New report on Arizona program on alternative business structures does not paint a pretty picture

 Long time readers of this blog may remember that I have posted several comments on whether the regulatory changes in some jurisdictions allowing lawyers to share their practice with non-lawyers in so-called “alternative business structures” has resulted in their supposed goal: to provide better and more affordable access to legal representation. The data I have seen over the years has not been very supportive of this conclusion.  What I have read about the subject always suggested that allowing “innovative” ways to fund the practice of law has resulted in innovation in the practice of law (and with it, in more profits for those involved), but not necessarily in more, better or more affordable access to representation for those who need it.

This was the conclusion in a 2022 report about the effects of the 2020 changes in Arizona and Utah by the Stanford Center on the Legal Profession.  See here. The publication of a 2025 report by the Institute for the Advancement of the American Legal System (IAALS) has been delayed, but the most recent published study has reported even more troubling results.

This new study, published in Arizona just recently, has found that the Arizona program has attracted profit-focused investors whose firms have generated a trail of consumer complaints (claiming harm to clients, violation of consumer protection laws, etc), financial conflicts of interest and inadequate oversight – essentially the types of dangers that those who originally opposed proposals to open the practice of law to non-lawyer investors feared would result from the experiment.  See here.

These results clash with some of the conclusions in the Stanford study, which found low rates of consumer complaints and which concluded that concerns about non-lawyer ownership compromising legal quality or professional standards had not materialized in any systematic way.  

But, as Robert Ambrogi explains in a comment on both studies, the different conclusions may be explained by looking at the methodology used to reach them.  While the Stanford study focused primarily on formal complaints filed through official channels, while the newer study in Arizona used more traditional techniques of interviewing affected consumers, reviewing court records and examining business practices in detail.

You should read Ambrogi’s very informative article carefully for more detail and links to more information; and we should all look forward to the upcoming publication of the IAALS report to compare the results.