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Big Changes in Law Firm Ownership Regulations

There are recent developments in many states regarding non-lawyer ownership in law firms. This topic was highly contested between those who advocated for and opposed the reform. What are the new changes affecting the legal field and what are the benefits of these new law firm ownership regulations? 

The Law Firm Ownership Regulations

For many years, the American Bar Association (ABA) commission has been trying to innovate and enhance the availability and quality of legal services. But this is the only time that the well-established ABA policy regarding non-lawyer ownership of law firms has changed. As per the 2022 DRI Center for Law & Public Policy Report, lawyers are not allowed to invest in business ventures in the law firm industry. This is due to the proposition of Model Rules of Professional Conduct (Model Rule 5.4) stating that law firms and lawyers should practice professional independence.

States That Approve the Alteration in Law Firm Ownership

In the past years, supporters of Alternative Business Structures (ABS) for law firms went forward to push the change in ownership regulations. Here are the states that initiate the change:

District of Columbia

Since 1991, the District of Columbia has authorized limited forms of nonlawyer ownership in their district to welcome business owners who didn’t study law to own or set out careers in the legal field. 


The Arizona Supreme Court got rid of Model Rule 5.4 in 2020. Their objective is to initiate a licensing system that allows nonlawyers to have economic growth in law firms. 


There was a proposed change in 2020 in the Utah Supreme Court. They authorized a regulatory sandbox pilot program and allowed at least seven years to let nonlawyers take ownership of law firms starting September 1, 2020.

The Benefits of Law Firm Ownership Regulations Reform

Mid-market law firms or firms with less than 100 employees will benefit the most from the new regulations. The cash flow for mid-market firms is limited and usually depends on the revenue of the company and investments of equity partners. Therefore, if there are venture capitalists or private equity firms who are willing to invest in mid-market law firms, there’ll be more legal business growth in the future. Opening the door to new businessmen will promote innovation in the legal industry.

Innovate Your Law Firm With Us

Everything is changing for the better and your firm must get accustomed to it. Legal Soft Solution offers services to enhance your law firm’s growth. Whether you are a lawyer or a law practice manager, we can help you. Talk to our expert team for the best assistance to any law firm management and legal team issue, or call us at (424) 341-4917. Or, book a demo now to know more about our services. 

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