On behalf of the members of the Yavapai County Bar Association, the association provides the following comments:

1. I am strongly opposed. I have a son who is a small animal surgeon. He belongs to a clinic that has several Vets. They were bought out by venture capitalists and, while he made money on the sale, he says it was the worst mistake he has ever made. He now has non doctors telling him how to practice. This is exactly what will happen in the law. We should not be fooled thinking this might help offer legal services to the poor and near poor. Trauma surgeons will link up with PI lawyers. Non lawyers will have a say in the running of the office and it will all be about the bottom line.

2. I am concerned with the current proposal that "non-attorney" practitioners be permitted to practice law, or be participating members in law firms. My personal experience has been negative, in that clients I have had who have worked with document preparers have come with a host of troubles, inconsistencies and liabilities that hey could have avoided.

Many of the comments that I have heard attempt to liken the "attorney light" position with the medical field's allowing nurse practitioners to practice medicine in limited capacities. However, the fields vary enough that this is not a valid similarity. When we, as licensed attorneys train we take a host of coursework. Constitutional law, criminal law, contracts, torts - all before we can even sit to test to become licensed. Each state in turn has its own specific examination for state-specific laws and peculiarities. When we undertake to represent a client, each and every one of those areas of practice have to come into play to assist that client in understanding the full effect - and potential ramifications - of their actions. We have to rely on our education and training to assist that client in making not just a voluntary, but a knowing decision. That intensive coursework takes years to accomplish - not weeks or months. A prime example of the effect of this is with a review of the levels of specialization and the fact that a Family Law Specialization Certification is so difficult to achieve.

Most certified document preparers and paralegals simply do not have that level of training. Many of the aforementioned are primarily trained in one specific area, and often simply process a certain "form set". While the main focus appears of this proposed rule is in family law, the concerns do cross between disciplines. Few, if any, have been trained in the emotional, physiological and/or psychological effects of the actions that a client must take. Even under the guidance of a licensed attorney, there should still be limits to matters to which a "lawyer light" could or should be assigned.

I, like many in the practice believe that if such a person should be allowed to "practice law", that position should be permitted to appear in court to represent a client in procedural motions, but not substantive ones. That only under the direct guidance of a licensed attorney, participate in representation in settlement and pre-trial conferences. That they may continue to prepare documents including motions and discovery requests, but that the supervising attorney's signature must also be on the pleading. There should also be a limitation of liability for supervising attorneys. Perhaps most importantly, such "direct representation" should be permitted only after the applicant has had a number of years working under the direct supervision of a licensed attorney, and then only after passing some form of examination. In light of the fact that they will not have the training and education of a practicing attorney, that they be permitted to test in one legal discipline for which they have received such training (i.e. - Family Law, Personal Injury, Commercial Law, etc.).

I personally believe a simpler manner of addressing the issue is to require licensed attorneys to provide a mandatory level of pro-bono representation. Perhaps for the purpose of training, have the "attorney light" position be assigned to these matters under the direct supervision of a licensed attorney. If the concern is easy and equal access to representation, requiring us to "give back" is truly the best manner to address this situation.

Sincerely,
Yavapai County Bar Association
P.O. Box 11679
Prescott, AZ 86303
[email protected]

Colleen Reppen Shiel
Vice President, Deputy General Counsel FN1

March 30, 2020

The Supreme Court of Arizona
1501 West Washington Street, Room 402
Phoenix, AZ 85007

In re: Rule 28 Petition to Restyle and Amend Rule 31; Adopt New Rule 33.1; Amend Rules 32, 41, 42 (Various ERs From 1.0 to 5.7), 46-51, 54-58, 60, and 75-76, Arizona Supreme Court No. R-20-0034
First Comment Deadline: March 30, 2020

Dear Supreme Court:

The American Property Casualty Insurance Association (APCIA) is the primary national trade association for home, auto, and business insurers. APCIA promotes and protects the viability of private competition for the benefit of consumers and insurers, with a legacy dating back 150 years. APCIA members represent all sizes, structures, and regions – protecting families, communities, and businesses in the U.S. and across the globe.

Property casualty insurers are among the highest-volume consumers of legal services and have a genuine interest in preserving the integrity of a fair, predictable, legal system. APCIA appreciates the opportunity to submit an initial comment letter, responding to Petition No. R-20-0034, In re: Restyle and Amend Rule 31; Adopt New Rule 33.1; Amend Rules 32, 41, 42 (Various ERs From 1.0 to 5.7), 46-51, 54-58, 60, and 75-76 (Petition). It is our understanding that the Task Force on the Delivery of Lega Services (Task Force) filed this Petition pursuant to Rule 28(a) of the Arizona Rules of the Supreme Court to propose adoption of New Rule 33.1 and revisions to the Rules 32, 41, 42 (various ethical rules from 1.0 to 5.7), 46-51, 54-58, 60, and 75-76.FN2 For the reasons set forth below, we urge the Arizona Supreme Court to reject the Petition to remove or limit Ethical Rules prohibiting nonlawyer law firm ownership, fee-splitting between lawyers and nonlawyers, and/or nonlawyer investments in law firms or litigation.

While this letter is intended to highlight some of APCIA’s concerns, it is not intended to identify or address all potentially harmful unintended consequences of granting the Task Force’s Petition.

First, APCIA opposes elimination of Ethical Rules (ER) 5.4 and 5.7. ER 5.4 serves a critical purpose to ensure the independence and ethical conduct of lawyers, as its title, the “Professional Independence of a Lawyer”, indicates. Comment 1 to ER 5.4 confirms its purpose is to protect the lawyer’s “professional judgment.”FN3 The Task Force proposes to redistribute public and professional judgment protections among existing rules, acknowledging the import of these protections, without subjecting non-lawyer owners or investors to the Ethical Rules. In addition to diluting the existing protection provided by ER 5.4, eliminating it will weaken the special fiduciary relationship between attorney and client, insert a new set of conflicts between practicing attorneys and firm ownership, and convert the practice of law into a mere service.FN4

The Task Force relies for its petition, in part, on the District of Columbia’s version of ABA Model Rule 5.4, which allows nonlawyer ownership of, or investment in, law firms so long as the owner or investor provides a professional service to assist the law firm in providing legal services to the client. The Task Force also points to insurance company employment of staff lawyers to represent insureds as justification for its proposal to eliminate. The Task Force’s reliance is misplaced, however, because insurance companies have a pre-existing contractual relationship with their insured that typically includes a fiduciary duty to defend. Additionally, insurance companies have a direct financial interest, fully aligned with the interest of the insured, in the outcome of a case it is defending. This is distinct from outside nonlawyer ownership of law firms, and it’s a distinction with a meaningful difference. Insurers are regulated by the Arizona Department of Insurance, and staff lawyers are subject to and protected by ERs 1.8, 5.4 and 5.7. Eliminating ER 5.4 would erode the underlying foundational ethical obligations owed by lawyer to client.

The same is true with regard to the Petition to allow fee-splitting with nonlawyer owners or investors that have no relationship to, and owe no professional obligation to, a client. The introduction of an outside entity having the ability to influence – if not directly control – decisions related to the client’s interests, without that entity having any contractual obligation to, or other relationship with the client, would inherently conflict with the lawyer’s ethical obligation to exercise independent professional judgment for the benefit of the client.FN5 Further, the Task Force acknowledges that the rules must only be changed “in a way that continues to protect the public”, yet rejects the sandbox approach because it would be difficult to manage and altogether neglects to propose a means of regulating the individual non-lawyer owners.

Second, the Petition to allow an Alternative Business Structure (ABS) would open the flow of investment capital into law firms without the proposed benefit to the underserved. Philanthropists already have myriad ways to support or provide free or reduced cost legal services, so this new class of investment will be driven by investors and entrepreneurs, including Third Party Litigation Funders, that seek to create and grow capital. Similarly, shared service providers – such as accounting firms – will invest in Arizona law firms in anticipation of profit, not because of altruism. In addition to the anticipated conflicts noted above, the effect of granting the Petition will be to reduce services to the underserved and drive up legal fees because Arizona attorneys will have to provide a return on investment to the nonlawyer ABS investors. Finally, the risk that Third Party Litigation Funders use their substantial capital to encourage more litigation and indirectly reduce access to justice by clogging Court dockets with more lawsuits. Law firms and litigation should not be an investment vehicle.

In support of this Petition, the Task Force suggests that ER 5.4, among other Ethical Rules, operates as barrier to innovation, such as the use of technology to enhance and expand legal services. Removing ER 5.4 is not the solution, however, because the legal landscape is replete with technology services such as computerized legal research, electronic discovery, firm websites, and apps. Clearly the existing rules are sufficiently flexible to permit innovation, as evidenced by the use of technology. In every case, however, the public is best protected when lawyers are required to exercise independent professional judgment to evaluate technology and innovation.

Lawyers are ethically obligated to provide competent legal representation, to protect client confidentiality, and to represent clients zealously within the bounds of the law. Allowing nonlawyer law firm ownership or nonlawyer investment will put lawyers in the untenable position of having to answer to two masters with opposing interests. Allowing nonlawyers to own law firms would be put nonlawyers in possession of confidential client information without those nonlawyers being subject to Ethical Rules for protecting that confidential information. Instead, the Task Force proposes that a “compliance attorney” bear the burden and risk – including loss of license – of protecting all client confidences and eliminating every conflict. This does not provide a sufficient ethical check to protect client confidentiality. Even if nonlawyers agree to confidentiality and non-disclosure as a condition of law firm ownership or investment, they are not subject to discipline by the Arizona State Bar for any violation, nor is it clear that such conditions would fully protect attorney-client privilege.

Proposals to loosen restrictions against nonlawyer law firm ownership and fee-splitting with nonlawyers, if granted, would put lawyer’s ethical obligations to their clients at risk and would also likely disincentivize lawyers from taking low value cases, contingent cases, and pro bono cases. Rather than increasing access to justice for underserved citizens, granting the Petition will close the door to justice for many.

Thank you for the opportunity to comment and for your consideration of our perspective. We urge the Arizona Supreme Court to reject the Petition.

Please contact me directly at [email protected] with any questions.

Sincerely,

Colleen Reppen Shiel

Colleen Reppen Shiel
Vice President, Deputy General Counsel
American Property Casualty Insurance Association


Footnotes:
FN1 Colleen Reppen Shiel, Vice President and Deputy General Counsel for American Property Casualty Insurance Association of America with a mailing address of 8700 W. Bryn Mawr Ave., Ste. 1200S, Chicago, IL 60631-3512. Phone (847) 297-7800. Email: [email protected]. Illinois Bar No. 6193134.
FN2 http://www.azcourts.gov/Rules-Forum
FN3 ER 5.4 Comment [1] read in part “These limitations are to protect the lawyer's professional independence of judgment.” See https://www.azbar.org/for-lawyers/ethics/rules-of-professional-conduct/.
FN4 See, e.g., New York State Bar Ass’n: Report of the Task Force on Nonlawyer Ownership, 76 Alb. L.Rev. 865, 877 (2013) (“nonlawyer control of legal practice presents considerable risks to the legal system and the justice system…and should not be permitted”).
FN5 See Arizona Bar Ethical Opinion 99-12, noting that a lawyer employed by an architectural firm may violate “ERs 5.4(c) and 1.8(f)(2) if the firm, in its role as the attorney's employer, in any way directed or regulated the lawyer's professional judgment in rendering legal services to clients. Even if the firm agreed to comply with these Rules by refraining from influencing the attorney's representation of clients, the structure of the proposed arrangement would allow the firm to indirectly influence representation of clients by controlling matters such as the attorney's time and workload.”

I wish to register my opposition to this proposed rule change.
I have practiced in Arizona for 25 years and my practice area is entirely in the area of Family Law.
I do not envision the proposed changes enhancing the public's participation in Family Law matters. Instead, the proposed changes open up the carefully
balanced field of law to allowing non-attorneys not only to do the things in the office the attorneys are best at doing, but further to allow non-attorneys to
practice before the Court. It is my experience in the area of Family Law that the attorneys (the majority of whom are sole practitioners) consistently work to settle cases, avoid unnecessary expenses and move the cases forward expeditiously. The proposed rule changes are not necessary in that most practitioners are currently settling and negotiating in a professional manner with their clients.
I urge the denial of these proposed changes.

Andrew E. Moore
Andrew E. Moore Law Firm, P.C.
207 N. Gilbert Road, Suite 209
Gilbert, Arizona 85234
480-699-7454
[email protected]

Mauricio R. Hernandez (#020181)
P.O. Box 7347
Goodyear, AZ 85338
(623) 363-2649

The attached comment is filed opposing the petition to amend the subject rules.

Brian Pursell
8118 E State Route 69
Prescott Valley, AZ 86314
Phone: (928) 227-2852

I am shocked and appalled at the proposed rule changes and thus lodge my objection.

It is unconscionable that the State or any organization would support these rule changes. The proposed changes would not only open the legal field to abuse and corruption, it would devalue all attorneys’ legal education, training, and experience.

While I understand the goal and do not disagree with the sought after outcome, the way to reach the low / middle income people, is not by opening new types of legal position, but to address the matter outright with funding for legal aid or by more education for the public about existing programs. For example, Law Days, Divorce 101 classes, or Lawyer in the Library. Programs that I have personally volunteered for in the past and currently provide free services for.

Nevertheless, to allow non-attorney ownership of any law office is outrageous. One only has to look to the medical field to see the future outcome. No entity invests in any enterprise without the expectation of financial gains. Thus, you have non-attorney entity pushing work product in the interest of financial gain and not in the best interest of the client. In the medical field setting, you have owners of medical practices pushing for doctors and nurse practitioners to increase monthly earnings, to order tests and procedures that are more profitable.

While, even if there are checks in place, for example, subjecting the non-attorney owners to the same rules of an attorney, the pressure to increase profits will place the attorney in a position of violating ethical rules at worst, or at best billing unnecessary hours. For example, unnecessary, yet justifiable discovery. A firm can generate hours upon hours of billable time on discovery and justify it, yet it may not be necessary.

In regard to the LLLP issue, it is nothing short of insulting and disingenuous. My main area of practice is family law. To have the State Bar support the creation of the LLLP is nothing short of having the State Bar tell me that my area of practice does not require the skill and the ability of an attorney. (Which I must note, that when the State Bar president gave a presentation at the local county bar meeting, he said.) I went to law school, I passed the bar, now it appears that all my efforts were in vain. Nevertheless, if this proposed rule change passes, let’s see how much access to justice an LLLP provides when I evoke Rule 2 and require strict compliance with the rules of evidence.

In the end, the proposed rule changes will have a “big box” law firm with one attorney, six LLLPs, and 15 paralegals, operating at full capacity, while solo practitioners suffer.

Petition to remove Puppet Oath from SC Rule 32

The proposed restyled AZ Supreme Court Rule 32(c)(4)(ii) for the regulation of the Legal Profession
must be amended to bring Rule 32 into conformance with US Constitution Art 6 Clause 3 as follows.

(ii) Upon admission to the state bar, a lawyer applicant shall also, in open court, take and subscribe an oath
to support the constitution of the United States and the constitution and laws of the State of Arizona.

(in the form provided by the supreme court.) <<< This language must be removed.

Please see attached.

Sincerely,
Martin Lynch - WTPCS LLC
1120 W Broadway Rd #55
Tempe, AZ 85282
602-550-6304

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.

I' ve learned about 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.

Mark Waldron
Bar No. 025814
MAXWELL & MORGAN, P.C.
Mesa Office
4854 E. Baseline Road, Suite 104
Mesa, AZ 85206
Tucson Office
6700 North Oracle Road, Suite 240
Tucson, AZ 85704
Mesa Phone (480) 833-1001
Tucson Phone (520) 812-7841
Fax (480) 969-8267

[email protected]

As i have followed the thread of comments on this proposed rule change, i have noticed that a majority of those comments in support of the rule change have come from organizations and individuals from outside of Arizona. Even Scott Bales has written to support the rule, but on behalf of an organization outside of Arizona. I have the utmost respect and personal admiration for Justice Bales. But, interests from outside Arizona should not have the deciding influence on legal practice and the citizens of Arizona. For those of us who have spent our lives and careers trying to protect Arizonans, the thought that interests from outside of Arizona are trying to manipulate the State Bar and the Supreme Court to make such a drastic change is offensive. i strongly urge the Supreme Court to reject the proposed rule change. Please do not subordinate the interests of Arizonans to outsiders with their own agenda.
Frank Verderame
[email protected]
602-266-2002

Scott Carpenter, Esq.
Carpenter Hazlewood Delgado & Bolen, LLP
Tempe, Arizona
480-427-2844
[email protected]

If the goal of these changes is to innovate the delivery of legal services, one attorney stands as proof that nonlawyer ownership of a law firm is not necessary in order to innovate the delivery of legal services to consumers of legal services. Richard Keyt, at www.keytlaw.com, and his law firm stand as unique proof that having nonlawyer ownership of a law firm is completely unnecessary to provide innovation in the delivery of legal services. Much of the discussion around innovation in the delivery of legal services surrounds "access" and rarely involves "access" to legal services for businesses, partnerships, and others involved in commerce. Much of the discussion centers on domestic relations and criminal law but, in the area of business structure and transactions, Richard Keyt has proven that lawyers can innovate in the delivery of legal services without any of the equity in a law firm being owned by a nonlawyer.
Law schools do not require students to forever shut down their ability to think about clients and their economic needs when deciding to become a lawyer. Nothing about the bar exam requires lawyers to surrender an ability to align a lawyer's ability to provide services that are good for the client and to innovate the delivery of legal services throughout a lawyer’s legal career.
The challenge with nonlawyer ownership of law firms is that nonlawyer money will seek to maximize return on investment. If that nonlawyer money sees that a law firm has historically had a profit margin of X%, the invested funds will seek to duplicate the return of X% into the future and work to increase it. Those invested funds will not easily tolerate less than a return of X%. In the context of plaintiff personal injury matters, if private equity money becomes interested in investing in plaintiff personal injury practices in Arizona and the belief is that a particular contingency fee law firm generally realizes a profit margin of Y% (on a Contingency Fee Percentage of Z% of the Total Recovery), the nonlawyer dollars invested are fungible with the dollars invested by the lawyer owners of the firm (and lawyers always invest their own money in these types of law firms). There is no differentiation between the investment dollars made by the lawyer owners and the nonlawyer owners. The contribution of the dollars to that firm by the nonlawyers and the lawyers cannot be differentiated. At that point, the only argument for nonlawyer ownership in the context of personal injury law firms is that, at the ownership conference room table, the nonlawyer will make a unique contribution to the success of the law firm that might increase access to justice by the clients of the firm. Will the nonlawyer of this hypothetical personal injury firm argue for more advertising at bus stops? What does increased access to justice look like and why will a nonlawyer necessarily increase it beyond the “access level” provided by lawyer owners? In the context of personal injury law firms, one need only look around. It is apparent that those injured in accidents receive messages throughout the day from many providers of legal services competing for consumers of personal injury legal services. Nonlawyer ownership of personal injury law firms is not necessary to increase awareness by injured Arizonans.
Finally perhaps the notion of the rule change is that the existing rule embeds a misaligned incentive between a client’s needs and a lawyer’s motivation or requirements under the existing rules of professional responsibility. That is not the case. It is not true that lawyers are disincentivized by the existing rules to innovate the delivery of legal services. The existing rules, as evidenced by Richard Keyt’s behavior, provide plenty of room for innovation. Nonlawyer ownership of law firms is not necessary for innovation to blossom. Richard Keyt proves that is a false premise.
The challenge for the Arizona Supreme Court is that the provision of legal services to the residents of Arizona is, for the most part, provided by lawyers in private practice. In that regard, there is no debate that each lawyer is entitled to practice law in a manner where his or her income exceeds his or her expenses – that he or she is entitled to make a “profit”. The “profit” equates to that “lawyer’s” compensation. Many lawyers innovate to maximize the “profit” while others innovate to pass along the benefits of the “innovation” to the client in the form of cheaper legal services. So long as the Arizona Supreme Court is not capping “profit” and so long as that “profit” is available to licensed attorneys and if that “profit” is made available in our free market economy to nonlawyers under the rule changes contemplated, there is no way to predict that the result of making that “profit” available to nonlawyers will be innovation that benefits consumers rather than innovation that increases “profit” for owners of the law firm business enterprise.
The proposed rule changes do not pretend to require that “innovation” flow to the consumer of legal services rather than that the “innovation” flow to the equity owners as increased “profit”. So long as the proposed rule changes contain that fundamental flaw (that “innovation” can result in increased “profit” and need not result in increased access to legal services or “access to justice”), the rule changes, if enacted, will not necessarily increase access to legal services. The Arizona Supreme Court’s proposed rule changes provide evidence of a fundamental belief in the magnanimity of lawyers and nonlawyers who will be in business with each other and the belief that lawyers who do not share ownership with nonlawyers who innovate will do so solely to increase profit and decline to share the benefits of innovation with Arizona’s residents.
There is no evidence that nonlawyer owners, when at an owner meeting of a particular law firm, will provide a contribution to that law firm that will achieve the result the Arizona Supreme Court seeks. Before undertaking a change of this type, evidence that nonlawyers will provide that contribution would be critical before subjecting the profession to the change contemplated.

Penny Koepke
480-833-1001
Maxwell & Morgan PC
4854 E Baseline Rd Ste 104
Mesa, Arizona, 85206-4636

My name is Penny Koepke and while it pains me to admit I've been practicing for 27 years, it would pain me even more if this Rule change went into effect. I can understand the motivations behind the proposed changes, as in theory they sound arguably as good ideas. I concur most whole heartedly with Judge Swann's comments.


A few of my questions include the following: I have three points to emphasize:
1) What proof or data is there that having non-lawyers own law firms will improve legal services. My fear is that the push for profits will override ethics and best practices for the clients/consumer. There are already attorneys who churn files and overbill unsuspecting clients......when those not subject to the same ethical obligations are allowed to impact bottom line - wow ripe for abuses.
2) If this was such a great idea, how come no other states are allowing this same business idea.... How are the non-lawyers going to be regulated? Nobody should vote for this rule change until they know exactly how the bar is going to regulate these future non-lawyer owners.
3) I too have seen the debacle that non-lawyer document preparers can cause....it is a real shame and there is virtually no recourse.

Both of these ideas will NOT advance the underlying reasons for the proposed changes. If the belief is that there is a lack of affordable access to legal services, then why not require more practical experience from law students before graduation, which will earn them credits and provide practical experience. Require all Arizona attorneys to provide a required number of hours of pro-bono work....

Allowing for an expansion of non-lawyers performing work will cheapen the profession (not in the way intended) and send a message that studying rigorously and being a well rounded legal professional can be easily circumvented.

The Committee should be commended for the hard work and thought that went into the proposals. They are unique and forward thinking. But likewise, the comments against adoption of these changes are unique and forward thinking and, in this practitioner's opinion, have the preponderance of the evidence behind them.

Brian Morgan
Maxwell & Morgan, P.C.
4854 E. Baseline Rd., Ste. 104
Mesa, AZ 85206
480-833-1001


Opposition to Petition R-20-0034

I appreciate the article written by Judge Swann in opposition to this petition. In addition to the reasons set forth below, I would like to incorporate Judge Swann's reasoning. 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 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, I 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.

Jonathan O'Steen
State Bar #024043
O'Steen & Harrison, PLC
300 W. Clarendon Ave., Suite 400
Phoenix, AZ 85013-3424
602-252-8888
[email protected]

I am strongly opposed to the Petition, particularly the elimination of ER 5.4.

In 1977, my father went to the U.S. Supreme Court in the landmark case that permitted lawyers and other professionals to advertise their services. He took on this case because of his sincere belief that consumers were harmed by not receiving helpful information about their legal rights. Studies have shown that this case increased access to the legal system and lowered the cost for the delivery of legal services by increasing competition. I share my father’s enthusiasm for increasing access to justice.

The Task Force identified a problem and proposed a "solution" that not only will not improve the problem, but is likely to exacerbate it. A story published on Law.com last week about two publicly-traded British law firms bore the headline that “DWF Share Price Crashes as Keystone Cancels Dividends in Latest Virus Disruption.”

https://www.law.com/international-edition/2020/03/27/dwf-and-keystone-latest-listed-uk-firms-hit-by-virus-disruption/

The article noted that “the market reels in the face of the global pandemic.” A statement issued by Keystone Law to its investors included the following:

As a Board we are monitoring the situation closely and will take all necessary actions to ensure the good health of the business through these challenging times. We remain confident of the Group’s ability to continue to deliver on its strategy for growth, taking advantage of the sizeable market opportunity which exists, once the current situation has passed.

https://www.keystonelaw-ir.co.uk/content/news/archive/2020/270320

The statement goes on to reassure investors that they “have no dependency on any single area of the economy or client.”

I fall within the majority that believe client relations are more important than investor relations. In fact, investor relations has no place in this profession.

One of the strengths of this Bar is the community feel and the willingness of its attorneys to help one another. I shudder to think how this would change under the proposed rule changes. Do we want to encourage the corporatization of legal services in Arizona to persons and entities with no legal training and no connection to our great state?
As I read the comments to this proposed rule change, it strikes me that many of those in support have no connection to Arizona or its legal community. The opposition is strong among Arizona attorneys who are on the front lines of helping those less fortunate than us. Not only is this model unproven, but other states are walking back efforts to explore similar rules changes. California, which was considering a proposal far less radical than this one, slammed the brakes on its plans.

Changes to our justice system to improve access merit strong consideration. Rushing through untested and radical plans--particularly during a pandemic that threatens to upend our economy--is not the solution. The Task Force itself pointed out that it had "limited time" to explore a "complexity of topics." The recommendations were not universally accepted, as addressed in a lengthy and passionate dissent authored by Judge Peter Swann. We must hit the brakes and give careful consideration, from a wide range of voices, as to what areas in this community are underserved and the changes we reasonably can make without harming the profession and the people we serve.

I am writing to join others who have expressed their opposition to that aspect of the Petition, eliminating ER 5.4, in order to permit nonlawyers to own, manage, and make decisions concerning legal disputes. While the goal of increasing access justice is laudable, there does not appear to be any empirical support for the proposition that this proposal will achieve that end.

Whether the proposed rule will, in fact, increase access to justice seems to be based on supposition; on the other hand, it seems clear that allowing nonlawyers with financial incentives to have a stake in law firms will compromise a lawyer’s ability to exercise independent professional judgment in rendering legal services. The proposal sets up the scenario in which the nonlawyer supervises a lawyer without the ethical standards demanded of licensed attorneys.

The proposed rule will set situations rife with potential conflicts of interest that are not adequate addressed, in my view.

For all these reasons, and the many more expressed by other, I strongly oppose these provisions.

William C. Bacon
698 E. Wetmore Rd. #200
Tucson, AZ 85705
520-879-7165; 520-909-0906
[email protected]
004895

On behalf of Elevate Services, Inc.

Dear Task Force Members,

We commend the work of the Task Force and believe that removing barriers to innovation and competition in the delivery of legal services will improve choice and access for all consumers. We enthusiastically support the consideration of right and reasonable regulatory changes to modernize legal services in Arizona.


Elevate is a law company offering consulting, technology, and services for law departments and law firms to improve efficiency, quality, and business outcomes. Headquartered in California with a large service delivery center in Phoenix, we have 1,200 employees serving over 100 Global 1000 law departments and 30 Global 100 law firms. We are proud to be known as legal service delivery innovators and of the reputation we have earned with our customers.


Today Elevate operates under a variety of regulatory frameworks, including various departments of the U.S. Government and the Solicitors Regulation Authority (SRA) in England and Wales. We hold an Alternative Business Structure license granted by the SRA and are well-acquainted with the oversight and compliance obligations administered by that body. We reviewed the rule changes proposed by the Petition and find them consistent with the model already working well in England and Wales. We believe a well-regulated legal sector will ensure that legal services are performed with the public’s best interests in mind, encourage healthy competition, and improve the practice and delivery of legal services to the benefit of consumers.


We embrace establishing and enforcing ethical and eligibility standards for legal professionals in law companies, approved to offer certain legal services, that are comparable to those required of lawyers in law departments and law firms. This protection will provide customers the confidence that their legal services providers conduct themselves to the highest standards at all times.



We appreciate the dedication each Task Force member has invested personally and professionally into this vital endeavor, and we understand that your work is far from done. Thank you for stepping forward to address these important issues and for your leadership. We stand ready to assist you in any way we can as these initiatives move forward.


Steve Harmon
General Counsel
Elevate Services, Inc.
10250 Constellation Blvd
Suite 2815
Los Angeles, CA 90067

I am writing to express my personal support of these changes because I read them to allow existing nonprofits to start providing direct legal services to their current clients without having to establish a separate, stand-alone law firm. I further understand that these changes would allow a non-profit to solicit financial support to subsidize their direct legal services. For example, a non-profit domestic violence shelter could hire a lawyer to represent its clients in non-criminal matters and the board of the non-profit could host a fundraiser to support these legal services.
I support these changes because I think they provide nonprofits with another avenue to empower lives.

Sarah Selzer
[email protected]
Bar No. 025747

Regina M. Pangerl
[email protected]

I strongly oppose the proposed rule changes that would allow non-attorneys to represent clients in certain court proceedings and that would allow non-attorney companies to have an ownership interest in law firms or legal departments. As an attorney licensed in the State of Arizona since 2004, I have practiced family law, personal injury, and appeals. I do not see the need to authorize non-attorneys to represent clients in court proceedings, and I find that it will be a dangerous road to travel should this rule pass.

It was not so long ago that the adoption of another rule change allowed document preparers to prepare legal documents on behalf of non-represented parties. I have had clients come to me with various problems that resulted from hiring document preparers. Some such errors can be fixed (often at an additional cost to the client) and other errors cannot be fixed ever, and sadly those clients are stuck with the ramifications of having hired a non-attorney to complete their court documents. Those clients were not protected. Instead, they were placed in a category of being at high risk for suffering damage at the hands of someone who was unqualified to prepare legal documents. Some errors caused by non-attorney document preparers have come at a great cost to such clients, who often have to live with very serious detrimental consequences of having hired someone who lacked appropriate legal training. Those clients have no remedy against the negligence of the document preparer who was there to allegedly help the client save money.

I have also often found that some such clients have been given poor legal advice, when they should not have been given any legal advice at all, given the prohibition against legal preparers giving legal advice, even though they were preparing court documents. It quickly became evident to me that some legal document preparers crossed the boundaries of the limits placed upon them, to the detriment of the public. I see the type of problems that have arisen with document preparers only worsening with the passage of the proposed law to allow yet more non-attorneys to act in the capacity of “attorneys”. And I see the risk of harm to the public only increasing.

I disagree that there are insufficient legal services out there for the less fortunate members of our community. Personally, I have donated hundreds upon hundreds of hours of free legal services to clients who could not otherwise afford it. Some of those services were offered pro bono to begin with, and other services started out as paying services only to be transferred into cases where I knew I would never be paid or would be paid very little for my services. I know of several colleagues who have done the same. In fact, it would likely be shocking to learn of the many hours that some of us solo and small firm attorneys donate to members of the community.

Additionally, I have seen numerous pro per clients filling out simple court forms at the self-service centers of our local courts. They can even get assistance when needed. Some such parties have told me that the process is “easy” and that they had their questions answered and were perfectly comfortable filing their documents that way. Some such parties like the opportunity to represent themselves, as that allows them to “do it their way” and an opportunity “to represent themselves in court.”

And importantly, I have witnessed time and time again that judges have been well trained to deal with pro per parties. I have seen many judges be incredibly patient with pro per parties, give them instructions, allow them leeway on the enforcement of the rules of procedure and the rules of evidence, and I have repeatedly witnessed judges being more than fair to pro per clients, leaving them with just as fair of a result as they would have received had they retained representation and sometimes even more so.

Significantly, similar to my many other colleagues, I worked diligently and sacrificed much to obtain my law degree, to study and pass the bar exam, and to begin my new career and build upon it over the years. I am still paying many thousands of dollars in student loans, and I will be paying them for several years to come. It is wholly unfair to those of us attorneys, who had to work so long and so hard and sacrifice so much to obtain our right to practice law, to now suddenly lower the threshold to the point that one need not even have a law degree to be allowed to represent clients. While I understand that the new non-attorneys would only be allowed to represent clients in certain areas of the law, this is just the beginning of what could be a slippery slope to destroy our profession as we know it today.

We as attorneys are held to such a high standard, as we should be, in order to protect the public. Yet, I find it most troubling that our state now wants to pass a law that lowers that standard significantly, which in turn will have the natural effect of failing to protect the public – something that is our utmost responsibility as attorneys in this great state of Arizona. The less fortunate members of our society deserve better than that. We can work hard to find other ways to provide legal services to those individuals in a way that will not lower the standards for those less fortunate individuals who need help with legal services.

Lastly, I oppose the idea that non-attorneys or non-attorney companies should be allowed to have any ownership interest in a law firm. For years now, the ethical rules have prohibited such an arrangement, and for good reason. If we allow non-attorneys to begin having an ownership interest in law firms and begin making decisions about legal services, we will again be going down a dangerous road. No one other than qualified, licensed attorneys, who are in good standing with the bar, should be allowed to gain any control over the practice of law or any legal services. Large wealthy companies should not be allowed to take over the practice of law in our communities, simply because they are well-funded, well-established, or have intelligent minds working for them. Our law profession should not be taken over by other professions, nor be governed by them.

I own a small solo firm in Phoenix. I have legitimate concerns about being pushed out of business should either one or both of these measures pass. The attorneys who are licensed to practice here in Arizona have been dedicated to upholding the standards expected of lawyers in our state, and we have worked diligently to protect the public. Let’s not take steps that would undermine our profession, that would increase the risk of harm to the public, that would lower the high standards expected of those who represent clients in the legal profession, and that might put many dedicated lawyers out of work.

Jason Solomon
Executive Director, Center on the Legal Profession
Stanford Law School
(650) 723-9505
[email protected]

Michael G. Kelly
Arizona Mobile Attorneys
14050 N. 83rd Ave., Suite 290
Peoria, AZ 85381
(623) 628-1110

I wish to incorporate the many objections to this rule on the grounds of incompetence of non-attorneys and lack of protection for the public submitted by other commentators.

By way of example I would point to other professions, such as Medicine and Pharmacy: Hospitals, insurance companies and, in the case of pharmacies, big retail (Target, Walmart, Frye's (Kroger), etc.) have taken these professions over. As a result, interests other than the interests of patients and the public are served. Doctors over-test, over-prescribe and over-bill often due to pressure from the entity for whom they work. Pharmacies are typically understaffed promoting mistakes. Pharmacists often fill illegitimate prescriptions and fail to report transgressors due to pressure from the business for whom they work to "satisfy complaining customers". There is every reason to believe that similar problems will occur with the legal profession. Independent professional judgment and sound ethical behavior cannot be compromised to provide investment opportunities for monied interests.

I have seen many instances of documents that were poorly drafted by non-attorneys and the damage from these documents has been amply illustrated by other commentators. In my view it defies logic to believe that a non-attorney would perform any better in a courtroom where that person's task would be much more challenging than document drafting. Again, the interests of the public and of clients would be compromised for the special interests of a narrow group of persons.

I oppose the rule change. While access to legal services is certainly important, this approach will change the profession of law to be focused more on the business aspects than professional aspects of representation. The conflicts of interest, both known and unknown, for every case will be nearly impossible to track and to prevent. Attorneys have a special relationship with their clients and a fiduciary duty to them that must remain protected and intact. I do not believe that same type of relationship and protection of the client's interests can remain under this new proposed rule change. Thus, I believe the proposed rule change should be rejected.

Ryan Skiver
THE SKIVER LAW FIRM
3200 North Hayden Road, Suite 220
Scottsdale, AZ 85251
Telephone: (480) 626-1667
Facsimile: (480) 482-7285
email: [email protected]

As an Arizona native, I share Frank Verderame’s opinion concerning comments pouring in from outside of our state. One must wonder why those comments are not directed to their own states. I also agree with everything that Geoff Trachtenberg and others have written and do not want to repeat what has already been said. When I have asked other attorneys why they have not commented on the Petition, they have responded that they have read the comments opposing the Petition, which they agree with, and do not know what more they can add, so they don’t. This Court should be aware, however, that those of us who have devoted our lives to the legal profession in Arizona overwhelmingly oppose the Petition.

I will share just a bit of my background and experience. I recognize that I don’t have much clout compared to some others who have commented, if any, but I believe my experiences have not been necessarily unique from those experienced by countless Arizona lawyers.

I was born in Arizona and went to high school in Arizona, various community colleges, the University of Arizona, and Arizona State University. In 2007, I started law school in Oklahoma. While in law school, the economy collapsed. When I graduated in 2010, my former spouse and I moved back to Arizona, because we love the state, and our families in Arizona. I passed the AZ bar exam. However, there were no jobs. And so, I owed about $160,000.00 - $200,000.00 in law school debt but could not find a job. I was not alone. It is not that I didn’t attend Harvard that I couldn’t find a job, it is that there were not any openings. Therefore, I volunteered at a very small firm. Eventually, I was offered a job at an extremely small salary, which I accepted. I worked for the firm for about a year, after which virtually everyone was laid off. At the time, there were still no jobs for new attorneys, so I figured I could try to find another position in another small firm where the same thing could happen, or I could start a practice myself. I started a practice.

I found an executive suit that would work for me. After I signed the lease, I learned that a legal document preparer had the suit at the entrance of the building, which advertised to do basically everything. Oklahoma does not have legal document preparers, and I don’t recall them existing in Arizona before I went to law school and was shocked to learn that such a thing is permissible in Arizona. I had worked my tail off in law school and studying for the bar and owed close to $200K in debt and had a legal document preparer communicating to folks at the entrance of the building.

Since then, my practice has grown. I have devoted my time, energy and focus into my legal career and take it seriously. In the first few years of being in practice, when the legal profession was over-saturated, my ex-wife asked me to find a job as a non-attorney or to work in government, because practicing law takes unique devotion and sacrifice. After having gone to law school and carrying the debt, however, we find that the practice of law is sacrosanct and devote our lives to being the best attorneys we can be to best serve the public. Having to satisfy some non-attorney’s business interest is not going to help but will only add more for attorneys to worry about.

Over the years, there have been many times when I have seen legal document prepares in my Facebook feed advertising to the community that they can and will answer all questions and help people resolve their legal issues. There seems to be no limit as to what they can advertise or do. If there is a limit, those limits appear to be woefully ignored. At the same time, I cannot, nor would I, solicit folks in the community as they do.

I have now been building a practice for approximately 8 years. I liked Oklahoma and considered staying there after law school but moved back to Arizona, because we like it more and our roots are here. Since I am a member of the bar and have spent years and countless hours trying to build a practice in Arizona and have worked hard to develop relationships within the community, I am not going anywhere. Arizona is my home. If, however, I could have foreseen the Petition and the havoc it may cause to our community, I may not have come back to Arizona and may have put forth my efforts in another state where my efforts would not be diminished. Thus, it is my belief that an unintended consequence of the Petition will be that it will strongly discourage young attorneys from coming to Arizona and from starting practices of their own. Lowering the bar will keep young attorneys away. Arizona will eventually become the state with the lowest professional standards and competencies than any other state in the union. And it is difficult to believe that is in the public’s best interest.

Again, I oppose the petition.

Randal Hutson (028522)
The Hutson Law Firm, PLLC
22849 N. 19th Ave., Suite 135
Phoenix, Arizona 85027