Pera Publishes “The Playbook” on Expanding the Geographic Reach of an Arizona ABS

Click here to download a free copy of “The Playbook”
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Adams & Reese Partner Lucian Pera, one of the nation’s leading legal ethics practitioners, has published “The Playbook: How to Extend the Reach of an Arizona ABS Law Firm to the Entire United States.” Pera provides a practical survey of tools and models now used by innovators to deliver legal services and extend the reach of ABSs – short for Alternative Business Structures.

In the legal industry, an ABS generally refers to a legal service entity (typically a law firm) with an ownership, management, or legal fee-sharing arrangement including both lawyers and individuals who are not licensed to practice law. On Jan. 1, 2021, ABSs were authorized by the Arizona Supreme Court. In the first four years of the program, over 125 ABS’s have been licensed, including KPMG, one of the Big Four accounting and consulting firms in the U.S.

When KPMG was granted an ABS license in February, it sent a big news splash through the legal services industry, with headlines even extending globally. The Financial Times, a British daily newspaper, published “The Rule Change That Could Blow Open U.S. Law,” as the publication interviewed Pera and other ethics practitioners about the impacts of the ABS approval and how ABSs have attracted entrepreneurs eager to innovate in legal services.

“It has led to a flurry of interest that has only increased since KPMG’s law application became public,” said Pera. “[KPMG has] clearly affected the imaginations of innovators and investors. It’s made a lot of people broaden their horizons.”

However, lawyers are governed by a patchwork of state rules, and Arizona is one of only three jurisdictions, along with DC and Utah, to allow some level of nonlawyer ownership of law firms. The other 48 jurisdictions adhere to ABA Model Rule 5.4, which prohibits partnerships or fee-sharing with nonlawyers. Under the view adopted by most jurisdictions, an Arizona ABS cannot establish branch offices or operate seamlessly in other U.S. jurisdictions, as traditional, lawyer-owned law firms may.

The primary roadblock for ABSs is the prevailing interpretation of ABA ethics rules. ABA Formal Ethics Op. 91-360 (1991) found that nonlawyer-owned law firms cannot establish branch offices in jurisdictions that prohibit nonlawyer ownership. And lawyers licensed in jurisdictions that prohibit nonlawyer ownership cannot practice with ABSs. Every jurisdiction that has addressed this issue has followed these principles. Arizona ABSs are essentially “landlocked.”

Still, despite this restriction, Pera says at least four techniques allow ABSs to expand their work beyond Arizona, including a fifth technique to allow nonlawyer support of a law firm without implicating ABSs at all. Pera discusses approaches that include:

• The Co-Counsel and Referral-Fee Model;
• The Pro Hac Vice Admission Model;
• The Temporary Practice Model;
• The Staffing Company Model; and
• The Two-Company Law Firm Model.

These techniques are explored in more detail in Pera’s “The Playbook” – a 36-page guide that discusses how to extend the reach and operations of an Arizona ABS to other U.S. jurisdictions, while acting within current U.S. law and ethics rules. Click here to download the full version.

Bloomberg Law recently published a condensed overview of Pera’s playbook – “Operating Alternative Business Structures Across Jurisdictions” – in the national publication’s Practical Guidance section (subscription required).

At Adams & Reese, Pera is a Partner in the national law firm’s Memphis office. For more than 30 years and licensed in Tennessee and Arizona, Pera has practiced in commercial litigation, media law, legal ethics, and lawyer regulation – advising lawyers, law firms, and businesses on legal ethics, compliance, risk management, and innovative legal service models. Within that practice, Pera counsels clients on whether an ABS fits their business model to deliver legal services, and the geographic reach of an ABS under current law.

The ABA Center for Professional Responsibility has bestowed on him the prestigious Michael Franck Award, their highest award for work in the field of ethics and professional responsibility over his career. For 20 years, in addition to his work as a practicing ethics lawyer, Pera has been a leader at the highest levels of the ABA on revisions to the Model Rules of Professional Conduct and other important lawyer conduct issues.