ABA Model Rule of Professional Conduct 5.4 generally prohibits a law firm or a lawyer from sharing legal fees with a non-lawyer, from forming a legal services partnership with a non-lawyer, and from practicing in a business structure where a non-lawyer owns any interest in the business or serves as an officer or director.  Arizona, Utah, and the District of Columbia, however, have modified Rules which permit certain business structures that allow non-lawyer ownership of law firms. The question arises, therefore, whether a lawyer licensed to practice in a Model Rule 5.4 State can acquire a “passive investment” interest in an alternative business structure formed under the laws and requirements of Arizona, Utah and/or D.C.?

In a Formal Opinion issued in September of 2021, the ABA has suggested that a lawyer may passively invest in a law firm that includes non-lawyer owners operating in a jurisdiction that permits alternative business structure entities, even if the lawyer is admitted to practice law in a jurisdiction that precludes non-lawyer ownership of law firms.

The lawyer, however, must not practice law through the alternative business structure, be held out as a lawyer associated with the alternative business structure, or have access to attorney-client privileged information without the alternative business client’s informed consent.


ABA Formal Opinion No. 499  (Sept. 8, 2021).