One Small Step and a Giant Leap: Comparing Washington, D.C.’s Rule 5.4 with Arizona’s Rule 5.4 Abolition

Model Rule 5.4—which prohibits nonlawyer ownership of law firms—has existed for almost 100 years in one iteration or another. Throughout that time, the Rule has been steeped in controversy. Some consider the Rule a necessary fail-safe, protecting the legal profession from complete ethical collapse. Others consider the Rule to be nothing but a hindrance to legal innovation, artificially inflating the cost of legal services. This Note compares Washington, D.C.’s modified Rule 5.4, allowing nonlawyer ownership in law firms in some circumstances, with Arizona’s recent Rule 5.4 abolition, requiring firms that wish to be owned (in whole or in part) by nonlawyers to comply with regular government oversight. All in all, Arizona’s Rule abolition is more promising because it allows the Arizona legal profession to have its cake and eat it too: it allows firms to sidestep Rule 5.4 altogether while allowing authorities to monitor firms that choose to do so to make sure they comply with other professional and ethical rules. Thus, as this Note argues, Arizona’s Rule abolition does much more to foster innovation than D.C.’s modified Rule. Arizona’s Rule change also does much more to carry out the intentions of Rule 5.4 than the D.C. Rule; it better ensures that nonlawyer ownership of law firms does not interfere with the ethical administration of the law. Finally, this Note argues that although Arizona’s Rule abolition is a major step in the right direction, much more still needs to be done to lower the cost of legal services—the stated purpose behind Arizona’s Rule change.