Brian T. Leonard
THE LEONARD LAW FIRM, PLLC
20830 North Tatum Boulevard, Suite 360
Phoenix, AZ 85050
(602) 419-3201 Main
(602) 419-3314 Fax
www.theleonardlawfirm.com

I strongly DISAGREE with the proposal to eliminate ER 5.4. I believe eliminating ER 5.4 – ensuring the independence and ethical conduct of lawyers - and allowing non-lawyers to own law firms would severely harm the rights of the underserved by exposing them to substandard lawyering by non-lawyers that would, ultimately, impair their inalienable rights. All with no accountability. I fail to see how elimination of this safeguard, in any way, helps those in need of legal service in Arizona.

I would also like to note that I agree with the thoughtful post of former State Bar of Arizona President, Geoff Trachtenberg, on February 18, 2020. Geoff DISAGREES with the proposal as well.

I have read concern in the comments about whether LLLPs will be required to carry professional liability insurance. Even if they are, it would seem that claims for professional malpractice would be difficult to prevail on if the standard of care is merely that of a LLLP, which will surely be lower than the standard of care required of an attorney. If all an LLLP has to prove is that he or she acted as a reasonable and prudent LLLP and, therefore, can't be held to the same standard as an attorney to provide representation, then what? A reduction in the quality of legal services may lower the standard of care and leave aggrieved clients (or will they be customers) without an appropriate remedy. I highly doubt this would be communicated to the public. Would attorneys be expected to contribute to some additional client/customer protection fund?

From what I gather, attorneys who are in the trenches doing good work for the public oppose the petition. It appears to be folks who are (a) in ivory towers, (b) academia, (c) out of state, (d) virtually retired, and/or (d) have unusual practices that support the changes. It is my hope that you will take their opinions/comments with a grain of salt.

There is nothing said but bumper sticker slogans in support of it. What new attorneys would want to come to Arizona to practice in such a Mickey Mouse atmosphere that would result from the passing of the petition? Arizona should be seeking to create an atmosphere that attracts high-quality talent, not the reverse. Maybe law school loan forgiveness is a better option, or student loan forgiveness in exchange for pro bono hours?

Also, I believe I read that the universities are willing and ready to create programs for LLLPS. Of course, they are. They charge exorbitant tuition rates and have a degree for virtually everything that can be imagined under the sun, regardless of the actual need in society and the student's ability to pay back the debt.

Again, I oppose the petition in toto.

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

Rob K Poundstone, Bar No. 032188
17505 N. 79th Avenue, Suit 411
Glendale, Arizona 85308
Tel: 602.254.3333┃Fax: 866.273.1859
Web: www.PoundstoneScotten.com
Email: [email protected]

Comment to the April 27, 2020 Task Force Response:

Please consider this my Comment Opposing the Task Force’s recommendation to eliminate Ethical Rule 5.4 thereby allowing non-lawyer ownership of law firms under the guise of providing access to justice “not just for low income and indigent persons, but for working and middle-class persons.”

A simple comparison can be made to an institution that came to Arizona intent on providing greater access to the legal profession under the guise of "diversity". Similar to what this proposal allows, said institution was backed by investors requiring profit. In the end, the institution is no more and endless trails of devastation remain (i.e., lowing of bar exam passage rates, graduates with tremendous debt, unable to pass the bar, and an unusable education, at least as an attorney). In other words, "access" by infusing the profession with investor money, in the case of the institution, harmed the target consumer, not the other way around.

Nicholas J. Kuntz, Bar # 035759
9885 South Priest Dr., Ste 104
PO Box 14086
Tempe, AZ 85284
(602) 288-3325
[email protected]

First by allowing nonlawyers to own, manage and make decisions on behalf of law firms will all but eliminate any of the ethical safeguards put in place to protect clients and the court system. For a profession that is oft perceived publicly as only in it for the money, this is a step in an entirely wrong direction. Furthermore, nonlawyers simply are not trained and are not under the very real threat of losing their ability to practice a profession which they have studied and crated for years. A marketing person that gets disbarred as a “limited license legal practitioner,” can just go to another company and get another marketing job.

Lastly, the process to become a barred attorney starts with most aspiring lawyers in high school and does not end until they pass the bar exam. Intelligent candidates are not enough. There must exist a dedication to ensuring that not just a student’s grades but their SAT, LSAT and ultimately bar exam scores are high enough to take them to the next level. While the process is near universally despised by law students and attorneys everywhere, the final product results in highly competent highly dedicated attorneys. By cheapening the process, removing any substantive bars to client representation or reclassifying who can provide legal representation to a client in Arizona, is harming the legal process in Arizona and diminishing the substantive rights of all Arizonians. The perceived and actual damage to Arizona’s court systems and the rule of law will be immeasurable.

Thank you for your time and consideration.

Marlo K. Arnold
Bowman, Smith & Kallen, P.L.L.C.
113 Harold C. Giss Parkway
Yuma, Arizona 85364-2210
Tel. 928.783.8879 | Fax. 928.329.1816
www.bsklawoffice.com

I am an attorney here in Arizona and I am writing to comment on the proposed elimination of ER.5.4 For a litany of reasons too long to list in this email, I strenuously oppose the elimination of ER 5.4 Thomas Burnett of Burnett Law Office and Frank Verderame set forth the objections more succinctly than I could. I would endorse the points set forth in their comments. My Arizona bar number is 027233. My contact information can be found below, in my signature line. In case it needs to be in the comment itself, I am Marlo K. Arnold, Bowman, Smith & Kallen, PLLC, Attorney, 113 Harold C. Giss Parkway, Yuma AZ 85365, (928)783-8879.

R. Randall Johnson
480.905.9114
[email protected]
bar #014814
The Vakula Law Firm
11240 North Tatum Boulevard
Phoenix, AZ 85028

I am opposed to this proposed rule because it’s harmful to the public, the legal system, and the legal profession.

Diana Ezrré Robles | Attorney
Arizona Bar No.: 018337
SNOW, CARPIO & WEEKLEY
Office (520) 647-9000| Fax (520) 647-9688
2135 E. Grant Rd., Tucson AZ 85719
[email protected] | www.workinjuryaz.com

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

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

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

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

The Petition in allowing nonlawyer investors to own any type of law practice in Arizona is a recipe for disaster, and allows an experiment of our entire justice system. I sincerely hope the Court rejects the Petition insofar as it eliminates ER 5.4. Thank you for your time and attention to this matter.

Gene M. Cullan
Cullan & Cullan
20830 N. Tatum Blvd., Suite 360
Phoenix, AZ 85050
(602) 200-9999

The purpose of this correspondence is to voice my objection to the proposal to eliminate ER 5.4. The Bar and Courts should always work to maintain the independence and ethical conduct of lawyers practicing law in Arizona. Independence will be compromised should ER 5.4 be eliminated allowing non-lawyers to own and operate law firms. Those in need of legal services deserve better than some large corporation overlooking a client’s rights in favor of the non-lawyer’s bottom line.

John P. Ager, Esq.
Sandweg & Ager, P.C.
Medical Negligence Lawyers
1221 East Osborn Road
Suite 100
Phoenix, AZ 85014
(602) 648-3210

I agree with the vast majority of comments opposing the proposed changes to ER 5.4. I do not see how non-lawyer ownership of law firms will make justice more accessible. Where will the money come from to pay the non-lawyers for their capital in such cases? Those who lack access to justice have issues for which legal representation is cost prohibitive. Creating a system where non-layer entrepreneurs must also be fed is not the answer to this problem. If an economic incentive existed for providing access to justice, lawyers would have already implemented that business model. Non-lawyers may be able to inject capital into the legal process, but that is not likely to result in better or more accessible legal services for those who cannot currently afford it.

Sarah R. Randolph, Esq.
480.599.5051
[email protected]

I oppose the proposed rule change and feel strongly that it should not be approved.

Peter T. Donovan
The Voightmann Law Firm, P.C.
13880 N. Northsight Blvd., Suite 115
Scottsdale, Arizona 85260
(480) 348-5000
(480) 348-5515 (fax)

I would like to add my voice to the opposition to this proposed rule as it relates to the potential for non-lawyer ownership of law firms in Arizona. In my view, this proposed rule would not have a positive impact on the legal professional in Arizona. Non-lawyer ownership will create an impermissible risk of the client's interests not being put first. While access to legal services must certainly be improved this is not the way to go about it. Thank you for considering my input.

Jeffrey T. Brei
State Bar # 019404
4574 N. First Ave., #150
Tucson, AZ 85718
520-297-4411
[email protected]

I oppose the proposed rule change. I do not feel that non-lawyers should be able to hold an interest in law firms. I do not believe that a non-lawyer investor or owner would always have the clients’ best interest in mind. I believe that this could turn law firms into money making mills that would not be held to the highest ethical standards. Please do not adopt Petition #20-0034.

Brandon D. Millam
Bar #034696
1313 E Osborn Rd., Suite 220
Phoenix, Arizona 85014
602 240 6711
[email protected]

I write to voice my opposition to removing ER 5.4 and join in the well-stated responses provided by Judge Swann, Geoff Trachtenberg, Frank Verderame, Charles Sellers, and Thomas Burnett. Each has provided compelling and persuasive reasons not to adopt these recommendations.

In terms of accomplishing the stated goal presented in the petition, why not consider raising the jurisdictional threshold of the justice courts, small claims court, and compulsory arbitration, and maybe provide some sort of relief to recent law graduates to work in CLS and in underserved communities? If cost is the problem, solutions like those seem more related to the stated goal than what is being proposed.

Stevie Scotten
SBN 032825
17505 N. 79th Avenue, Suite 411
Glendale, Arizona 85308
Tel: 602.254.3333┃Fax: 866.273.1859
Web: www.PoundstoneScotten.com┃Email: [email protected]

I am opposed based on comments that have already been articulated.

Lawrence S. Rollin, Esq.
Udall Law Firm, L.L.P.
4801 E. Broadway Blvd., Suite 400
Tucson, Arizona 85711-3609
520-623-4353 (Main Office)
520-792-3426 (Fax)
520-844-1050 (eFax)
520-444-7336 (Cell)
[email protected]
www.udalllaw.com

If 5.4 is eliminated, picture Goldman Sachs, KPMG, Allstate, and other big corporate machines providing legal services to consumers under their own name. In theory, you would be able to get a will with your mocha grande at Starbucks. Eventually, Amazon will be the only provider of legal services in the country. They can pick up your tort settlement documents when they drop off toilet paper.

The purpose for the proposed rule change is only to increase potential revenue sources from companies who should not be providing legal services. The residents of AZ will be hurt by this rule change. It is not for their benefit.

Karl S. Pearson, Esq.
PEARSON LAW, PLC
4422 N. Civic Center Plaza
Suite 202
Scottsdale, AZ 85251
(480) 820-1800
[email protected]

I would like to register my strong opposition to the proposed rule change. While access to legal services is important, the proposed rule change will lead to conflicts of interest and the corrupting influence of money.

Ultimately, our clients and the general public will be negatively impacted by the proposed rule change.

Weston S. Montrose, Attorney at Law
4600 N. 12th St.
Phoenix, AZ 85014
602-346-9031
[email protected]

I am opposed to the Rule. It is bad for the legal profession and bad for consumers.

David Friedman
State Bar #029943
Knapp & Roberts, P.C.
8777 N. Gainey Center Dr., Ste. 165
Scottsdale, AZ 85258
480-991-7677
[email protected]

This message is to strongly oppose the proposed rule changes. I am deeply concerned that, by opening up the floodgates to permit non-lawyers to own and operate law practices, whom are not subject to sanction by engaging in unethical conduct, a race to the bottom is likely to ensue. It would give rise to a conflict of interest existing between the licensed practicing attorneys in the firm, and its owners/managers, against whom there would be no recourse by the state bar, were they to encourage legal practices that could trigger sanction upon the individual attorneys.

While we might hope that the licensed attorneys could reign in the unmitigated profit-driven motives of the owners/operators, when it comes to how the firm functions, as a practical matter, those who sign the paychecks ultimately call the shots.

As it presently stands, if my supervising attorney, my managing partner, or my boss were to suggest I engage in conduct that would run afoul of ethical rules applicable to lawyers, but which is otherwise perfectly legal, I could now say to him or her, "This could jeopardize BOTH our law licenses. This could be sanctionable against us BOTH. Is whatever upside you had in mind, worth that risk?" In this way, the conversation would be between two individuals who each have something to lose, equally. This is an important guardrail that we presently have at our disposal.

How does that conversation go if, instead, the low-level associate attorney is raising that concern to a non-lawyer boss, who has no license to personally lose except potential profits? The non-lawyer-owner/manager and the attorney would be operating by two different sets of rules, where the one with the power and hiring/firing authority has the less stringent rules of the two.

But that is an intra-firm concern. What about between firms? Because we licensed attorneys all presently abide by one set -- the same set -- of ethical rules, to which we are all equally susceptible to sanction, the playing field is as fair as it can be in this regard. But alter that so that some firms are run by lawyers, and others not? We can reasonably expect to see a very different mentality take hold, driven by those unaccountable by personal licensure and the risk of losing that license.

As to our clients, having a strictly defined, regulated legal profession means that customers know what they are getting, and provides recourse to those customers if they are treated unethically or unfairly. Bar complaints help hold licensed lawyers accountable, but a non-lawyer owner/manager would have no reason to be similarly restrained by such concerns.

Moreover, lawyers are trained in law school to prioritize their clients needs over personal gain, where the two come into conflict. A non-lawyer-owned, non-lawyer-operated law firm would have little reason to keep such client-favored priorities in mind, if the company could conceivably be more profitable by cutting corners here and there. For those non-lawyer operated/managed companies, client service is likely to degrade into "customer service," which all too often is little more than "lip service."

We as a State Bar must ask whether we are willing to sacrifice the ethical safeguards that have kept Arizona's practice of law fair and professional, or whether we will continue to hold our profession sacrosanct for the betterment of our communities and clients. I sincerely hope that the decision here is the latter.

Donal E. Burnett, Esq. (#028800)
Burnett Law Office, PLC
1744 South Val Vista Drive, Suite 208
Mesa, AZ 85204
(480) 347-9116
[email protected]

I add this additional comment in response to the Amended Petition. As before, I strongly oppose the petition and the amended petition. They do not provide adequate explanation or real world examples of how eliminating Ethical Rule 5.4 will increase access to justice.

While “access to justice” is what’s being marketed, it is not what’s being sold. Rather “access to the justice system” for investor capital is in actuality what has been packaged, and I suspect many boarding this untested ship called “Eliminate ER 5.4” are unaware that it is floating on hyperbolic waters with its course set to sail to the greed infested shores of Investor Island.

Ironically, as Judge Swann noted in his “Con” article in the April 2020 Arizona Attorney Magazine, the “Pro” author “Ms. Cunningham acknowledges, this is ‘not an access to justice initiative’.” If the initiative to eliminate ER 5.4 is not an access to justice initiative – what is it? It can only be one thing, an initiative to bring big investor capital into law firms to push for increased profits and market share to benefit the investor – not to help the underserved. Yes, the underserved need greater access to justice, but non-lawyer ownership of law firms does not bridge this gap. If the goal is to provide more affordable legal services to clients, adding another layer of individuals to be paid is completely counterintuitive. There may be some scenarios where an attorney would like to have a friend or spouse come in and co-own the practice to take care of the business side of the practice – but the result would not make legal services more available and more affordable for their clients. The new co-owner still has to get paid. In reality, the friend or spouse co-owning a law firm is not the elephant in the room. The elephant is the investor wanting to benefit from the legal services of a lawyer to make the greatest return on their investment.

The push for the elimination of Rule 5.4, whether intentionally or unintentionally, will solely benefit lawyers and investors, not the underserved. The evidence already shows non-lawyer ownership has not created any more “access to justice” in England, as noted in the comment posted by Thomas Burnett on April 30, 2020. Petitioner’s amended petition with proposed ABS regulations and licensing while attempting to address the obvious ethical concerns, does nothing to address HOW eliminating Rule 5.4 will increase access to justice. Why? Because it can’t and won’t. The following quote from a consultant in England says it all:
"Tina Williams is chair of Fox Williams, which advises firms on ABS applications. She says the government’s aim was to reduce the cost of legal services, and in that respect the policy has failed. ‘With hindsight, it seems clear that the more flexible ownership of law firms (and access to external capital) permitted by ABS status does not of itself create innovation and competition,’ she adds.” https://www.lawgazette.co.uk/news-focus/1000905.subject.

Although many of those behind the push for eliminating ER 5.4 may have altruistic objectives, I suspect they have not taken a deeper look at the global consequences such a drastic change would bring. The uber hyperbole that “non-lawyer ownership of law firms will bring ‘Innovation and Infusion of technology’ into the legal field” is simply a snazzy tag line with no real meaning and has nothing to do with non-lawyer ownership of law firms or access to justice. Technology does not require ownership in a law firm to benefit the legal profession, nor does the legal profession require non-lawyer ownership to benefit from technology. “Innovation” and “Infusion of technology” in and for the legal field can be accomplished without eliminating Rule 5.4. The elimination of ER 5.4 will simply give non-lawyers access to another income highway with a push to see greater return on their investment.

Further, I don’t believe the Petitioner’s attempt to remedy the ethical concerns with the use of a “compliance attorney” will in practice play out as hoped. The reality is that an attorney’s ethical obligations to his client and the court will unavoidably clash with the non-lawyer business investor. In the event of a conflict, or ethical breach, the compliance attorney may face being forced out or faced with lying to save his job. There is a reason the practice of law is self-regulated and governed by certain ethical rules; it’s for the independence of the attorney to do what they are bound to do both ethically and legally for their client and the courts – not their non-lawyer/investor business owner.

Our Supreme Court has previously highlighted this conflict:
“Many of the Canons of Professional Ethics which attorneys must observe most scrupuously are diametrically opposed to the code by which businessmen must live if they are to survive. Perhaps the most important applicable Canon states that 'The lawyer owes 'entire devotion to the interest of the client, warm zeal in the maintenance and defense of his rights and the exertion of his utmost learning and ability,' to the end that nothing be taken or be withheld from him, save by the rules of law, legally applied.' Excerpt from Canon 15, Canons of Professional Ethics.” State Bar of Ariz. v. Arizona Land Title & Trust Co., 366 P.2d 1, 90 Ariz. 76 (Ariz. 1961).

Lastly, for such a drastic rule change, I suspect a majority of Arizona’s attorneys are not aware of this proposed rule change. And for those that are, I submit many do not understand the consequences the changes would bring to the legal profession. In addition, for those that are aware, many have struggled to figure out how to post a comment on the Rules Forum, which has been plagued, unfortunately, with glitches making it very difficult to post comments. Because of these issues, in the event the Court is considering adopting these proposed rule changes, I would urge that the petition be postponed until a better forum for open discussions or additional Hearings can be conducted to ensure more attorneys are aware of the Petition and to bring greater transparency to the changes, the issues involved, and the consequences of these changes.

I join in the comments and opinion expressed by Judge Peter Swann, former State Bar of Arizona President Geoffrey Trachtenberg, and others in opposition to the proposed rule changes.

I find no evidence in the petition, or amendments thereto, evidencing good cause to eliminate ER 5.4. In short, ER 5.4 no more infringes Arizonans access to justice than removing all Arizona Walmart stores would infringe their access to clothing and food. And unlike the discounts at Walmart, as Judge Swann eloquently wrote, bad legal advice is never a bargain. What’s worse? Without ER 5.4, and with the addition of non-lawyer practitioners, Arizonans may be none the wiser the person in charge of their legal claims or defenses is not in fact a lawyer, has far less training, less or no oversight, and may be simply encouraging unnecessary services to maximize the bottom line at the direction of non-lawyer ownership.

Independence of a lawyer is a cornerstone of the legal profession. Arizona has gone to great lengths to remove influence from the court system since 1975 and the installment of Merit Selection. Even early legal scholars and founding fathers made abundantly clear, “the complete independence of the courts of justice is peculiarly essential in a limited Constitution.” Alexander Hamilton, Federalist Paper No. 78. That Petitioners seek to extinguish ER 5.4 without so much as a “spot test” in a sandbox so as not to cause permanent and widespread damage, on Arizonans in need no less, is myopic at best and reckless at worst.

For decades, ER 5.4 has protected the public while many lawyers and law firms have thrived financially. That some may have provided ample justice while not enjoying as much financial success is no reason to sacrifice client protection so that entrepreneurs and hedge fund managers can take over and cash in. Moreover, non-lawyer ownership of law firms in no way guarantees an actual increase in access to justice. There exist any number of opportunities for entrepreneurship outside the actual practice of law where independence of judgment, Supreme Court regulation, confidentiality, attorney-client privilege, and conflicts of interest are not commodities to be balanced on a profit and loss statement.

ER 5.4 should remain for the protection of the public. Assets and resources to assist Arizonans in actual need of access to justice would be better directed to entities long engaged in such provision of legal services (e.g., Legal Aid, Community Legal Services, etc.).


Kellen W. Bradley (#030055)
602-271-0183
[email protected]
Levenbaum Trachtenberg, PLC
362 N. 3rd Ave
Phoenix, AZ 85003