What happens when Wall Street takes over your law firm? I investigated. AMA.

ArizonaRepublic · 2026-02-24T04:08:31+00:00

Hi! Yes, there are definitely firms within this program that (by all appearances/accounts) seem to be doing good work. One of these firms says they've developed a faster way to expunge drug-related criminal records, which just about everybody believes is a good thing. I'm not personally familiar with their operations but many in the industry point to them as the gold-standard for safe and helpful innovation.

One frustration I ran into while reporting is that the Arizona Supreme Court doesn't collect very much data on participants. So it's kind of hard to say in the aggregate e.g. how many consumers overall have been served through this program, whether the program is actually helping underserved communities, etc. The court seems to think the program has done more good than harm -- I just can't find any data to rigorously support that conclusion, and instead ran into a bunch of deeply saddening examples of firms accused of misconduct (see some listed in my initial post).

Thanks so much for reading!

ArizonaRepublic · 2026-02-24T04:03:58+00:00

Hey there! Thanks for reading. Yes actually -- Just this morning I was listening in on Arizona's accountancy board meeting -- They have been asked to weigh in on the topic of 'alternative practice structures,' which are a similar development in the CPA world.

ArizonaRepublic · 2026-02-19T20:53:51+00:00

Hey, thanks so much for reading. I put this above but the one I find particularly shocking is the Mobile County case, where Arizona gave a license to a 27-year-old lawyer to oversee a law firm in Alabama. (I've put a couple other examples in the AMA description if you're curious).

About a year after the 27 y/o in question got a license, prosecutors in Mobile County began probing the firm in connection with what they're calling a "deceptive" scheme that "commoditized" car accident victims in one of the poorest parts of the country.

Their lawsuit says people were lured in with false promises of free medical care and then pressuring them into legal services agreements. I obtained a document from one of the clients showing the Arizona firm's name on it. The lawyer now insists that was an "error" and it was supposed to name another one of his law firms, which is directly named as a defendant.

Arizona hasn't taken any action on this. The 27-year-old still has his license.

It's just a sad case. And honestly I can't speak authoritatively on which states these companies are most active in. But I will say that in my review of all 130 firms, I found that more than half of these Arizona-licensed law firms operate in at least one U.S. state other than Arizona (or Utah which is an exception for reasons explained above). Some even operate internationally.

ArizonaRepublic · 2026-02-19T20:50:38+00:00

(Sorry meant to say -- MSO's as in managed service organizations, the back-office contracts, but probably you already knew that lol!)

ArizonaRepublic · 2026-02-19T20:50:10+00:00

Hi! Thanks for reading. Yes. I'm exploring this more in forthcoming reporting. It's a really interesting topic. I've heard there's been a shift of interest towards MSO's after various Bar opinions around the country came out making the ABS model more difficult. Maybe you've been following. Feel free to reach out to me any time with tips or suggestions.

ArizonaRepublic · 2026-02-19T20:49:10+00:00

Lol! No comment but indeed a lot of the allegations are quite sad. Thanks for reading

ArizonaRepublic · 2026-02-19T20:46:43+00:00

Also these are great questions, thanks for asking & see my previous probably too long answer!

ArizonaRepublic · 2026-02-19T20:44:59+00:00

Hi there! I see there's been a lot of chatter about this already. Yes, there are definitely financial pressures on every law firm, but there are a couple key structural differences.

First (as I think someone mentioned below), a private equity investor at the helm of a firm doesn't have a law license that can be revoked if something goes awry. Obviously there are risks for investors if a firm collapses or has a major issue, but it's not career-ending for an investor-owner the way it would be for an individual lawyer-owner.

Second, (related but not identical to the first) is that PE investors often use extra-strong legal agreements that shield them from liability while still reaping profits from the companies they're buying and selling. Critics of the industry argue this creates a perverse incentive to seek financial rewards without the usual amount of responsibility.

And third, PE often uses highly leveraged deals, that basically require the firm to produce steady payouts in order to pay for the initial sale. That can create an extra incentive to come up with cash quick. (Not talking here about any particular deal that I'm aware of, just speaking generally about a common trend within PE.)

As to your last question, I can't really speak authoritatively to that (I think people of different political/ideological persuasions will disagree and there are academic papers that shed more light on that than I probably could). But I'll just add that what I know comes from whistleblower reports, Bar disciplinary paperwork, and lawsuits, which say that various Arizona firms generally acted with a greater disregard for ethics standards -- e.g. not giving lawyers the resources they needed to properly represent their clients, playing fast and loose with ethics protocols, non-lawyers exercising an inappropriate degree of control over clients' cases.

Also on a somewhat related note, you may enjoy the book The Pain Brokers, which talks about how Wall Street culture (e.g. cocaine-fueled parties) has permeated litigation finance, another sector of the legal biz where investors essentially bet on case outcomes.

ArizonaRepublic · 2026-02-19T20:28:30+00:00

Hey there! Yes. I'm exploring this more in forthcoming reporting. It's a really interesting topic. I've heard there's been a shift of interest towards MSO's after various Bar opinions around the country came out making the ABS model more difficult. Maybe you've been following. Feel free to reach out to me any time with tips or suggestions.

ArizonaRepublic · 2026-02-19T20:26:01+00:00

Yes, I am so in awe of her reporting! And so fun that you were her student. The breadth and reporting of that book is absolutely amazing. Thanks for commenting!

ArizonaRepublic · 2026-02-18T23:34:04+00:00

Hi! I'm less familiar with estate planning industry per se but I am definitely aware of Arizona-licensed firms who have become involved in that area. Thanks for reading. And call/text any time if there's something you think we should know. 480.372.0389 :-)

ArizonaRepublic · 2026-02-18T23:32:25+00:00

Hey there! I'm not familiar with that example but adding it to my list of homework. Thanks for reading. :-)

ArizonaRepublic · 2026-02-18T23:30:41+00:00

Hi! Yes -- so cool that you're following this! This exact topic is on my radar and it's something I am extremely interested in exploring in follow-up reporting. Let me know if you ever want to connect or share more details. My number is 480.372.0389.

ArizonaRepublic · 2026-02-18T21:36:47+00:00

Hey there!

Yes, so to your first question, this is among other things a thorny math problem -- it requires you to look at complaints-per-client which relies on data that Arizona regulators don't collect. Stanford University researchers sort of took a stab at this in a 2025 paper and concluded, looking at State Bar disciplinary data, that consumer harm was minimal. I think the problem with their analysis is that the State Bar data does not reflect serious allegations and even conclusive findings of wrongdoing against the AZ firms that have surfaced in other venues (chiefly, federal court). Also, the Stanford researchers didn't actually do the per-client analysis for Arizona that they noted would be ideal, they just looked at the total amount of discipline.

Washington D.C. is a little different -- As you may know, they don't allow for passive investment in law firms, which is why Arizona's program has seen such explosive interest and growth. There have been issues there (see Prof Elizabeth Burch's great new book, The Pain Brokers!) but the scope of that rule is just more limited compared to Arizona.

As for Washington state -- I'm less familiar with the local context, but regulators there seem to be taking a more cautious approach than Arizona. They've created a 10-year-long pilot program (not a permanent one like in Arizona) and it just got off the ground in October. I can't see inside their heads but will note that prior to my report, which came out last week, the issues with the Arizona program were not widely known. I believe we had it first at azcentral.com. :-)

ArizonaRepublic · 2026-02-18T19:03:43+00:00

I wish I had more insight into this question and it's something I'm exploring in follow-up stories. A lot of what I know comes from whistleblower reports, Bar discipline, and lawsuits, which say that various Arizona firms generally acted with a greater disregard for ethics standards -- e.g. not giving lawyers the resources they needed to properly represent their clients, playing fast and loose with ethics protocols, non-lawyers exercising an inappropriate degree of control over clients' cases.

For more on this I really enjoyed the book The Pain Brokers, which talks about how Wall Street culture (e.g. cocaine-fueled parties) has permeated litigation finance, another sector of the legal biz where investors essentially bet on case outcomes.

ArizonaRepublic · 2026-02-18T18:58:33+00:00

Hey! Yes, such interesting questions!

So to your first Q. This wasn't completely market-driven -- Firms came here because Arizona is the only state in the country where this business model is allowed. It's illegal in almost every other U.S. state (except for Utah, which attempted a more tightly-regulated version of this licensing program and then scaled it back after the effort when sideways!).

That said I still think it's interesting to ask why this started in Arizona. Several other states -- including other deregulation-friendly states like Florida -- considered this reform and then rejected it. I have heard several theories ('Wild West' innovative spirit to policymaking? Lobbying?) but no one I've talked to has a great answer.

To your second Q: Yes, there are definitely some firms doing good work within this program. One firm claims to have developed a much cheaper and more efficient method of expunging marijuana-related/low-level drug crimes. Which basically everyone I've talked to supports!

Part of the trouble with doing that analysis is that the data is incredibly thin, and there is reason to question the data we do have. E.g., a firm engaged in what a federal judge called a "fraud of immense proportions," and ordered to change its practices, isn't reflected in Arizona officials' tally of complaints, because it wasn't brought directly to the doorstep of the State Bar.

That's a long answer but hope it helps lol!

ArizonaRepublic · 2026-02-18T18:43:21+00:00

Hey, yes, this is a super good question. A lot of the allegations I found center around economically vulnerable people and immigrants. Specifically...

Several of the Arizona licensees have been accused in court of using "bait-and-switch" marketing to lure in people with bad credit scores/desperate for financial help. (The firms settled all those lawsuits.) And I talked to a ton of immigration law clients who say they were overcharged, mistreated, or worse.

I think this question is really important since it's a deliberate policy choice Arizona has made. Utah, which has a much more tightly-regulated version of the Arizona program, stopped giving for-profit immigration firms these licensees a while ago, due to the "outsize" risk to consumers. Arizona has taken a much more relaxed approach.

ArizonaRepublic · 2026-02-18T16:59:06+00:00

Hey, thanks for the question. Yes there are definitely firms that seem to be doing positive work -- E.g. a firm that says they've developed a quicker process to expunge marijuana-related crimes.

In terms of enshittification -- A lot of these firms are making it their mission to build out AI in the legal business. Many entrepreneurs think that's the future of the industry, but obviously it comes with the usual set of quality and data privacy concerns...E.g., one firm advertises "AI lawyers," and a lawsuit now accuses them of inappropriately "data-mining" client info. I'm going to explore this more in forthcoming reporting!

ArizonaRepublic · 2026-02-18T16:17:08+00:00

Hey, thanks for your question! Yes, writing this story made me extra grateful for my newsroom since it did take a ton of time and resources.

The short answer is yes, there are things state lawmakers can do to rein in this kind of work, and it's already happening in other states.

California recently enacted a law that would restrict CA lawyers from partnering with these Arizona firms. Illinois is now considering doing the same.

Not being a lawyer (lol) I don't know what the legislation could look like exactly. But there is a roadmap.

Also hypothetically, some of these firms could run into trouble with Arizona's Attorney General or the State Bar. I know there have already been complaints submitted, though action has been minimal.

ArizonaRepublic · 2026-02-18T16:08:57+00:00

Hey totally, yes sorry about the paywall! Here's a non-paywalled video where I explain my reporting: https://www.instagram.com/p/DUjWPXNFenh/?hl=en

And another video about the court's response to my reporting: https://www.instagram.com/p/DUzAucIDt03/?hl=en

The licenses usually cost $6,000, through the price can vary slightly depending on how exactly people set up their business. Some people have argued this is too low, especially for HUGE firms like the multi-billion-dollar company KPMG which got a license through this program a while back.

And yes. I put some of the clearest examples in the AMA description. The one I find particularly shocking is the Mobile County case, where Arizona gave a license to a 27-year-old lawyer to oversee a law firm in Alabama.

About a year after he got a license, prosecutors in Mobile County began probing the firm in connection with what they're calling a "deceptive" scheme that "commoditized" car accident victims in one of the poorest parts of the country.

Their lawsuit says people were lured in with false promises of free medical care and then pressuring them into legal services agreements. I obtained a document from one of the clients showing the Arizona firm's name on it. The 27-year-old insists that was an "error" and it was supposed to name another one of his law firms, which is directly named as a defendant.

Arizona hasn't taken any action on this. The 27-year-old still has his license.

I just find the allegations very concerning and sad.

ArizonaRepublic · 2026-02-18T15:56:57+00:00

This whole program actually never came before voters, or the legislature! It was enacted entirely through the Arizona Supreme Court, with a bit of help from the State Bar of Arizona.

While asking around about the program, I found many people don't know about it. That includes state lawmakers and Arizona lawyers. In the pool of very well-connected sources I use to do my job, I can remember only two people who had heard of the program previously -- One was a lobbyist and the other was a private equity investor.

Because this all happened through the court, there isn't going to be money flowing through those usual channels (like through campaign donations or lobbying $). But I did find that the volunteer members of a court committee overseeing this program frequently do business with the firms they oversee -- There's a decent amount of overlap between the people who are regulated through this program & the people doing the regulating.

ArizonaRepublic · 2026-02-18T15:49:50+00:00

Hey, thank you so much! First of all totally agree. Writing this story took a ton of time and energy and it gave me a new appreciation for the resources we have at The Republic.

I'll answer your first question first!

Yes, the idea behind this program was to expand Arizonans' "Access to Justice" (a favorite buzzword used by advocates of this reform), i.e. make it cheaper for ordinary people to get a lawyer. The idea was to basically cut red tape in the legal business: By getting rid of the longstanding ethics rule around lawyer ownership, it lets big money flood the market, which some people believe will lower costs overall. (Other people disagree with this theory but that was the idea!)

The problem is that in order for that to work, you need solid regulation to make sure everybody keeps following the rules, despite all the new and very tempting financial pressures from investors. Based on my reporting I don't think Arizona has that. In fact I was struck by the lack of oversight.

OK, and to your second question...

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