Rocket Lawyer seeks ownership test from non-lawyer firm in Arizona

Rocket Lawyer, which is testing ownership of legal services by nonlawyers in Utah, has applied to join the Arizona experiment, making it the first company to study the new approach in both states.

Rocket Lawyer has submitted an application to become an “alternative business structure,” said Suzanne Porter, the Arizona Supreme Court’s legal services program manager. These legal services, which are not owned by attorneys, are permitted in the state after the court repealed a rule that prohibited such arrangements.

Rocket Lawyer in September became the first major legal services provider to announce it was participating in Utah’s two-year sandbox pilot program. The Utah Supreme Court recently added another five years to the effort, designed to collect data and test legal businesses with new ownership models.

Deregulation in Arizona and the regulatory sandbox experience in Utah allow legal services companies to innovate without fear of being sued for unauthorized practice of law, said Charley Moore, founder and CEO of Rocket Lawyer.

Moore said Rocket Lawyer plans to bring the work he does in Utah and the United Kingdom to Arizona, where the company has been doing business since 2012. Rocket Lawyer, through its online platform, helps people design wills, leases and other legal documents, and it helps small businesses form contracts and sign e-signatures.

“We plan to fully participate in Arizona, building on our experience and continuing to refine our operating model to reduce the cost of hiring an attorney,” Moore said in a written statement.

Companies like Rocket Lawyer have “anticipated and waited for this moment,” said Marcie Borgal Shunk, president of the Tilt Institute, a legal consultancy, in a statement.

“Operating in these states opens up a wide range of opportunities for any business looking to compete for traditional legal work, and to do so with the benefit of potential large-scale investment to propel rapid growth,” she said. declared. “Rocket’s lawyer is no exception.”

On the razor wire

Arizona and Utah have been at the forefront of states seeking to relax or repeal their law firm ownership rules. Proponents of the legal regulation changes say the overhaul is needed to increase access to legal services for those who cannot afford lawyers.

California is officially considering approving a new regulatory sandbox similar to Utah’s, and several other states are also considering the matter.

Last August, Arizona went further than Utah in eliminating Ethics Rule 5.4, which prohibited non-lawyers from having an economic interest in law firms or other legal services operations. . This change came with a framework to allow new “alternative business structures” that take advantage of the rule change. The new process also included measures to protect the public.

The court simultaneously instituted a new process allowing non-lawyers, called “law paraprofessionals,” to provide limited legal services, including going to court with clients.

Since then, the Arizona Supreme Court has authorized three entities to become alternative business structures. Nine others, including Rocket Lawyer, have submitted nominations to participate, Porter said. About 150 people have signed up to take the test to become a paraprofessional, which is still under development, she said.

Historically, it’s been up to tech-savvy alternative legal service providers like Rocket Lawyer to demonstrate the benefits of deregulating the legal industry, said Clifford Winston, senior fellow in economic studies at the Brookings Institution.

“They do the things traditional lawyers do, but charge a lot less,” Winston said.

This has been particularly important in the legal field, which time and again has been reluctant to embrace change even when it’s clear consumers will benefit, said Winston, co-author of the new book, “Trouble at the Bar : An Economics Perspective on the Legal Profession and the Case for Fundamental Reform.

In the UK and Utah, Rocket Lawyer is allowed to have lawyers on staff – as regular employees – who can work with the company’s digital tools “in a much more integrated way” than its existing network of independent attorneys was unable to do so, Moore said. .

“In Utah, this allows us to be the first point of contact for simple cases, while creating opportunities for our network attorneys when more complex cases arise,” he said.

Rocket Lawyer announced on April 21 that it had raised “significant growth capital funding” of $223 million. Funding will be critical, Moore said, as the company seeks to scale its cloud platform, which will make it easier for clients to get attorney advice and create and sign native digital legal documents.

Denise W. Whigham