Robert Ambrogi Blog
An in-depth investigation by The Arizona Republic has found that Arizona’s pioneering program allowing nonlawyers to own law firms — a reform long championed by access-to-justice advocates — has become riddled with consumer complaints, legal loopholes, financial conflicts of interest and inadequate oversight.
In a series of investigative articles, Republic journalist Laura Gersony paints a troubling picture of the state’s Alternative Business Structures program, which the Arizona Supreme Court approved in 2021 to allow nonlawyers to own law firms. The program was intended to make legal services cheaper and more accessible for Arizona residents. Instead, the Republic found, it has in many cases attracted profit-focused investors whose firms have generated a trail of consumer complaints across the country.
Related LawNext episode: Supreme Court Justice Ann Timmer on Arizona’s Sweeping Regulatory Reforms.
The findings present a sharp contrast to a comprehensive Stanford Law School study I reported on last June, which found “remarkably little evidence of consumer harm” from the Arizona reforms and similar reforms in Utah.
That study, by the Stanford Center on the Legal Profession, reported that through April 2025, Utah had only 20 consumer complaints across all sandbox entities, and that the two Arizona ABS entities that faced formal disciplinary action involved procedural and oversight issues rather than systematic consumer harm.
The Republic investigation, however, tells a different story, one focused on specific firms and the on-the-ground experiences of consumers rather than aggregate data.
Consumer Complaints and Misconduct
In the first installment of the series, “Arizona lets investors own law firms. Consumers pay the price,” Gersony reports that the ABS program has become an epicenter for consumer complaints, with clients across the United States saying they were mistreated, misled, or — in the words of a lawsuit against one firm — outright “scammed.”
The investigation found that more than a dozen licensees have been accused of harming their clients or violating consumer protction laws. Several licensees are accused of targeting vulnerable people, such as those in financial distress. Allegations range from illegal robo-calling to what Alabama prosecutors have called a deceptive scheme that “commoditized” car accident victims in one of the poorest states in the country.
The Republic also found significant conflicts of interest within the program’s oversight structure. Several members of the committee that advises the Supreme Court on each licensing decision also make money counseling the firms applying for the program. An ethics expert told the Republic’s reporter that they should step down.
Despite these issues, just two firms have received mild discipline, according to the Republic. One firm may lose its license, though the decision is not yet final, the Republic said.
Arizona Supreme Court Chief Justice Ann Timmer stood by the program, Gersony reports, asserting that any reform will have both benefits and costs. She took issue with any suggestion that the court should do more to police misconduct by licensees.
“It’s unrealistic to think that we can monitor people all the time,” Timmer told the Republic. “We don’t have the capacity to do that.”
Out-of-State Spillover
In a second article, “Loopholes let Arizona law firm experiment spread nationwide,” Gersony reports on how the ABS program, which was intended to benefit Arizona residents, has effectively spread nationwide.
At least half of the Arizona licensees do business in other states, according to the Republic’s review. Only one-tenth of the firms specifically emphasize Arizona on their website or marketing materials. According to the Republic, firms are using their Arizona licenses to operate what are essentially nationwide practices, including some that function more like call centers, farming out cases across the country while doing little legal work themselves.
The article profiles reality TV star Joe Gorga of “Real Housewives of New Jersey,” who owns an Arizona-licensed personal injury firm that operates nationwide through billboards and advertising — despite having no connection to Arizona and not being a lawyer himself.
In Alabama, prosecutors are probing an Arizona-licensed firm’s connection with what they have called a deceptive scheme. In Texas, a woman settled with another Arizona firm she accused of clogging up her personal cell phone with illegal robo-calls and automated text messages. And in California, a federal judge accused a third licensed firm of trying to make a “quick buck” by luring authors out of a class-action settlement under misleading conditions.
Regulatory Response
In a third article, “Arizona Supreme Court may change law license rules after Republic investigation,” Gersony reports that the court is now moving to tighten rules in response to the investigation.
At a Feb. 10 meeting, court regulators backed changes that would tighten the ABS program. The proposed rules would restrict firms that operate as call centers and would clarify that the licenses are meant to benefit Arizona residents and companies.
Arizona Attorney General Kris Mayes called the allegations in the Republic report “serious questions” that “warrant a greater conversation about oversight of the program so that Arizonans are not taken advantage of or otherwise defrauded by bad actors.”
Chief Justice Timmer acknowledged the program’s large out-of-state spillover and said she was uncomfortable with the way some firms have used their licenses. She also said she had already directed the court to consider whether the program should change its rules.
The chair of the oversight committee also proposed a new, draft rule that would require the licensees to “at least in part” benefit Arizona people and companies.
The Stanford Study: A Different Lens
The Republic’s findings seem at odds with the Stanford study I covered last June, Legal Innovation After Reform: Five Years of Data on Regulatory Change.
That study, authored by David Freeman Engstrom, Natalie A. Knowlton and Lucy Ricca, represented the most comprehensive empirical analysis to date of Arizona’s and Utah’s legal regulatory reforms. It found remarkably low rates of consumer complaints and concluded that concerns about nonlawyer ownership compromising legal quality or professional standards had not materialized in any systematic way.
The Stanford researchers reported a harm-to-service ratio in Utah of approximately 1:5,869 based on reported legal services delivered. In Arizona, the two ABS entities that faced formal disciplinary action involved procedural and oversight issues, not systematic consumer harm.
One explanation for these seemingly conflicting findings is that the Stanford study focused primarily on formal complaints filed through official channels and aggregate data, while the Republic investigation used more traditional “shoe leather” techniques of interviewing affected consumers, reviewing court records and examining business practices in detail.
Asked about the Republic series, Natalie Knowlton, one of the Stanford researchers, said this:
“Our methodology in the Legal Innovation After Reform research series involved reviews of initial application materials (from the Arizona ABS program and Utah regulatory sandbox) along with – specific to the consumer harm piece – publicly available information from regulators in the two states. In Arizona, that available information is published disciplinary orders against ABS entities and ABS compliance lawyers. As we note in our latest report, published in June 2025, an important empirical question is whether these innovations are resulting in unacceptable harm to legal consumers. Allegations of consumer harm should be taken seriously, whether resulting from actions of ABS law firms and their lawyers or non-ABS law firms and their lawyers. But I have yet to see any data on the question of whether consumers experience harm by ABS law firms at a higher rate than they do by non-ABS law firms.”
It is, of course, also possible that both accounts are simultaneously true — that the overall rate of formal complaints remains low relative to the total volume of services, while at the same time specific firms are engaging in practices that cause real harm to individual consumers. Notably, the Stanford study flagged the concentration of Arizona ABS entities in personal injury and mass tort practice areas as an emerging concern — precisely the area where the Republic found the most troubling behavior.
A Crucial Moment for Legal Reform
Still, the Republic investigation arrives at a time when the topic of legal regulatory reform is being debated nationwide. As the Stanford study documented, Arizona’s program has grown significantly from 19 authorized entities in 2022 to 136 as of April 2025. Other states have been watching Arizona closely as they consider their own reform efforts.
The investigation does not necessarily argue against regulatory reform, but it raises important questions about the adequacy of oversight mechanisms, the need for consumer protections, and whether Arizona’s particular approach — with its lack of geographic restrictions on where licensed firms can operate — is best model.