In a recent development, the Puerto Rico Supreme Court has revised its professional conduct rules to allow non-lawyer ownership of law firms. This change positions Puerto Rico alongside Arizona and the District of Columbia as one of the few jurisdictions in the United States recognizing such ownership structures. The new provision, detailed in the updated Rules of Professional Conduct, marks a shift from the traditional exclusivity of lawyer-only ownership.
The changes to Rule 5.4 introduce specific conditions under which non-lawyer ownership is permissible, including the stipulation that these ownership interests must not exceed 49% of shares in any law office. Furthermore, non-lawyer owners must ensure that operations comply with legal ethics and cannot participate directly in legal services or interfere with legal professionals’ independent judgement.
This decision diverges from the American Bar Association’s Model Rules, which generally maintain a prohibition on non-lawyer firm ownership due to concerns about preserving the independence of legal practice and the attorney-client relationship. The amended rule in Puerto Rico outlines stringent requirements aimed at mitigating some of these concerns.
However, the rule change was not unanimously supported. Associate Justice Luis F. Estrella Martínez dissented, voicing apprehensions regarding potential risks to the independence and integrity of the legal profession that non-lawyer ownership may introduce. Justice Estrella Martínez expressed fears that economic motivations might overshadow ethical practice and that non-lawyer investors could influence legal decision-making without being subject to the same professional standards as attorneys.
Interestingly, the court has opted to review the rule’s impact three years post-adoption to evaluate its efficacy, a task assigned to the Committee on Rules of Professional Conduct, which also played a role in drafting the updated rules. For more on the dissenting opinion, the full translated text is available here.
This legal reform aligns with another advancement in Puerto Rico’s legal landscape—its recently affirmed duty of technology competence, representing another departure from the American Bar Association’s guidelines. Together, these changes underscore a dynamic period in Puerto Rican legal practice, reflecting broader debates within the legal community about the evolving nature of law practice in the modern era.