Everything else in this library concerns case-specific or portfolio-level funding: capital tied to the outcome of particular matters, with the law firm's ownership structure untouched. Alternative business structures, or ABS, are a genuinely different mechanism entirely, regulatory reforms that permit non-lawyers to hold an ownership stake, and in some cases managerial authority, in a law firm itself, independent of any individual case's outcome.
Utah launched the first U.S. pilot in August 2020, through a regulatory sandbox designed to test whether loosening the rules around who may own a law practice could narrow the access-to-justice gap without a corresponding rise in consumer harm; Arizona followed with permanent ABS rules in 2021, requiring a rigorous application process, an internal compliance attorney, and Arizona Supreme Court certification before a non-lawyer can hold an economic interest in a firm. The two programs have diverged sharply in practice: Utah clawed back roughly three-quarters of its issued licenses after a review found the sandbox had gone awry, while Arizona's more tightly regulated model has continued to expand.
For law firms, ABS and traditional litigation or portfolio funding are not competing options so much as different tools for different problems: portfolio financing (covered elsewhere in this library) raises capital against a firm's existing book of contingency matters without changing who owns the firm, while ABS restructures the firm's capital base itself, opening the door to outside equity investment in exchange for giving up a degree of ownership and control that portfolio financing never touches. Which one a firm reaches for depends less on the size of the capital need and more on whether the firm is trying to fund specific cases or fund its own growth as a business.