Risk Update

Ethics & Rules Updates — Ohio on Lateral Movement, Utah & Arizona on Non-lawyer Firm Ownership

Earlier this month the Ohio Board of Professional Conduct published: “OPINION 2020-06” —

  • Issued August 7, 2020 Withdraws Adv. Op. 98-0
  • “A law firm and a lawyer leaving the firm have an ethical obligation to ensure that affected clients are informed of the lawyer’s departure.”
  • “A law firm and departing lawyer may jointly or separately notify affected clients of the lawyer’s departure from the law firm. The notice may indicate the availability and willingness of the lawyer or law firm to continue to provide legal services to the client.”
  • “A lawyer and the law firm must accept a client’s choice of counsel prompted by the departure of a lawyer from the firm. A law firm cannot prevent a departing lawyer from notifying affected clients for whom he or she has principal responsibility.”
  • “The Board recommends that a departing lawyer’s notice to affected clients be undertaken at the same time or after, but not before, the law firm is informed of the lawyer’s impending departure.”
  • “Because the departing lawyer in most cases may be actively representing the affected client at the time he or she gives notice of his or her departure, the lawyer may indicate his or her willingness to continue the representation. Even if the representation of the client terminates, the lawyer may directly solicit the client for employment since the client had a prior professional relationship with the lawyer.”
  • “If a joint notice from the departing lawyer and law firm is neither feasible due to timing nor desirable because the separation is unamicable, notices from either party should be sent to those clients for whom the departing lawyer is principally responsible.”
  • “The separate notices should instruct the affected client that the decision concerning the choice of counsel is within the sole direction of the client and should not encourage the client to sever ties with either the firm or the lawyer or disparage either party.”

Utah embraces nonlawyer ownership of law firms as part of broad access-to-justice reforms” —

  • “The Utah Supreme Court has unanimously approved a slate of reforms that allow for nonlawyer ownership or investment in law firms and permit legal services providers to try new ways of serving clients during a two-year pilot period.”
  • “In Utah, nontraditional legal services entities will have the opportunity to operate in a regulatory sandbox the state supreme court has established. The court also created an Office of Legal Services Innovation that will evaluate and recommend sandbox applicants to the court, as well oversee the applicants that are approved for entry into the sandbox.”
  • “Sandbox participants that are able to demonstrate their legal services ‘do not cause levels of consumer harm above threshold levels’ established by the innovation office may receive approval to exit the sandbox and continue practicing law, according to the court’s standing order.”

Arizona approves nonlawyer ownership, nonlawyer licensees in access-to-justice reforms” —

  • “Arizona has become the second state in recent weeks to approve opening its doors to nonlawyer ownership or investment in law firms, concepts that previously have faced strong resistance in the United States.”
  • “The Arizona Supreme Court announced Thursday its unanimous vote to eliminate its ethics rule barring nonlawyers from having an economic interest in a law firm or participating in fee sharing, one of two major rules changes it adopted this week in hopes of expanding access to justice.”
  • “The court also approved a new category of nonlawyer licensee called ‘Legal Paraprofessionals’ who will be able to represent clients in court, joining a couple other states in broadening the pool of permitted legal practitioners.”
  • “Both regulatory reforms, which were recommended by Arizona’s Task Force on the Delivery of Legal Services, take effect Jan. 1.”