Utah’s Implementation Task Force on Regulatory Reform is working to optimize the regulatory structure for the practice of law in the Age of Disruption. The Task Force’s main goal is to increase access to and affordability of legal services while protecting consumers.
At the recommendation of the Task Force, the Utah Supreme Court has issued proposed rule changes and a Standing Order establishing an Office of Legal Services Innovation to oversee nontraditional legal services and providers and a Regulatory Sandbox in which such services and providers will be permitted to operate. There is a 90-day public comment period on the proposed rule changes (closing on July 23, 2020).
The current COVID-19 pandemic has underscored the importance of finding new, affordable, and high-quality innovations as quickly as possible. Indeed, COVID-19 and its aftermath threaten many Americans with severe legal consequences, including eviction, domestic violence and other family disputes, and consumer debt challenges. That is why the Utah Supreme Court is inviting proposals for low-cost or no-cost COVID-19 related legal service offerings to the Regulatory Sandbox, as well as offering expedited review and, potentially, approval of those proposals.
Proposals can include legal service offerings from nonlawyer owned entities, including nonlawyer subject matter experts and technological platforms. Your proposal should satisfy the following criteria:
In 2018, the Utah Supreme Court, at the request of the Utah State Bar, authorized a work group to study and make recommendations about optimizing the regulatory structure for legal services. That work culminated in a report: Narrowing the Access-to-Justice Gap by Reimagining Regulation. In August 2019, the Utah Supreme Court adopted the Report and authorized a task force to implement the Report’s recommendations.
The Task Force’s core mission is—by implementing the Report’s recommendations—to optimize the regulatory structure for legal services so as to foster innovation and other market forces and to increase access to and affordability of legal services.
The task force will carry out its mission by focusing on two aspects of legal regulation. Track A will focus on loosening the restrictions on lawyers. Track B will zero in on creating a new supervisory body. Each track is critical to successful reform.
Restrictions on lawyer advertising, fee sharing, and ownership of and investment in law firms by nonlawyers are concepts that need serious amendment if we are to improve competition and successfully close the access-to-justice gap.
First, lawyer advertising and solicitation rules need revision. The main concern there should be the protection of the public from false, misleading, or overreaching solicitations and advertising. Any other regulation of lawyer advertising seems to serve no legitimate purpose; it is blunt, ex ante, and neither outcome-based nor risk appropriate.
Second, Utah Rule of Professional Conduct 7.2 prohibits a lawyer from giving anything of value to a person for recommending the lawyer’s services or for channeling professional work to the lawyer. But use of paid referrals is one method that helps clients find needed legal services and one of the ways that lawyers can find new clients. Again, this rule should be amended to balance the risk of harm to prospective clients with the benefit to lawyers and clients through an outcomes-based and risk-appropriate methodology.
Third, nonlawyers have traditionally been prohibited from owning and controlling any interest in law firms. See Utah Rule of Professional Conduct 5.4. We view the elimination or substantial relaxation of Rule 5.4 as key to allowing lawyers to fully and comfortably participate in the technological revolution. Without such a change, lawyers will be at risk of not being able to engage with entrepreneurs across a wide swath of platforms.
Alongside the proposed revisions in Track A, Track B develops a new supervisory body for legal services in the State of Utah. Track B will have two phases. In Phase I, the Task Force will run a legal regulatory sandbox, from which the Task Force will develop and refine a data-driven regulatory framework focused on the identification, assessment, mitigation, and monitoring of risk to consumers of legal services, and an enforcement approach designed to respond to evidence of consumer harm as appropriate to support the core objective of improving access to justice. In Phase II, the Task Force will use what it learns in Phase I to implement a regulatory approach across the Utah legal market more broadly.
The goal of Phase I is to design a “regulatory sandbox” that will allow participants to create high-quality, innovative legal services products based on market demand. The sandbox will allow technology and innovation to flourish while addressing risk and generating data to inform the regulatory process.
In Phase I, the Task Force will oversee sandbox participants. The Task Force will likely include a director, a senior economist, a senior technologist, support staff (operations, development, communications), and a volunteer board of advisors. The Task Force will be funded through grants and sandbox participants.
The Task Force will establish rules and standards for operating inside the sandbox, including monitoring and assessing risk. The Task Force will focus mainly on whether consumers (1) achieved a satisfactory legal result, (2) were informed of and exercised their legal rights, and (3) purchased a service that was necessary and appropriate for resolving legal issues. The Task Force will be responsible for licensing and monitoring sandbox participants and for enforcing the rules and standards that are developed in Phase I.
In Phase I, the Task Force will solicit nontraditional sources of legal services, including nonlawyers and technology companies, and will allow them to test innovative legal services models and delivery systems through the sandbox. Phase I is expected to run approximately two years, at the end of which the Task Force will potentially establish a permanent supervisor.
In Phase II, we anticipate some form of an independent, nonprofit supervisor with delegated regulatory authority over some or all legal services. But what happens in Phase II will be determined by the outcome of Phase I. Phase II could proceed in multiple different directions as long as the objectives-, risk-based approach remains its key characteristic.
By the end of Phase I, Utah will have at least two years of data and experience in allowing market participants to enter a traditionally closed market and serve traditionally unserved and underserved clients. The goal of this project is to use that data and experience to design viable, sustainable, high-quality solutions for narrowing the access-to-justice gap.
At the end of Phase I, we will have answers to several important questions, including:
The Implementation Task Force
To read more about the Task Force Members, please visit the About page