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Alternative Business Structures (ABS) Questions & Answers

The Supreme Court unanimously adopted changes to its rules to encourage business innovation in providing legal services at affordable prices. The Court further adopted modifications to the court rules regulating the practice of law and eliminating the rule prohibiting fee sharing and prohibiting nonlawyers from having economic interests in law firms. The regulatory framework addressing this change requires businesses, called “Alternative Business Structures,” to be licensed. The changes came into effect January 1, 2021.

The Committee on Alternative Business Structures will review applications for licensure under Arizona Supreme Court Rule 33.1 and Arizona Code of Judicial Administration (ACJA) § 7-209 and will make licensure recommendations to the Supreme Court.



The Court unanimously adopted the elimination of Rule 5.4. What does this allow? What is an Alternative Business Structure (ABS)? What are the advantages of allowing the formation of an ABS? Does the public support the proposal to allow nonlawyers to partner in or own a law firm? Can my firm or I apply for an ABS license? What are the costs to apply for an ABS license? How will an ABS be approved? Will the ABS committee be looking at the purposes of the ABS (such as requiring that it offer low-cost legal service?) Can an ABS be composed of all nonlawyers? Must the compliance lawyer be an Arizona lawyer? What are the requirements for the ABS Compliance Lawyer? Will the application require certification that the compliance lawyer attests to the statements about his/her qualifications? Can a disbarred lawyer or a person who has been refused admission due to the character and fitness process own or be a partner in an ABS? Who is an "Authorized Person"? Will the application require the disclosure of the names and identities of all nonlawyer investors – even those with less than a 10% interest? For all disclosed nonlawyer investors, what information besides crimes/licenses/court sanctions will be required? Will the application require disclosure of how much money/capital is being contributed by nonlawyers? If 10% of the ownership of an ABS is through an entity, will the application require disclosure of the beneficial owners/individuals in control of that entity? Will the application require disclosure of lawyer owners? Will the application require disclosure of the ABS’s practice areas? Is the ABS application open to the public? How will complaints against an ABS be handled? Where can I get more information?