Arizona: ABS pioneer
Leading alternative legal services provider Axiom Law has moved into regulated services for the first time after being granted an alternative business structure (ABS) licence in the US state of Arizona.
Arizona is the first state to ditch its ban on non-lawyer ownership of law firms and Axiom Advice & Counsel LLC was granted a licence by the state supreme court last month.
Other notable ABS licence holders in Arizona include legal consultancy, technology and outsourcing firm Elevate and online legal services provider LegalZoom.
The firm is a subsidiary of Axiom Global, along with its operations in the UK, Canada, Germany, Switzerland, Hong Kong and Singapore.
Since spinning off its contracts intelligence and managed services divisions in 2019, Axiom has focused on providing on-demand lawyers.
“Axiom will provide legal services to corporate clients, including small, high-growth companies that do not have in-house legal departments,” said the committee that recommended its application be approved.
Catherine Kemnitz – who leads Axiom’s global legal & compliance, corporate development, and corporate secretary functions – is the firm’s designated principle, while its compliance lawyer is Lynda Shely, who was director of lawyer ethics for the State Bar of Arizona for a decade and was heavily involved in the work to allow ABSs.
She also chairs the American Bar Association’s standing committee on ethics and professional responsibility.
An Axiom Law spokeswoman said: “For more than 20 years, Axiom has stood for innovation in the legal industry. We support the continued evolution of the regulatory processes that govern the legal industry.
“As always, we are continuing to explore how regulatory advancement can shape the future of the legal industry for the better and inform our own business practice.”
However, she would not comment on whether Axiom might seek an ABS licence in England and Wales.
Axiom was one of those who wrote to the Arizona Supreme Court in 2020 to support the recommendations to allow ABSs.
It said: “Access to financial resources spurs competition and innovation, which in turn makes us better—it creates better outcomes for clients, gives lawyers more opportunity, and moves the profession forward…
“Axiom was founded on the fundamental belief that the legal industry was broken; that the winners of the traditional law firm model and the billable hour are law firm partners at the cost of associates and clients.
“Traditional law firms and law firm partners are hardly villains; they are merely products of an incentive structure. New models are needed.”
The submission argued that the ethical issue of ownership by other professionals and fee-sharing was a red herring and hide protectionism: “Ethical choices sit with the individual lawyers, who should be entrusted with holding up the ethical standards of their professions.”
Axiom also observed that there had been “no deluge of ethics complaints” since ABSs were allowed in England and Wales, “and fear of erosion of legal ethics proved unfounded”.
It added: “In markets that permit ABS, we also see a proliferation of legal technology innovation and communities dedicated to its development… We also see robust regulatory frameworks designed to properly regulate ABS.”
ABSs have also been licensed in Utah since autumn 2020 as part of a regulatory sandbox but is not yet a permanent regulatory change. California is looking at a regulatory sandbox and liberalisation is being examined in other states too.
http://www.lawoncall.com is the largest ABS so far to be approved.