes wealthier through better and cheaper good and services, human-intensive fields such as law, medical care, and higher education become relatively more expensive,” but “[i]n contrast to medical care and higher education, however, a growing proportion of U.S. consumers are choosing to forgo legal services rather than pay a higher price.”

What do these statistics actually mean? They mean that many people face major challenges to their financial security, living security, and their physical and mental health without any assistance, and, consequently, they often suffer significant adverse impacts on their lives. Evidence shows us that those forced to deal with issues such as evictions, mortgage foreclosures, child custody disputes, child support proceedings, and debt collection cases without legal help face disproportionately adverse outcomes.

Lawyers, through pro bono and legal aid services, have worked to close part of the justice gap. But the need is just too great. An attorney’s average hourly rate is approximately $250, much more than most people can afford or want to pay, whichever the case may be. Providing just one hour of attorney assistance to every household facing a legal problem would require over 200 hours of pro bono work per year by every lawyer in the country. The cost of providing legal help under our current rules is too expensive for lawyers to provide legal assistance at the scale needed to solve the problem. This is because our current rules require lawyers, and lawyers alone, to bear all the risk and all the responsibility of law practice.

Emphasizing the point, ABA President Judy Perry Martinez recently stated, “We need new ideas. We are one-fifth into the 21st century, yet we continue to rely on 20th-century processes, procedures and regulations.” Under today’s regulatory system, in most jurisdictions, anyone other than a lawyer providing legal services would be seen as engaging in the unauthorized practice of law and can be subject to sanctions—even if those services were actually helping, not harming, consumers. Most jurisdictions prevent lawyers from sharing fees or ownership interest with any other professional. Eliminating Rule 5.4 and allowing outside investment and/or multi-professional business models would foster innovation in a sector deeply in need of innovative thinking and benefit a customer base that is deeply in need of legal services. Thus, access to legal services for consumers and sustainable practices for lawyers appear to be two sides of the same coin. As Professor Henderson writes, “We have entered a period where we are either going to redesign our legal institutions or they will fail.”

Evidence Supporting the Elimination of Rule 5.4

There is already strong public support for the rule changes proposed by the Petition. Over 60% of Arizonans surveyed agreed that the current requirement that restricts the ownership of any business that engages in the practice of law exclusively to lawyers should be eliminated. In addition to public support, there is also ample evidence to suggest that these changes could lead to more innovation in the delivery of legal services, more available services for those who need them, and better quality services in general.

Unlike Rule 5.4, the changes proposed in the Petition are not based solely on assumption. Research from England and Wales on ABSs operating under the Solicitors Regulation Authority (SRA) suggests that overall innovation among legal services providers, including innovation that reduces the cost of delivery legal services, is higher than among traditional providers. ABSs are three times as likely to make use of technology compared to other providers. Specifically, ABSs are twice as likely as other providers to use any of the following ten emerging technologies: interactive websites, live chat or virtual assistants, cloud or similar data storage mechanisms, ID-checking tools, custom-built smart device apps, technology assisted review (TAR), automated document assembly (ADA), robotic process automation (RPA), predictive technology, and smart contracts/distributed ledger technology (DLT).

The beneficial impacts of technology on the quality of services is widely recognized, and technology has also been shown to reduce the costs of legal services delivery. Along with ABS entities, larger organizations and newer providers operating under the SRA were also more likely to innovate in a way that would result in more efficiency (reduced costs/increased profitability).
A 2016 review of the Law Society of England and Wales similarly illustrated that ABS firms were active in numerous, diverse areas, including residential conveyancing, personal injury, ADR/other litigation, corporate/commercial, and others. Thus, the evidence shows that by allowing attorneys to partner with other professionals, those attorneys are far more likely to create efficiencies that lead to better client service and a more sustainable practice overall—a change that would be welcome for many attorneys, particularly among the solo and small firm practitioners who make up the bulk of the legal profession.
Increased innovation in England is also leading to more available services for people who need them.

Indeed, U.S. Supreme Court Justice Neil Gorsuch addressed this issue recently in his book “A Republic, If You Can Keep It.” Citing data from an experiment analyzing ABSs six years after permitting multidisciplinary firms and non-lawyer investment in England and Wales, Justice Gorsuch writes:

[W]hile these entities accounted for only 3 percent of all law firms, they had captured 20 percent of consumer and mental health work and nearly 33 percent of the personal injury market – suggesting that ABSs were indeed serving the needs of the poor and middle class, not just or even primarily the wealthy. Notably too, almost one-third of the ABSs were new participants in the legal services market, thus increasing supply and presumably decreasing price. ABSs also reached customers online at far greater rates than traditional firms – more than 90 percent of ABSs were found to possess an online presence versus roughly 50 percent of traditional firms, again suggesting an increased focus on reaching individual consumers. Given the success of this program, it’s no surprise that some U.S. Jurisdictions have appointed committees to study reforms just along these lines.

Moreover, the Petition’s proposed amendments ensure that a new ABS model in Arizona will not come at the cost of ethical duties or quality of service. And in other countries where ABS entities have existed for years, there is no evidence that they cause any more consumer harm than traditional firms. In fact, in New South Wales, Australia, which has allowed nonlawyer ownership under a management-based regulatory approach since 2001, there has been no increase in complaints against lawyers. Importantly, in Australian business structures where lawyers and other professionals share fees or ownership, all other professionals working with lawyers are held to the same ethical standards as the lawyer. And in England, where the ABS model has existed since 2007, “[t]here have been no major disciplinary failings by ABS firms or unusual levels of complaints.” To the contrary, the quality of legal services in England has improved, as measured by the 12 percent increase in the number of “first tier” complaints being resolved, and new business models, including ABSs, have better and more responsive consumer complaint processes.

IAALS Supports Adoption of the Petition’s Proposals

The profession is facing declining business at a time when there is enormous demand for affordable legal services. This contradiction exists because lawyers are locked into a 19th century model for delivering legal services. Now, more than ever, with disruptions and restrictions in place due to the COVID-19 pandemic, is time for change.

The crisis we face demands action. Our Unlocking Legal Regulation project is about taking a bold step towards laying the foundation for a consumer-centered regulatory system that will ensure access to a well-developed, high-quality, innovative, and competitive market for legal services. Our vision is a legal system that works for all people by being accessible, fair, reliable, efficient, and accountable: a system that earns trust, because a trusted and trustworthy legal system is essential to our democracy, our economy, and our freedom. That is why we support eliminating Rule 5.4, and we urge the Arizona Supreme Court to adopt the proposals outlined in the Petition.

Sincerely,

Scott Bales
Executive Director

Zachariah J. DeMeola
Manager

Matthew J. Neubert, Executive Director
Arizona Corporation Commission
1200 West Washington St.
Phoenix, AZ 85007
Phone: 602-542-4250/602-542-3931
Email: [email protected]; [email protected]
Bar No.: 009225


March 30, 2020

Arizona Supreme Court
1501 West Washington, Fourth Floor
Phoenix, Arizona 85007

Re: Petition No. R-20-0034

Chief Justice Brutinel, Vice Chief Justice Timmer, and Justices Bolick, Gould, Lopez, Beene, and Montgomery:

The Arizona Corporation Commission (“Commission”) submits these comments for the Court’s consideration in determining whether to adopt the changes to Arizona Supreme Court Rule 31 (“Rule 31”) included in Petition No. R-20-0034.

Many parties who appear before the Commission use lay representation as permitted under Rule 31(d)(28), which allows a public service corporation, an interim operator appointed by the Commission, or a non-profit organization (collectively “organization”) to be represented by a corporate officer, employee, or member who is not an active member of the state bar under the following circumstances: (a) the organization must have specifically authorized the representation, (b) the representation must not be the representative’s primary duty to the organization, and (c) the representative must not receive separate or additional compensation (beyond reimbursement of costs) for the representation. Rule 31(d)(28) further allows the Commission or presiding officer to require counsel in lieu of lay representation if it determines that the lay representation is interfering with the orderly progress of the proceeding, imposing undue burdens on other parties, or causing harm to the represented organization.

The Commission is also mentioned by name in Rule 31(d)(13), although it has relied upon that provision only to allow for lay representation in Commission securities cases, to which Rule 31(d)(28) generally does not apply. The Commission finds the current language of Rule 31(d)(13) to be unclear in that inclusion of the Commission in the first sentence of Rule 31(d)(13) is unnecessary, because the Commission has no involvement in tax-related proceedings, and the second sentence of Rule 31(d)(13) is a very broad exception that appears to have no relationship to the first sentence. Additionally, the Commission has received inconsistent opinions from Arizona State Bar UPL attorneys over the years when inquiring as to the meaning of Rule 31(d)(13).

The Commission conceptually supports broadening the exception currently afforded by Rule 31(d)(28), as the proposed Rule 31.3(c)(5) would do, but requests that the following revisions be made to the language of the proposed Rule 31.3(c)(1), (c)(5), and (c)(6):
• In Rule 31.3(c)(1), the definition of “legal entity” should be revised to include federal, state, county, municipal, and tribal governmental entities. It is not uncommon for a federal government entity or a tribal entity to desire representation by an individual licensed as an attorney in another jurisdiction. Additionally, small municipal entities may prefer to rely on lay employees for representation rather than outside counsel for budgetary reasons.
• In Rule 31.3(c)(5), a comma should be inserted between “administrative agency” and “commission,” to distinguish between them.
• In Rule 31.3(c)(5)(A), the “full-time” requirement should be deleted. A number of smaller utilities primarily use part-time employees in their operations. Additionally, an individual’s status as “full-time” with a legal entity does not necessarily correlate with an enhanced ability to represent the legal entity effectively in a hearing or other administrative proceeding.
• In Rule 31.3(c)(6), an additional situation under which counsel may be required should be added—when lay representation is causing harm to the legal entity so represented. The Commission believes that this is what the current Rule 31(d)(28) language “or causing harm to the parties represented” was intended to address. The Commission suggests replacing “or” in the last line of proposed Rule 31.3(c)(6) with a comma and inserting the following after “parties”: “, or causing harm to the entity.”

Additionally, the Commission requests that “the Arizona Corporation Commission” be removed from proposed Rule 31.3(d)(5), as the Commission is not involved in tax-related proceedings, and its inclusion there invites confusion.

Finally, for the reasons set forth below, the Commission requests that the following revisions be made in Rule 31.3(c) to allow for the preparation and filing of technical or financial documents by qualified non-attorneys:
1. Add the following language as a new subsection (c)(6) in proposed Rule 31.3:
"(6) Arizona Corporation Commission.
(A) A person may represent a legal entity in a proceeding before the Arizona Corporation Commission (“Commission”) if the representation complies with subsection (c)(5).

(B) A person with expertise in the field of public utility regulatory compliance, public utility accounting or finance, public utility engineering, railroad engineering or safety, or pipeline engineering or safety may, on behalf of a legal entity regulated by the Commission:
(i) Prepare for filing with the Arizona Corporation Commission or submission to a Commission Division a tariff, rate schedule, engineering report, or other technical or financial document within the person’s field of expertise; and
(ii) File in a Commission docket, or submit to a Commission Division, the tariff, rate schedule, engineering report, or other technical or financial document prepared as permitted under subsection (c)(6)(B)(i)."

2. Renumber the existing subsection (c)(6) in proposed Rule 31.3 to (c)(7).

Utilities and other legal entities regulated by the Commission are often required to file with the Commission technical or financial documents, such as tariffs, rate schedules, or engineering reports. Regulated entities also may be required to submit such technical or financial documents to a Commission Division directly. It is common for these technical or financial documents to be prepared by hired consultants rather than attorneys or the personnel of the regulated entities. In the case of utilities, this is true largely because public utility operation and regulation is a complex and niche field, and it can be difficult for utility personnel to develop the level of regulatory expertise that experienced consultants have acquired. For smaller utilities, of which there are hundreds in Arizona, the training necessary to develop such expertise generally is cost prohibitive, as is hiring an attorney. For out-of-state competitive telecommunications utilities, which commonly operate throughout the United States, it is often most efficient to have one consulting company oversee regulatory compliance for all operations. Also, and importantly, the education, training, and experience of most attorneys does not impart the knowledge and expertise necessary to prepare such technical or financial documents.

Nevertheless, because such a technical or financial document is prepared on behalf of a specific entity for filing with an administrative agency and could be a document intended to affect or secure the utility’s legal rights (e.g., a tariff may confer the right to impose certain requirements on customers or to receive recovery through rates for certain capital expenditures), the preparation of the document by a non-attorney consultant appears to constitute the unauthorized practice of law (“UPL”) under the current Rule 31(b)(3) and (5). Likewise, under the current Rule 31(b)(2), the act of filing such a document in a Commission docket or submitting such a document to a Commission division can be viewed as representing the utility in an administrative proceeding and thus UPL.

The Commission believes that it would be beneficial to the regulated entities and the public interest to facilitate regulated entities’ use of experienced non-attorneys, including consultants, for the preparation and filing of technical or financial documents. The Commission further believes that the cost savings to affected utilities (from not being required to hire attorneys) would flow-through to the customers of those affected utilities in rates.

Sincerely,


Matthew J. Neubert
Executive Director

CC: Jane Rodda, Hearing Division Director
Robin Mitchell, Legal Division Director
Mark Dinell, Securities Division Director

Jayne Reardon
Two Prudential Plaza Suite 1950
180 N. Stetson Avenue Chicago, IL 60601
312-363-6210

My name is Jayne Reardon. I am the Executive Director of the Illinois Supreme Court Commission on Professionalism, a member of the Chicago Bar Association-Chicago Bar Foundation Task Force on Access to Justice & Innovation, and a member of the Association of Professional Responsibility Lawyers Future of Lawyering Committee. I am a past member (2012-2015) and chair (2015-2018) of the ABA’s Standing Committee on Professionalism.

I appreciate the opportunity to comment on R-20-0034. I have written and presented on these issues extensively. These comments are mine personally and do not necessarily reflect the viewpoint of any organization with which I am affiliated.

I support and applaud the work of the Arizona Task Force in proposing regulatory changes to address the access to justice gap in America and the considerable stressors on lawyers. The evidence that a significant portion of Americans have legal needs that are unmet is indisputable. The evidence that lawyers, also, are generally failing to thrive under the current system is also compelling. As a self-regulated profession, action to address both situations, perhaps two sides of the same coin, is long overdue.

For the reasons explained in my article, Alternative Business Structures: Good for the Public, Good for the Lawyers, St. Mary’s Journal on Legal Malpractice & Ethics, Vol. 7, Number 2 (2017), I am a proponent of regulatory changes, including adopting regulations directed to those who are not licensed lawyers but who are nonetheless delivering legal services. I ask you to consider the arguments in my article, including that Rule 5.4’s prescriptions about how lawyers can organize their business structures and proscriptions against fee sharing with those who are not lawyers are neither necessary nor sufficient to preserve the professional independence of a lawyer (as the title of the rule connotes).

I would like to add three other points: 1) law as a profession is not defined by Rule 5.4; 2) because we are a self-regulating profession, we have an obligation to amend/create new regulations when warranted; and 3) the time for leadership is now.

1) Rule 5.4 does not Render Law a Profession (Rather than a Business).
In comments to the Arizona proposals, many lawyers react negatively to the proposal that Rule 5.4 be eliminated on the grounds that sharing fees, or business structures, with individuals who are not lawyers would undermine our profession and a lawyer’s independent professional judgment. I am not that cynical. There is no evidence that working alongside other professionals in delivering legal services would cause lawyers to lose their ethical backbones. Nor is there evidence that other professionals in a business entity with lawyers would have no ethics or would seek to undermine lawyers’ independent professional judgment.
Rule 5.4 notwithstanding, lawyers currently must navigate situations in which there may be challenges to their independent judgment, such as where their fees are paid by a third-party insurer. We have many other rules addressing conflicts of interest, and the Arizona proposals properly seek to strengthen other rules as some are eliminated.
Our status as a profession, or the extent of our professionalism, is not defined by whether we have any single rule of conduct, especially one like 5.4 which in large part can be characterized as an economic (not ethical) rule governing who lawyers may practice alongside or with whom they may share fees. Our profession has a comprehensive code governing ethical behavior, and this fact, along with other factors such as specialized training, makes us a profession.
The Preamble to the Rules of Professional Conduct has much more to say about professionalism than the compliance-oriented rules. The Preamble reminds us that “a lawyer should seek improvement of the law, access to the legal system, the administration of justice and the quality of service rendered by the legal profession.” [6] These are important core values that set lawyers apart from other individuals who may be providing legal information or services.

2) We have an Obligation to Amend/Create Regulations when Warranted.
If we are of the mind that current regulations may be undermining “access to the legal system, the administration of justice, or the quality of service rendered by the legal profession” (Preamble [6]), then we have an obligation to change the regulations. We have done so in other contexts.
Over the past several years, most state supreme courts have recognized that in the modern world, the quality of the service rendered by the legal profession must include some understanding of technology. 38 states now have adopted a version of comment 8 to Rule of Professional Conduct 1.1 stating that to provide competent representation to a client, a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology.
Over a similar time, most jurisdictions have adopted the Uniform Bar Exam. In adopting the UBE, state supreme courts consistently cited the rationale that the legal field continues to evolve such that multi-jurisdictional or cross-border practice is common and the UBE provides a “portable score” that lawyers can use to apply for admission in other UBE jurisdictions. The state supreme courts should be lauded for recognizing that the UBE is a national standard that both protects the public and allows cross-border practice that effectively serves the public.
Regulations should both protect the public and serve the public. Current Rule 5.4 does neither (at least well) for the reasons articulated in the Arizona Task Force Report. I highlight:
• We live in a world that is increasingly complex in terms of laws and regulations, yet more and more people are shut out from accessing the legal system, and our current lawyers are scrambling both to remain competent and to find clients.
• Investment in legal tech is skyrocketing. 2018 saw a 713% investment growth to over $1Billion and 2019 marked even higher investment levels.
• Most of the investment is going to legal tech companies to improve efficiencies in law firms and corporate legal departments rather than the delivery of legal services. Evolve the Law published a directory of US Legal Tech businesses and 58 targeted Big Law and only 5 were consumer-facing. Most firms report regulatory and legislative hurdles as the most significant barriers to innovation.

It is clear to me that our profession labors under a regulatory structure that is likely contributing to the profession’s inability to effectuate its core mission: to provide legal services to members of the public. Under the circumstances, it is our responsibility as a self-regulated profession to take bold but measured action to attempt to correct these problems.

3) The Time for Leadership is Now.
In terms of timing, some assert that the Arizona Supreme Court should not be one of the first states to adopt major legal regulatory reform. They may ask the Court to step away from leadership and wait for other states to act, especially due to the uncertainties of the pandemic.
Now is not the time to abandon the courage of your convictions. We already can see serious effects of the pandemic on our citizens, courts, laws and constitutional framework. The crisis lays bare the deficiencies that have been present for too long. Circumstances call lawyers and judges to ever more strongly adhere to the pledge we made to uphold the Constitution and to discharge our duties to the best of our abilities.
Thank you for all you are doing to advance professionalism.

Tom Gordon
Executive Director
Responsive Law
1380 Monroe St, NW, #210
Washington, DC 20010
(202) 649-0399
[email protected]

I have attached Responsive Law's comments in support of the Petition.

Charles Sellers
4854 East Baseline Road, Suite 104
480.833.1001
[email protected]
026368

Opposition to Petition R-20-0034

I am strongly opposed to the adoption of Petition R-20-0034. The Task Force identified the growing “justice gap” as the impetus behind the proposed petition to change the ethical rules. According to the Task Force, the changes proposed by Petition R-20-0034 are intended to address the the legal needs of those “living in poverty, and the majority of moderate-income individuals”, which are not being met as the costs to obtain legal services continue to rise. I agree that the Task Force identified a problem that needs to be solved, but I strongly dispute that the proposed changes to the Rules will actually address the problem. While I support efforts to find ways to make legal services available to low-income individuals as well as those in poverty, the proposed Petition R-20-0034 will not be effective in accomplishing that goal. Indeed, the rule change may actually result in increased costs to the public for legal services by adding another layer of bureaucracy that must be supported by increased fees and pressure to provide unnecessary services. This change would also reduce the protections afforded to the public, such as a lawyer’s adherence to ethical rules and maintaining malpractice insurance, to which non-lawyers are not subject.

The Task Force explained that small firm lawyers who have historically served the “PeopleLaw sector” and bridged the current “justice gap” currently find themselves unable to make an adequate living. The Task Force explained that Professor William D. Henderson from Indiana University “suggests that this lagging legal productivity may result in part from ethical rules that restrict ownership of law forms to lawyers because ‘ethics rules are the primary mechanism for regulating the market for legal services’.” However, to speak frankly, a suggestion from a paper written by a law professor setting forth a hypothesis that “may” have an impact on “lagging legal productivity” is not a solid foundation on which to make sweeping, unprecedented changes to the ethical rules.

I could find nothing in the Task Force’s Report and Recommendation that provided reliable evidence to support the proposition that allowing non-lawyers to own law firms will bridge the justice gap and allow low-income and poverty stricken individuals to obtain legal services. Rather, the question remains as to whether non-lawyer business men and women will have any better success in providing legal services to those who cannot pay for them, even at a reduced rate. Additionally, there is no support for the Task Force’s recommendation that LLLPs will actually be able to fill the Justice Gap.

An example of where such a system has failed in the professional context is in dentistry. The March 27, 2020 Arizona Attorney Daily 5 links to a USA Today article (https://www.usatoday.com/in-depth/news/investigations/2020/03/19/dental-chain-private-equity-drills-healthy-teeth-profit/4536783002/) about a large dental chain backed by a Swiss owned private equity firm. The article states that the dental chain is part of a trend of dental offices being purchased by “private equity firms and turned into revenue-generating machines”. Unlike dentists that seek profitability, the private equity firms, the article states, subject the companies with “heavy debt at junk-bond-caliber interest rates”. Instead of doing what is best for the patient, as determined by the Dentist, there is pressure to perform unnecessary and excessive dental work to increase the profits to cover the overhead of the non-dentist private equity owners. Instead of lowering the cost of dental services, non-dentist ownership has resulted in the opposite. Why would the Supreme Court want to subject lawyers and their clients to a similar scheme?

Further, while there remain significant questions as to whether the proposed amendments to the Ethical Rules will have any affect on access to justice by indigent and low-income individuals, the impact the amendment will have on lawyers’ ability to maintain adequate income and provide for their families is likely much more quantifiable. These proposed changes could potentially force small to mid-size firms out of business. According to the Task Force’s Report and Recommendations, small firms are already struggling to stay in business because the PeopleLaw sector cannot pay for legal services. Rather than changing the Ethical Rules to bring in additional competition (the LLLPs) to the small and mid-sized firms that are already struggling, the better approach would be to research how to help small to mid-sized firms better reach those who need legal assistance.

In addition to the foregoing, our State is grappling with the effects of the COVID-19 Pandemic that has negatively affected the economy in significant ways. With the impending recession caused by COVID-19, the likelihood that attorneys will be out of work is high. Right now is not the time to pass sweeping changes that could compound the problem of lawyers out of work.

A few years ago, the niche industry I work in witnessed first-hand the effects of a non-legal corporate entity that attempted to enter the legal field in the civil litigation practice arena where I practice. The non-legal corporation hired a young, unsuspecting attorney, offered a generous salary and promised an unending supply of legal work. The non-legal corporation then funneled all legal work for its many clients to its attorney employee. The end result was that the young attorney billed at the marked rate with no discount to the clients of the non-legal corporation, had no mentorship, and provided reduced-quality services. Additionally, the young attorney made only the offered salary while all the profits for the attorneys’ work were taken by the non-legal corporation. Once other attorneys in the industry realized what was going on, the State Bar was contacted and the operation was shut down. As I have seen it attempted already, this will be the most likely result of allowing non-legal corporations to own law firms. The indigent and low-income members of society will continue to have their legal needs unmet, while the profits that formerly provided motivation for attorneys to work hard and provide quality legal work will be eroded, while those attorneys struggling to work in the Justice Gap will be forced out of business.

As such, I strongly object to Petition R-20-0034.