The Arizona Supreme Court Says Licensure of an Alternative Business Structure Must, at Least in Part, Further Its Regulatory Objectives for Persons Located in Arizona

Section 7-209 of the Arizona Code of Judicial Administration defines an alternative business structure, or ABS, as "a business entity that includes nonlawyers who have an economic interest or Decision-making Authority in the firm and provides legal services in accord with Supreme Court Rules 31 and 31.1(c)." Under the section, a committee reviews each application and recommends whether the Supreme Court should approve it. On March 18, 2026, the court amended the section by Administrative Order No. 2026-31, adding to what that committee must weigh. Parts of the order follow, not the whole.

What the Order Adds

The amendments came before the Arizona Judicial Council on March 12, 2026, and were approved and recommended for adoption. The order adopts them and says "All other provisions of § 7-209 remain unchanged and in effect." Its attached text shows added words underlined and deleted words struck through.

The committee must already consider the regulatory objectives of Supreme Court Rule 33.1(b), among them "protecting and promoting the public interest" and "promoting access to legal services". A new item (2) follows that list. The committee must "Consider the foregoing regulatory objectives in light of the Supreme Court's jurisdiction given that licensure is sought in Arizona." The same new item says: "Licensure must, at least in part, further the regulatory objectives for persons located in Arizona."

A new item (3) comes after it. The committee must "Ensure that lawyers practicing law with an ABS are or will be, at least in part, providing legal services to persons." The words "at least in part" stand in both new items.

Both new items look at whom a firm's legal services reach, not at who holds the economic interest in it.

The Governance List and the Recommendation

The item that was numbered (2) before the order is now (4), and its words are not marked as changed. The committee must ensure whether an applicant "has adequate governance structures and policies in place to ensure" that "lawyers providing legal services to consumers act with independence consistent with the lawyers' professional responsibilities"; that "the ABS maintains proper standards of work"; that "the lawyer makes decisions in the best interest of clients"; that "confidentiality consistent with Supreme Court Rule 42 is maintained"; and that "any other business policies or procedures do not interfere with a lawyers' duties and responsibilities to clients."

The order also adds words to the committee's recommendation. The committee must recommend that the court approve an application if it determines, among other things, that the applicant has demonstrated satisfaction of the regulatory objectives of Supreme Court Rule 33.1(b)(1) "and (E)(2)(a)".

How will the committee judge whether a license furthers its regulatory objectives "for persons located in Arizona"?