Summary List Placement
An experiment that could fundamentally reshape the legal industry is underway in Utah.
In 2020, Utah became the first state to let non-lawyers provide legal services through a so-called regulatory sandbox program.
The program lets companies experiment with different models of practicing law in a “sandbox” overseen by the Utah Supreme Court. It was designed to spur innovation and increase access to justice by lowering the regulatory barriers to practicing law, according to the Office of Legal Services Innovation, which reports to the state’s Supreme Court.
Traditionally in the US, only licensed lawyers who have a law degree and have passed the bar can practice law and own law firms.
This “anachronistic” structure is “meant to protect lawyers, not clients,” according to Dan Reed, CEO of UnitedLex, a technology and legal services company. Reed and other sandbox supporters argue that law firms’ near-monopolistic power makes legal help largely inaccessible to large segments of the American population. According to state studies, 80% of low-income people in the US can’t afford the legal services they need.
Under Utah’s sandbox program, non-lawyers can own law firms and provide legal help to clients, either directly or through automated technology.
“Law is the last bastion where it’s very much a guild that’s out-of-touch with what consumers need,” said Reed. “It’s ripe for reconsideration.”
A ‘huge win’ for legal-tech startups
Legal-tech startups like Rocket Lawyer and LawGeex, as well as accounting and nontraditional law firms, have jumped at the opportunity to join the experimental sandbox. So far, the Utah Supreme Court has received 47 applications and authorized 26 entities to participate in the program..
The Utah sandbox is “clearly a huge win” for these legal-tech startups, said Scott Mozarsky, who focuses on legal and compliance markets as a managing director at the investment bank JEGI. The deregulation opens up the possibilities of what a company can do in the realm of law.
Before joining the sandbox in May, LawGeex, which uses artificial intelligence to automate the contract review process, could only work within the parameters of clients’ legal playbooks, since anything beyond that would be considered practicing law.
“If anything was outside the policies set by the client’s playbook, we would have to escalate to the client and have them resolve the issue,” said Noory Bechor, CEO and founder of LawGeex.
Now, in Utah, the startup can make legal judgment calls when reviewing contracts, according to Bechor. LawGeex is hiring lawyers in Utah to make sure it’s issuing proper legal advice and managing contract-related risk.
Rocket Lawyer is another legal-tech startup that’s grown and scaled its services in the sandbox. The online platform, which helps consumers create legal documents and connects them with a network of independent attorneys, already had a client base in Utah. But it’s now able to hire local lawyers as part of its staff, said Charley Moore, CEO and founder of Rocket Lawyer. He declined to disclose the total number of attorneys hired since the company joined the sandbox program in September last year.
ClearMyRecord.org is a platform that automates the record-clearing process for eligible, low-level offenders under Utah’s Clean Slate Law, which went into effect in May 2020. The website is a joint venture between Sudbury Consulting and Code for America. Before the sandbox program, they couldn’t have any lawyers on staff, significantly limiting the scope of their work, according to Noella Sudbury, founder of Sudbury Consulting.
“A lot of people don’t remember when this criminal activity on their record occurred, and there are wait times and different things so it’s pretty hard without hiring an attorney to figure out if you’ve benefitted,” Sudbury said.
Now, the platform can determine who’s eligible for record expungement, and provide individualized advice — just like a licensed, human lawyer would, according to Sudbury.
Critics worry about the ethical implications of non-lawyer ownership
The regulatory sandbox has also spawned businesses that wouldn’t exist otherwise.
Law on Call, touted as the first entirely non-lawyer-owned law firm in the US, was launched in Utah in March. Clients pay just $9 a month for unlimited and immediate phone access to licensed lawyers in Utah — a departure from the traditional legal services world, where potential clients often have a tough time reaching a lawyer, according to a company press release.
Under its non-lawyer ownership, the firm has done away with the notorious billable-hour model that most law firms operate under, which clients often say drives up legal costs.
“I used to be so concerned with getting my billable-hour requirements fulfilled,” said Daniel Wilde, an attorney for Law on Call. “The great thing about being owned by non-lawyers is that our ownership group does the marketing, the billing, the collections. All the lawyers have to do is practice law.”
Critics of the sandbox say these alternative legal business models pose ethical questions, since non-lawyer owners might have conflicting interests that put clients — and the traditional legal industry — at risk.
“If a law firm must answer to the profit interests of investors, will lawyers be able to fulfill their ethical duty of exercising independent legal judgment for the sole benefit of the client?” asked Karen Rubin, a lawyer and member of the Ohio State Bar Associations’ Ethics Committee.
But sandbox participants say that’s not the case. “I just don’t see it that way,” said Wilde. “I wouldn’t let our owners try to influence me… I’d quit before that happened.”
“It is not our place, business, purpose, or desire to replace the traditional practice of law,” Wilde said. “Traditional law caters to those who can afford to pay for it. We’re helping to bridge the gap.”