Extract from Benjamin Joyner’s article “Puerto Rico Allows ABS Law Firms, but Program Is Still Work in Progress”
On June 17, Puerto Rico’s Supreme Court, the Tribunal General de Justicia, released a new set of Rules of Professional Conduct for the Commonwealth’s lawyers, primarily based on the American Bar Association’s Model Rules. The new rules, however, relaxed the prohibition of nonlawyer ownership of law firms, allowing firms to sell ownership stakes of up to 49% to nonattorneys.
Puerto Rico’s rule change follows Arizona’s 2020 decision to allow nonlawyers to own law firms, as well as Utah’s creation of a “regulatory sandbox” enabling nonlawyers to perform certain legal tasks and experiment with alternative business models.
Nonlawyer law firm ownership has come as part of a broader trend toward experimenting with new legal services delivery methods, as courts struggle with heavy dockets and potential clients face access to justice challenges.
William Large, president of the Florida Justice Reform Institute, told Legaltech News that recent moves to open up firm ownership came in an environment where larger plaintiffs firms had become more profitable, and thus more appealing to investors.
“I think many enterprising lawyers who own these valuable commodities realize it would be an infinitely greater value commodity if they could sell it to non lawyers, and that’s why you’ve seen this push in the last 10 or 15 years to restructure Rule 5.4,” he said.
