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Utah Court OKs Pathbreaking Pilot on New Legal Service Models

Aug. 14, 2020, 6:55 PM

Utah is moving forward with a plan that could result in broad changes in how law is practiced in the state—including allowing tech entrepreneurs and other nonlawyers to own legal operations.

The Utah Supreme Court’s unanimous vote on Thursday establishes a regulatory “sandbox” for non-traditional legal providers and services, including entities with non-lawyer investment or ownership.

Data will be collected through the sandbox, allowing for a new entity called the Office of Legal Services Innovation, to assess and recommend sandbox applicants to the court.

Proponents of reforms were spurred by the need to increase access to justice for the poor and others priced out of the legal system during civil and family court matters. The need for such services has reached “crisis levels” because of the Covid-19 pandemic, according to a court statement.

Proponents were led by state Supreme Court Justice Deno Himonas and John Lund, past president of the Utah Bar.

Utah’s move is a significant marker in the national effort to change the rules to allow for nonlawyer and tech company ownership stakes in legal services operations. California, for example, is trailing Utah but is on a similar path to creating a regulatory sandbox. The move also could have another consequence: opening law firms to increased competition from the Big Four accountancies and other alternative legal service providers.

Implementation of the sandbox and the other rule changes “represent perhaps the most promising effort by courts to tackle the access-to-justice crisis in the last hundred years,” according to the release.

For decades, “we’ve used the same tools, the same rules, tried to volunteer ourselves across the access to justice gap, spent billions and billions of dollars, and it’s gotten worse,” Himonas said during a panel discussion on Friday during the annual meeting of the Association of Professional Responsibility Lawyers.

Utah’s regulatory reforms are an “opportunity to test new and innovative ideas,” Himonas said.

The innovation office will be funded initially by a grant from the State Justice Institute, as well as in-kind contributions from the National Center for State Courts and the Institute for the Advancement of the American Legal System, according to the court’s standing order made effective Aug. 14.

The order makes clear that nonlawyer owned entities, or legal entities in which nonlawyers are partial owners, including both for-profit and nonprofit groups, can include those that practice law “through technology platforms.”

The question of whether to allow nonlawyers to own or co-own legal services operations, including legal tech entrepreneurs eager to find new markets, has been the source of heated debate in different states.

The American Bar Association also weighed in when it passed a resolution in February that encouraged states to consider innovative approaches toward increasing access to legal services, but only after several contentious, behind-the-scenes meetings on the topic.

The Utah Supreme Court will evaluate whether its program should continue once the two-year pilot is finished.

To contact the reporters on this story: Sam Skolnik in Washington at sskolnik@bloomberglaw.com; Melissa Heelan Stanzione in Washington at mstanzione@bloomberglaw.com

To contact the editors responsible for this story: Chris Opfer at copfer@bloomberglaw.com; Rebekah Mintzer at rmintzer@bloomberglaw.com

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