Rocket lawyer seeks to test Arizona law firm ownership

Rocket Lawyer, who tests the ownership of legal services by non-lawyers in Utah, has applied to join the Arizona experience, making them the first firm to study the new approach in both states.

Rocket Lawyer has applied to become an “alternative business structure,” said Suzanne Porter, head of legal services programs at the Arizona Supreme Court. Such legal services, which do not belong to lawyers, are permitted in the state after the court repealed a rule that prohibited such arrangements.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 pilot project. sandbox program. The Utah Supreme Court recently tacked on five more years to the effort, designed to collect data and test legal firms with new ownership models.

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

Moore said Rocket Lawyer plans to offer work in Arizona and Utah and the UK, where the company has been in business since 2012. Rocket Lawyer, through its online platform, helps people design wills, leases and other legal documents, and he assists small businesses in forming contracts and electronic signatures.

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

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

“Operating in these states opens up a wide range of possibilities for any business looking to compete for traditional legal work – and to do so with the benefit of large-scale capital investment potential to propel rapid growth.” , she said. “Rocket 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. Supporters of the legal regulatory changes say the overhaul is needed to increase access to legal services for those who cannot afford lawyers.

California is formally evaluating whether to approve a new regulatory sandbox similar to Utah’s, and several other states are also studying the matter.

Last August, Arizona went further than Utah in eliminate ethical rule 5.4, which prohibited non-lawyers from having an economic interest in law firms or other legal service 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 to allow non-lawyers, known as “legal paraprofessionals,” to provide limited legal services, including going to court with clients.

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

Historically, it has been up to technology-savvy alternative legal service providers like Rocket Lawyer to demonstrate the benefits of deregulating the legal sector, said Clifford Winston, senior economic studies researcher 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 arena, which has repeatedly been reluctant to embrace the 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 permitted to have lawyers on staff – as regular employees – who can work with the company’s digital tools “in a much more integrated fashion” than its network. existing independent lawyers could not do so, Moore said. .

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

Rocket Lawyer announced on April 21 to have raised “Significant growth capital funding” of $ 223 million. Funding will be critical, Moore said, as the company looks to evolve its cloud platform, which will make it easier for clients to obtain legal advice and to create and sign digital legal documents natively.

Denise W. Whigham