Supreme Court Regulatory Reform Proposal-Comment Period Closes July 23, 2020

While I applaud the justices in their search to help provide legal services to the underserved population. I do feel however that this proposal goes too far. From what I understand providers of non-legal services could market for sale their clients in need of representation.

In a market economy, these providers would be pushing their clients to attorneys willing to pay the provider the largest amount of money. As opposed to searching for the attorney(s) best suited to handle the legal needs of the client.

I am writing to comment on new Rules 5.4A and 5.4B.

My perspective is that of a 70 year old, sole practice attorney who is seriously considering ending his career. My clientele over 40+ years of practice have been individuals and small businesses.

The reason for accepting non-lawyers into the profession’s structure is said to be the need to make legal services more available and less expensive for people of ordinary means. I agree these goals are important and believe that legal insurance and software should be able to do just that. A defense tsunami in debt collection, eviction, divorce and criminal cases is long overdue but will tax the courts’ resources. I think it will be just as important to manage (reduce) attorney fee awards in these cases as it is to provide access to inexpensive legal defense services.

I doubt the impact of the rule change will be limited to low budget legal services, however. Insurance defense is already tightly run by insurance companies. Higher budget plaintiffs work will probably attract non-lawyers, starting with personal injury and expanding into every other profitable area. Regulatory compliance practices such as tax, human resource, and environmental law will probably be owned and managed by non-lawyers who can provide a wider range of services. In the end, I expect that lawyers will go the way of doctors, dentists and pharmacists. Most will become employees and a non-lawyer owner/manager class will struggle successfully to arise.

While I appreciate the intent to preserve confidentiality and the attorney’s independent judgment, it seems disingenuous. Management of attorneys includes directly and indirectly influencing attorney behavior and punishing non-compliance. Lawyers are subject to the court’s orders and discipline. Non-lawyers are not. In the end, non-lawyer owners and management will probably have more influence over the lawyer’s career and, therefore, the lawyer’s behavior. It will be interesting to watch whether most insurance companies bring defense attorneys in house or continue to hire outside firms.

Full disclosure I am a lawyer and a technology developer seeking admission into the sandbox.

As a practicing lawyer for 20 years I believe this regulatory reform represents an expansion the market for legal services to people who are not using lawyers when they could or should.

Most people do not know how to interact with the legal system or lawyers for that matter. Their perceptions are often negative towards the profession. Hence a tremendous educational curve is required to inform the public about quality lawyers that are willing to charge a reasonable fees.

The reality is that education or marketing of legal services is very expensive. Without the access to outside capital and traditional business operations and incentives, we as lawyers, and I speak to my experience as a small firm lawyer, are caught in a bit of an endless loop between getting the work in the door, finishing it on time and making a living. From my own experience these often can be difficult to balance.

There is a bit of an inherent conflict in the practice of law and the business of law that both technology and additional capital will improve.

For these reasons I support the proposed regulatory changes.

I believe this changes are unwise. We have already experienced the commercialization of our profession. We have had to defend against the legislative attempt to tax our services as a commodity. Now we must defend ourselves from our own Supreme Court? This will lead to further erosion of our profession and any modicum of differentiation between lawyers and those who have not endured the rigors of law school and who are not held to legal ethical standards.

I am a paralegal and applaud Utah in being at the forefront of legal reform. Many friends/neighbors/friends of friends have come to me for legal advice, which I am unable to provide, not because I don’t know the answers or have guidance for them, but because I am not licensed to practice law. These people simply can’t afford an attorney, and are left floundering in our society. I am a believer in the philosophy that when help is provided to one, all benefit.

I believe ethical standards are in place for many business partnerships to work within the framework provided in these reforms. Attorneys have ethical standards that are strictly regulated, it is true, but I do not believe there is a “Wild West” of corruption just waiting to happen should these reforms be enacted.

I would also support the institution of lawyer “apprenticeships,” or alternate law school opportunities (in addition to the LPP program), such as online, or evening law school programs, to decrease legal-education costs and increase opportunities for obtaining a J.D.

I think this is a great idea!

I do not see how these changes will address the access to justice issues the proposed changes are designed to address. These changes create an opportunity for creative non-lawyers to find ways to profit from legal services. For example, accounting firms will hire attorneys so that clients can have a one-stop shop for their estate planning/financial planning needs; personal injury attorneys can partner-up with physicians, with both professions profit sharing from medical services and judgments/settlements, etc. The under-served will continue to be under-served because these changes do not create any incentive to reach down to help tenants of slumlords, lower income individuals involved in domestic disputes, etc.

Also, the proposed changes require attorneys to continue to abide by the rules of professional conduct, but what if an attorney is working for a non-lawyer who is not bound by these rules? The non-attorney businesses who hire attorneys will be focused on profits, not on respecting professional rules that can sometimes get in the way of profits. Avoiding conflicts of interests in these hybrid models that will be permitted under the proposed rules will be very difficult.

Finally, I fail to see the benefit of loosening up lawyer advertising rules. It allows for puffery, exaggeration, loss of dignity, and even misrepresentation. If anything, it makes potential clients who are vulnerable even more so. A noble profession is at risk of being turned into a common service. The reputation of attorneys will not improve under these proposed rules, but will likely erode.

In short, I don’t see that the proposed changes to the rules will solve the access to justice problems that have been identified. Other less disruptive means should be considered. Perhaps revisit pro bono requirements, offer tuition forgiveness if new attorneys focus on certain under-served areas for a period of time following graduation, bolster/support those services like Legal Aid and Legal Services, etc.

Shared malpractice? How do you sue a non-lawyer for malpractice? What is the standard of care for a non-lawyer practicing law? The most likely result of this practice model is you’ll have a non-lawyer looking to make a buck hire a bunch of brand new law school grads who don’t know any better and don’t have the clout to stand up to them. After all, these newly-minted lawyers are the lowest-cost provider of crappy legal services. Clients will get screwed. The newbie lawyers will get sued. The non-lawyer businessman who made big money of both will skate.

The Supreme Court and the Utah State Bar should be protecting attorneys and their ability to practice law, not destroying or hindering them with this kind of sweeping change. These changes will not allow low-income people better access to legal services. They will allow companies to prey on low-income people by providing them with low-quality services that push real attorneys out of their own profession.

These proposed changes will allow large companies to manipulate people into thinking they are getting true legal analysis and representation when they are actually getting cookie-cutter robot-driven services without any meaningful attorney involvement on a case-by-case basis. The changes also create a system where companies are going to water-down attorney salaries because they can hire for low wages while putting many small firms and solos out of business. Instead of protecting consumers and attorneys, these changes will hurt them.

I am completely against these proposed changes to Rule 5.4A and 5.4B allowing non lawyers to own and control law firms or other businesses providing legal advice. (which seems to be permitted as long as someone, apparently the lawyer who works for the non lawyers, can conclude he is not being influenced in his decisions, professional judgment etc. by the owners he works for, and provided there is some disclosure to the client of the fact non-lawyers are getting a portion of all legal fees and payments.)

Allowing non-lawyers to own law firms and other businesses that provide legal services, is a bad idea and inherently undermines the provision of independent, professional legal advice which is why most jurisdictions have this prohibition.

The addition of some prophylactic lip service to independence of the lawyer as determined in his own judgment is unpersuasive and seems circular. Asking someone to conclude he is not working and providing services and legal decisions generally in a way that complies with the requests of the person who owns his firm and signs his checks seems to be asking someone to lie, or asking him to expect his need to support himself and his family to be irrelevant to his decisions and work. That is not in my experience how business in the real world works.
Additionally, if she (the lawyer), were to agree to such an arrangement and then be pushed by her employer and improperly influenced now the lawyer is the one guilty of an additional breach and is punished for breaking the rules because she is being controlled and manipulated by the person making her livelihood possible.

Furthermore, there has been no explanation in the related press release or otherwise to my knowledge of why or how this type of ownership structure with all of its faults and risks would ever be helpful or needed or otherwise meets any goals that were supposed to be the stated purpose of these changes, namely providing legal services for free or low cost to low income persons.

The changes to Section 1.5 allowing more flexibility to share legal fees between firms seems like an appropriate modification and I see no harm in it.

The change to 7.1 7.2 advertising rules seems reasonable, I don’t have a strong opinion on it.

None of these changes seems materially connected to the proposed access to free or low cost legal fees.

The “reform” measures you are proposing are anti-capitalist, will harm consumers rather than help them, will irrevocably harm the practice of law as we know it, and is based on a demonstrable lie. Proponents of this plan claim the goal is to help low-income people with legal services but that is intentionally false. There are at least a dozen ways to actually help lower the cost of legal services that will also preserve the rights of those clients. This plan does neither.

My practice is focused on helping consumers against the banks, credit card companies, and other large companies. By implementing these proposed changes you will destroy consumer protection jurisprudence. The whole point of consumer protection laws (and one of the stated goals of your so-called “reform”) is because banks, credit card companies, etc., take advantage of consumers and consumers cannot afford legal assistance. Instead of helping consumers, however, this plan will effectively be giving control of consumer protection to the companies that are already egregiously harming consumers. Rather than improving access to legal outcomes you will be depriving consumers of access to legal services. Legal services provided by these companies will be subject to jury waivers, arbitration clauses, and class-action waivers which are all 100% anti-consumer but inevitable under your plan.

The so-called “reform” will allow large firms and corporations to push out small firm and solo practitioners from being competitive because the small firms and solos will not be able to charge high enough prices to stay in business and compete with the marketing budgets of large companies with multiple streams of revenue. Utah lawyers are already notoriously low on their hourly rates but the only lawyers who will survive the aftermath of your plan will be the large firms handling the corporate work of the companies that will be taking over the practice of law. The only jobs for the rest of the attorneys will be at $20.00 per hour working in cubicles on mindless repetitive tasks for their corporate masters. Instead of helping low-income consumers obtain legal services you are creating low-income attorneys. True, a few entrepreneurs will emerge but their business models and ideas will be ultimately be taken and exploited by the non-attorney corporations to harm consumers with arbitration, class-action waivers, and jury waiver requirements in their contracts.

Indeed, with this model in place, all attorneys will actually serve the companies they work for rather than the actual clients. Ethical requirements like diligence, communications, and control of a client’s case will all be supplanted by company marching orders and profit margins. Diligent quality legal service will give way to template-based services that can be handled by uneducated drones. Individual clients will be hard-pressed to get anything even resembling competent legal work.

Your proposal is also unnecessary. Low-income consumers are not disproportionately served. There are legal aid clinics, low-profit and non-profit law firms, and other attorneys serving these clients. If you want real reform, equalize the budgets for legal defenders with the prosecution budget in criminal cases. Paying the two sides equally in that arena would be true and effective reform if you actually want to help low-income individuals.

Most attorneys in the solo and small firm sphere handle pro bono cases. We won’t anymore if you allow non-attorney ownership or control of law firms and legal services.

With corporations taking over, legal services will be turned into cookie-cutter template-based trash because corporations will open firms or add services to their existing business that degrade and dehumanize the practice of law. Clients’ will be enrolled by the thousands without concern whether they actually need the services or not. Rather than being able to work with an actual attorney they will be handed off to low-level customer service agents, chat-bots, automated help menu systems, and automated phone systems that keep clients on hold for hours. If you doubt me, try to talk to an actual person at ADP. They intentionally prevent you from ever speaking with someone in customer service. If you think we have an ethical problem with communicating with clients now, wait until you put large banks and other corporations in charge. There is absolutely no way a large company can or will communicate with clients as effectively and personally as we can now. Cookie-cutter email responses and programmed chat-bots will not cut it but that is exactly what we will get. Even when clients actually speak with real people those people will be mostly customer service agents constrained by checklists and telephone scripts. They won’t be trained or allowed to provide individual advice as attorneys are now.

Your sandbox will not catch these problems, and many others, for at least two reasons. First, it won’t be designed to catch actual problems. It will be designed to conceal these issues so the proposal will succeed. Second, these problems will be concealed on the corporate end as well.

This reform is akin to socializing the practice of law and it will destroy the free market as I am sure the proponents (who are all big firms and corporate shills) intend. You are shifting billions of dollars a year worth of legal services from individuals to large corporations. That will not better serve the poor but will instead give the banks, credit card companies, insurance companies, etc., (the proponent’s clients) control over the poor and allow them to exploit the poor for additional profit.

I will also point out that allowing comments on this proposal is a total sham. Nothing anyone says will stop it. The proponents are simply going through the motions. I attended a CLE on this last year and it was obvious the proponents were ramming this down our throats. They didn’t care about any opposing viewpoints and that opposition was futile because the foundations for this plan are already in place. This so-called “reform” is a foregone conclusion.

I am certain that many attorneys have brought this up before but why is there still no measure of commensurate accountability for non-lawyers? For example, if I go and work for one of these non-lawyers and the non-lawyer demands that I do anything that violates my ethical duties as an attorney, I can and will be replaced or be punished. Even if I report my hypothetical employer’s conduct, the worst that could happen is that the entity can no longer participate in the program. Assuming, however, that I am a new associate who is still learning the Rules of Ethics and I trust my employer and engage in activity that violates the rules I can be disciplined and that mark will follow me to various jurisdictions for the remainder of my career. While the business owner or middle management employee can go on to form a new entity or work somewhere else in their profession, I cannot form a new identity and my professional career as an attorney is brought to an end. I believe that 5.4A subsection B absolutely puts new attorneys in an untenable situation and for that reason alone I cannot support this proposal.

The Utah Work Group on Regulatory Reform (“UWG”) has already compiled a report which identified a justice gap in the legal fields of: (1) debt collection (2) landlord-tenant, (3) small claims cases (disputes valued at $12,000 or less), and (4) family law. I field calls every day dealing with at least one or more of those practice areas. It doesn’t surprise me that at least the first two practice areas have a “justice gap” as both debt collection and land-lord tenant law statutorily benefit those who can afford to bring the action in the first place. If there is a “justice gap”, the gap was statutorily created and so even if everyone had equal access to civil litigation the “justice gap” would still exist.

The proposed rules disincentives new attorneys from remaining in this jurisdiction and aren’t going to bridge the gaps created by statute.

I write to support the proposed changes wholeheartedly.
I am a retired Justice of the Colorado Supreme Court and former trial court judge in Colorado as well as the former Executive Director of IAALS, the Institute for the Advancement of the American Legal System at the University of Denver. In all of those capacities, I have been exposed to the widening gap between the need for legal services and the provision of those services.
In this increasingly complex world, justice for all is an illusion unless we all have access to legal advice, legal services and court process. Experimentation with ways to deliver those services in an accessible and affordable way has been caught in a web of regulatory constraints that have prevented innovation and creativity. Accordingly, we have not responded to the public need. Legal services are extremely expensive and hard to obtain. That is not acceptable. Almost every other profession has opened its ranks, changed its rules and figured out ways to meet the needs of the user. Now it is time for the legal profession to do the same.
The Utah Supreme Court and Bar have led the nation in other reform efforts, including online provision of court services and efforts to streamline and reduce costs of civil litigation. Utah is now leading the way in regulatory reform.
Not only are the proposals visionary, with a clear focus on how to serve the needs of the people – but they are also humble. They recognize that not all of the solutions are the right ones, and they have thus built in a plan to evaluate outcomes. If there is a need to tweak and change, the Court will have the benefit of clear, objective evaluations to accomplish that end.
The whole nation should be applauding what Utah is on the verge of doing. Change is hard, but long overdue. Let us all support these changes, lend a hand to make them work, and most importantly, refocus ourselves on the needs of the users, the people for whom Justice functions.

The proposal promises regulation by the Utah Supreme Court, but how would the court have authority to regulate the business end of the arrangement? The court’s authority is limited to regulating the “practice of law.” Utah Const. art VIII sec 4. The court has been unable to define the limits of that term: “We have never precisely defined the practice of law, and have noted that what constitutes the practice of law in any given situation requires a case-by-case decision.” In re Discipline of Jardine, 2015 UT 51, ¶ 21, 353 P.3d 154, 159.

The supreme court apparently views its authority very broadly, but the court probably does not have authority to regulate the business of providing legal services. The court probably does not have authority to regulate the ambulance chasers who do not provide any legal advice or legal services but merely refer injured persons to a lawyer (of course in exchange for a fee from the lawyer or other provider of services).

The need for comprehensive regulation will lead the legislature to attempt to regulate the field, which will lead to confusion and additional litigation.

A better approach would be to simplify the legal process so that litigation is not so expensive. Curtailing extensive motion practice and getting the cases to trial sooner would be a good start.

The Association of Professional Responsibility Lawyers’(APRL) Future of Lawyering (FOL) Committee generally supports the Utah Supreme Court Regulatory Reform Proposal published for comment on April 24, 2020. APRL is not offering comment as to the details of the specific regulatory and ethics rule changes being proposed in Utah; however; APRL’s FOL Committee supports Utah’s bold action as a significant step in facilitating a crucial discussion about improving access to legal services.

APRL is a national association of lawyers who provide advice and representation in all aspects of legal ethics and professional responsibility. APRL’s members include practicing lawyers, academics, judges, corporate counsel, risk management attorneys, and government lawyers. For 30 years, APRL has taken public positions on the rules governing lawyers, as well as professional discipline regulations, legal malpractice statutes and principles, and other developments in professional responsibility matters. APRL holds twice-yearly conferences on ethics topics, and submits public statements, reports, and amicus curiae briefs in pending state and federal litigation and rule amendment proceedings.

APRL issued landmark reports in 2015 and 2016 proposing reforms regarding lawyer advertising and solicitation rules, which have formed the basis of rule amendments and amendment proposals in several states and at the ABA.

In 2018, APRL formed the Future of Lawyering (FOL) Committee to consider comprehensive regulatory reform for improving legal services delivery and for easing overly restrictive ethics rules that inhibit legal help for middle- and low-income Americans.

APRL’s FOL Committee applauds the Utah Supreme Court’s acknowledgment of the judiciary’s primary role in regulating legal services delivery in the U.S., and its recognition that the rules and regulations that are in place in every U.S. jurisdiction simply are not working in light of technological developments in our 21st Century world. Not only is access to legal services largely inadequate and too expensive for a large segment of the population, but also the rules in place unnecessarily restrict innovation.

The Utah Supreme Court’s proposal seeks to explore methods to correct these inequities. Creating a regulatory sandbox for alternative providers of legal services is an excellent way to develop much needed data on how consumers are both benefitted and potentially harmed by permitting nonlawyer persons and entities to deliver legal help.

Dating back to the early 20th Century, bright-line restrictions in regulations such as Model Rule 5.4 and the unauthorized practice of law, along with the disciplinary approach to the law of lawyering, have been based on the assumption that multidisciplinary legal practice will detrimentally impact both lawyer professional independence and consumer protection. The Utah proposal recognizes the importance of putting in place effective, common sense regulation that is based on and tailored to the evaluation of real-world risks and outcomes to consumers rather than mere speculation about consumer harm.

And the data developed in this consumer-tested regulatory sandbox will no doubt inform the efforts at APRL and in other U.S. jurisdictions considering regulatory reform to allow for the delivery of legal services in a manner that reflects the realities of our 21st Century world.

APRL’s FOL Committee also appreciates Utah’s proposal for reframing the ethics rules to permit licensed lawyers to participate in non-traditional entities in the contemplated sandbox. As lawyers who advise and represent lawyers, APRL too often sees first-hand the chilling effect of the bright-line and non-consentable restrictions, with the practical effect that nonlawyer providers can often do things to serve legal needs of the consuming public in a manner in which lawyers are ethically prohibited.

Under the Utah proposal, licensed lawyers operating in the sandbox will remain generally subject to their legal ethics obligations when working with nonlawyers, with appropriate adjustments under a court-supervised regime charged with assessing the reasonableness of regulation based on public benefit as weighed against costs, burdens, and consumer harm. As APRL’s FOL Committee’s own study is ongoing, it appears that the Utah experiment will inform regulatory change in lawyer regulation beyond Utah, and ultimately will benefit lawyers as well as legal services delivery.

Finally, APRL’s FOL Committee applauds the Utah proposal for recognizing that in addition to Rule 5.4 on nonlawyer investment and ownership in law firms, other legal ethics rule will likely need to be amended to accomplish comprehensive regulatory reform. Utah’s proposal effectively adopts APRL’s earlier recommendations to simplify and improve the legal ethics rules regarding lawyer advertising. It also recognizes that historical restrictions on in-person solicitation and referral fees, including the near-absolute prohibition against fee sharing with nonlawyers, unnecessarily limit the ability of the public to locate and obtain cost-effective legal help.

The Utah proposal appears to be a thoughtful attempt to strike an appropriate balance in broadening the availability of legal services to the public while maintaining the appropriate level of protection to consumers based on real risks and real outcomes. The proposal is for reregulation, not deregulation. APRL’s FOL Committee believes Utah’s data will inform APRL’s effort to develop a comprehensive regulatory reform proposal that can serve as a roadmap for adoption in multiple jurisdictions on a national or regional basis and that will apply broadly to lawyers and nonlawyers alike. APRL’s FOL Committee commends Utah’s willingness to take action in attempting to improve access to affordable legal help for everyone and allowing us to learn from its experience.

The Utah Defense Lawyers Association (UDLA) is a Utah non-profit organization serving the interests of Utah lawyers principally involved in the defense of civil litigation. UDLA serves its members by promoting professional development through the exchange of information, ideas, and litigation techniques to enhance the knowledge and improve the skills of Utah civil defense lawyers.

DRI is the leading international membership organization of lawyers who represent business in civil litigation. DRI is committed to enhancing the skills, effectiveness, and professionalism of defense lawyers, anticipating and addressing issues germane to defense lawyers and the civil justice system, promoting appreciation of the role of the defense lawyer, improving the civil justice system, and preserving the civil jury.

UDLA and DRI agree with the Utah Supreme Court that access to justice is an area of national concern. But for several reasons, both UDLA and DRI are concerned the proposed changes to Rule 5.4 will erode the quality of legal representation available to Utah legal consumers while failing to meaningfully address individuals’ abilities to afford legal service.

First, there is little evidence that nonlawyer law firm ownership, fee sharing, and entity regulation licensing reforms, if implemented, would increase access to justice. In jurisdictions where nonlawyer ownership of law firms exists, it has not accomplished similar policy goals. Similarly, it is not clear, regardless of the regulatory sandbox framework proposed, that for-profit legal technology services would in any way assist the disadvantaged with legal representation.

In the U.K. and Australia (or in the District of Columbia which has had a relaxed version of Rule 5.4 for many years), where reforms similar to those under consideration here have been enacted, there is no evidence the changes have had any impact whatsoever on the access to justice crisis. Instead, evidence shows the typical alternative business structure in the U.K. competes with the same types of law firms that had been servicing the fee-paying public long before the U.K. recognized nonlawyer ownership, as opposed to providing services to disadvantaged clients. Notably, a recent study concluded that the use of alternative business structures in the U.K. and Australia had been accompanied by no measurable improvement of those countries’ access to justice needs. Robinson, Nick, When Lawyers Don’t Get All the Profits: Non-Lawyer Ownership.

On the contrary, the changes might lead to a decrease in access to justice. Big business and tech could tailor legal services towards individuals and entities most likely to minimize investment risk while avoiding expenses incurred through traditional legal providers. That shift could in turn result in a substantial decrease in pro bono work. Currently, many profitable firms subsidize their attorneys’ pro bono work by permitting or even requiring attorneys to meet their billable requirements through pro bono representation of disadvantaged clients. But under the proposed changes, non-lawyer owned entities would have little incentive to do this given they would not be subject to the same ethical or professional standards to which members of the Utah bar are held. Indeed, the proposed changes do not establish any duties on non-lawyers, let alone duties to provide disadvantaged groups with access to legal services.

UDLA and DRI are also concerned that these changes may exacerbate the decline of access to legal services for rural Utahns. Unlike lawyers along the Wasatch Front, many “country lawyers” cannot afford to specialize in only one type of law and instead offer services across the legal spectrum, from criminal defense, to preparing wills and trusts, to defending their clients in a range of civil disputes. The proposed changes may alter this balance by shifting certain types of work (for example, estate planning) away from the rural lawyers and into the hands of corporations in far-off cities. In doing so, country lawyers may find they can no longer afford to practice law in rural areas, leaving entire areas of Utah without access to any local legal practitioner (even today, there are counties in Utah with few, if any, lawyers living in their boundaries). While the individual who has procured discounted estate planning might be said to have benefited from such a situation, the same individual might not find the tradeoff worth it next time they find themselves in need of representation not easily provided by a smartphone app.

Second, UDLA and DRI are concerned the proposed changes would erode the ethical protections the Utah Rules of Professional Conduct currently ensure. Although the committee charged with addressing the rule changes insists a Utah lawyer’s ethical obligations would theoretically remain unchanged should the new rules be adopted, this would be practically impossible in practice. Under the current system, legal services providers are owned and controlled by the lawyers representing the client. Thus, while outside entities (like insurance companies) may pay a lawyer’s legal fees or litigation expenses, the case is always ultimately controlled by the lawyer and client, to whom the lawyers owe an ethical, non-delegable duty.

But a lawyer may not be practically capable of performing this duty should ultimate control be delegated to a non-lawyer. When the outcome of a case is driven by profit as opposed to client benefit, business interests will often win out even if the client is disadvantaged as a result. One possible example would be a lawyer who is incentivized to seek medical interventions for his client to increase claimed special tort damages, even if that attorney (or the client’s treating doctor) believes those medical interventions to be unnecessary. A lawyer employed in an environment that prioritizes financial outcomes over the client’s interest would potentially be forced to jeopardize their job should their ethical duty to put their client’s interest first conflict with their employer’s business interest.

Utah’s Rules of Professional Conduct reflect the core values of our profession, and they are designed to protect the public whom we, as licensed Utah attorneys, are all privileged to serve. As attorneys, we are sworn to serve as key members of a legal system on whom our society relies for justice and fairness. Lawyers must complete a rigorous program of education just to be permitted to sit for a bar examination. Our bar admission system is designed to test knowledge and competency, determine character and fitness to practice law, and assess adherence to a prescribed set of rules of professional conduct throughout an attorney’s tenure. This system not only serves to protect the public from untrained and unscrupulous would-be practitioners, but it also far surpasses what is required for a typical business. Fundamental change to our profession should not compromise our core values and enable profit-seeking by entrepreneurs who are unencumbered by our rules of ethical responsibility.

Finally, consequences to the practicing bar should be a major concern of any access to justice review. The impact of changing law firm ownership and fee sharing rules would bring major upheaval to the practice of law. The effect of the ownership, fee sharing, and entity regulation recommendations would not simply involve channeling legal practice revenues from lawyers to private investors or legal tech companies. These revenue shifts would likely also result in both the Utah State Bar and local bar organizations realigning their focuses away from service to and regulation of practicing attorneys and toward the novel (and as yet unknown) consequences of these fundamental changes to Utah legal practice. This would represent a profound disruption to the traditional work of Utah Bar and local bar associations, which could better work through the current regulatory framework to encourage and support licensed attorneys’ efforts to deploy technologies and non-traditional legal services directly, instead of through intermediary business and technology firms.

In sum, UDLA and DRI are concerned that the proposed rule changes will not lead to an increase in access to justice and would likewise negatively impact both the legal profession and the profession’s reputation.

I am a stay-at-home mom and part-time practicing attorney. As someone who has worked full-time at a firm and now works in what is sort of a professional no man’s land (almost literally–the others I know in my position are primarily women), trying to balance the cost of bar dues (high) with the likelihood that we’ll find enough contracting work to justify paying the cost of bar dues (and for child care), I applaud this effort to change up Utah’s regulatory landscape. The practice of law is run as a sort of cartel in most states and that means people in power get to keep out people without power.

I hope that these efforts to innovate and iterate are beneficial to the legal services industry and to Utahns as a whole, but I’m going to be especially watchful for the effects this regulatory experimentation will or may have on people like me, who are trying to maintain a financially viable legal practice without being able to associate full-time with a full-service law firm.

Also, I encourage the Sandbox Monitors to pay special attention to the consequences of these experiments on marginalized populations in Utah, both in the service provider sector and in the customer base.

MEMO

DATE: July 22, 2020
FROM: Langdon T. Owen, Jr.

Re: Utah Regulatory Sandbox – Comments from an Estate Planning and Elder Law Perspective

This memo is in three parts: The first part is a summary of comments from the members of the ad hoc legislative committee of the Estate Planning and Elder Law sections of the Utah Bar. The second part contains additional comments from other estate planning and elder law attorneys. The third part is the comment by an experienced estate planning attorney after listening to the July 17, 2020 Bar Zoom teleconference in which Justice Himonas and Dr. Rebecca Sandefur participated.

Part One.

This first part of this memo will describe in a summary fashion the comments raised by a number of estate planning and elder law attorneys who have commented to me about the issues raised by the proposed Regulatory Sandbox. (This part of the memo is a revised and expanded version of the memo circulated as part of the July 17, 2020 Bar Zoom teleconference in which Justice Himonas and Dr. Rebecca Sandefur participated.) The comments are in no particular order; they are numbered simply for ease of reference.

I am the Chair of the Ad Hoc Legislative Committee of the Estate Planning and Elder Law Sections, and the comments set forth in the first part of this memo are the result of discussions held by the members of that committee. The comments are not the position of that committee, those sections of the Bar, or of the Bar itself. They are the personal comments of the experienced attorneys who provided them.

1. The Sandbox proposal states that decisions about non-traditional regulatory levels (e.g., under a notification protocol or under an application protocol) are to be data-driven and based on an assessment of risk. The type and source of the data is unclear, as is the standard for using that data to evaluate risk to the consumer. We understand that there may exist some data in other jurisdictions relating to errors by lawyers, and that if it is not too likely that the proportion of errors by lawyers will be exceeded too much by non-lawyers providing a similar service, then the non-lawyer may be allowed (under the applicable protocol) to perform the service. However, it is not clear what someone might consider an error by a lawyer, and whether lawyers are making the error determination. Among other things one person may think there has been an “error” while the matter may in fact be a legitimate judgment call by a lawyer with sufficient knowledge and experience to make that call. It is not clear that a non-lawyer without that knowledge and experience should be put in a position to make the judgment call. A great deal remains mysterious about how the Sandbox will actually function. As will be noted below, there are also other risks to consumers, beyond legal errors, that should be analyzed empirically, such as risks to confidentiality and loyalty. It seems clear that this determination, in each case, should require the input of attorneys with expertise in the specific area of law for which the admission is sought. It is unlikely a lawyer without such experience or a non-lawyer will have sufficient expertise to spot issues where problems could arise.

2. It is not clear how a non-lawyer’s capacity to judge what is beyond his or her expertise will be evaluated. Lawyers are trained to spot issues over a wide range of legal areas; how is this training to be duplicated for non-lawyers? For example, a non-lawyer may be able to manipulate a form of a simple will, but will the non-lawyer be able to appropriately judge whether a simple will is actually what the client needs? Will the non-lawyer have the necessary knowledge to know what he or she does not know, and what alternatives may be available, in order to refer the client to someone (e.g., a lawyer) with the required expertise? A simple will may appear “error free” but be quite wrong for the client. The same concern applies to any number of services in the estate and elder law world.

3. In evaluating the risk of harm to clients, how is that risk to be assessed when any harm may not be apparent for a long time. For example, a will only speaks at death, which could be many decades in the future. The Sandbox apparently contemplates that the non-lawyers will report statistics; statistics on use should be relatively simple, but any relating to harm or risk should not derive from the practitioner him or her self and inherently will be more subject to doubt regardless of the source because a level of judgment will be required.

4. Although online form systems (e.g. Legal Zoom) are available to consumers presently, they do not carry with them the imprimatur of the Utah Supreme Court having granted such groups authority to practice law in this area. Blank legal forms and virtual volumes of legal “advice” are available on the Internet. Those resources can be improved by legal advice specific to the client’s unique circumstances. That would require the time and expense of an experienced lawyer – not contemplated by the Sandbox. If such services are approved by the Utah Supreme Court, how are clients to be warned about the quality of what they are actually receiving from such services so they are not misled?

5. It appears that the concepts behind the rules coming out of the Sandbox will include that the ethical rules to which lawyers are subject will also apply to non-lawyer practitioners. Such concepts also appear to include novel corporate and other ownership and delivery structures. Should Some level of lawyer supervision should be required in some or all areas of legal services. How are authorized non-lawyers to be disciplined when the authorized practitioner may be a technology or financial company, not a particular human being? Such companies need to use people to structure their systems, but these people may not even reside in Utah or even in the United States. Even if some people involved reside in Utah, those in actual control may not. Discipline applied to a corporation may be seen by it as a cost or risk of doing business (born by shareholders, ultimately). Experience has shown that in many areas of the corporate world, regulation and discipline will be ineffective unless and until it applies to the responsible human being, particularly to those in control, in addition to disciplining the company. Only human beings located in Utah should be authorized and be directly responsible for the conduct of the companies they serve. Those in control should be determined and be required to consent to Utah jurisdiction. Bonding should be required of corporations or other entities. Is adequate insurance actually available for such people or corporations? In any event, errors and omissions insurance should be required. There should be stringent background searches for nonlawyers seeking to provide legal services or own interests in companies providing legal services. How are the costs of analyzing data and of admitting, auditing, and disciplining nonlawyer participants to be covered?

6. As already stated, and as I restate here for emphasis, any regulatory authority set up by the Utah Supreme Court to grant authority to provide services in a particular legal area should include lawyers knowledgeable in the area at issue.

7. The concept of the Sandbox appears to have the goal of providing access to justice for those who are underserved. But it also appears to allow law firms and lawyers to be acquired by and controlled by corporations such as large insurance, investment, or accounting firms seeking to add another profit center, but which have no interest in serving low net worth individuals. The non-lawyer authorizations should focus exclusively on the underserved. It is not appropriate to allow Sandbox regulatory exceptions to restructure the finance and business world where clients can afford to pay for services.

8. Mixed discipline organizations carry with them built-in potential conflicts of interest that lawyers traditionally have shunned. A lawyer or non-lawyer practitioner inside an insurance company preparing estate planning documents for a client, for example, will be placed in a compromising position when the sales force tries to sell the client annuities or insurance products that the lawyer recognizes are not in the clients’ best interest. Mere disclosure of the potential for conflict is not sufficient protection for all but the most sophisticated clients. The lawyer or non-lawyer may be under the control of the company as its employee, or otherwise under control as a practical matter by making the practitioner choose between his or her livelihood and the client’s best interest. Such inherent conflicts will tend to tarnish the hard-won reputations of all lawyers, not just those tied to financial houses. Traditional lawyers and law firms will also suffer. Lawyers and other practitioners should at least have protections while doing their duty for clients against interference with professional judgment and against retaliatory actions. Perhaps a form of “Chinese Wall” should be imposed between the law related area and other areas. Anti-retaliation and whistle blower protection for attorneys in mixed groups should be required. The sort of situations that can lead to conflicts of loyalty are not restricted to the law. For example, the accounting industry has struggled over the relationship between the consulting and auditing functions, and the financial industry has also struggled over the duty owed to investors, such as suitability but without fiduciary duty (know your customer) compared to true fiduciary duties to the client. Requirements should be imposed to assure that the lawyer or practitioner’s fiduciary obligation to the client prevails over other considerations.

9. Is there evidence that fee-sharing and advertising of legal services actually reduces cost to those least able to pay?

10. Is there an actual gap in the provisions of pro-bono estate planning services for those least able to pay? Many practitioners help with pro-bono wills either alone or through Bar programs (Legal Services, Wills for Heroes, etc.) and it may be these efforts have been effective for wills and simpler estate planning.

11. There should be an effort to educate the public more regarding existing pro-bono programs.

12. Litigation and trials are expensive. Simplified procedures in certain types of cases affecting underserved populations should be explored. Our Uniform Probate Code is good in the situation of a simple probate (informal opening, informal closing, etc.), but in cases of disputes, litigation becomes as expensive in probate matters as in any other cases. Disputes leading to expensive litigation can arise in guardianship and conservatorship matters, and trust matters, as well as will and estate administration matters. Non-lawyers would not be allowed to represent clients in litigation. Will the attorney client privilege be extended to nonlawyer practitioners (such as those drafting instruments), and if so, on what terms; note that the tax practitioner privilege under federal tax law has all the limits applicable to the attorney client privilege but has further limits as well.

13. Have we in the legal profession, practitioners and the courts, fully tried all other possible solutions to solve the issue of access to justice for the underserved?

Part Two.

The following comments and questions have been added to the original draft used at the July 17, 2020 Zoom teleconference. They are from estate planning and elder law attorneys. They have not been edited to conform with the prior comments in this memo.

The following questions regarding nonlawyers apply both to nonlawyers who are applicants to develop programs under the Sandbox, and to nonlawyers who may be allowed to practice law under the new program of regulatory reform. Some of the questions may overlap in subject matter. For protection of the public, nonlawyers should not be allowed to practice law.

14. The Utah Supreme Court / regulatory reform project should not allow any nonlawyer to provide legal advice, to act as lawyer for a client, or otherwise to engage in law practice. Although it could under exceptional circumstances seem reasonable to allow a specific nonlawyer to practice law, the risks of unintended consequences outweigh the potential benefit. If the Sandbox program makes limited exceptions to allow nonlawyers to practice law, will the Utah Supreme Court or State of Utah have funds available to defend lawsuits or other claims by multi-national corporations or other deep pocket applicants who sue for the right to practice law, once exceptions have been made in the Sandbox program? For example: would the Utah Supreme Court have the funds required to defend such lawsuits and appeals by deep-pocket multi-national corporations, all the way to the Supreme Court of the United States?

15. Regulatory reform should not allow a nonlawyer to have authority to represent the client as “counselor or legal representative.” The nonlawyer’s role should be subject to strict limits within the level of knowledge and experience of the nonlawyer. How will that be determined? The current requirement for lawyers to pass the bar exam and to have a JD or other law degree may not be perfect indications of competence, but they are easy to define.

Nonlawyers should be required to complete coursework training in law and legal ethics

16. Nonlawyers developing proposed programs or materials for clients should be required to complete annual or other periodic coursework for legal and ethics education. What will be the entry level legal and ethical education requirements for the nonlawyer?

17. The regulatory reform program must have safeguards to prohibit the providing of legal advice for clients who are mentally incapacitated, who lack the requisite mental capacity to enter into contracts, and/or who are under duress or undue influence when they seek legal advice? What screening procedures will be required of non-lawyers to protect vulnerable potential clients from undue influence, fraud, or other problems resulting from the client’s diminished mental capacity?

Cost and funding of regulatory reform

18. How much will the program cost? Are funds currently available to pay for this requirement stated by the proposed standing order: “New providers will be required to submit regular reports to the new regulator, providing data on consumer complaints and satisfaction, and the regulator will also conduct audits, expert testing, and secret shopper actions to independently test quality — with special attention to the most vulnerable populations.”

Written notice to client regarding the nonlawyer organization

19. Detail required for written notice to the client of the financial or managerial structure of the organization: Names and contact information of principals, and of nonlawyer(s) who are responsible for service to the client. At what stage will the nonlawyer’s contact information, credentials, and proposed programs be made available to the public or at least to members of the USB? The program should err on the side of transparency: the material provided by the applicant/nonlawyer to the regulator should be available for review by the public and the client no later than when the nonlawyer receives authorization to start providing services to clients.

Client’s private information

20. The nonlawyer and all others involved should be prohibited from selling or in any manner disclosing the client’s private information including: client’s name, birth date, social security number, address, email, phone number, facts unique to the client’s case, and other private information.

21. If the Implementation Office believes any client private information should be disclosed to the nonlawyer, under what circumstances would the client’s name or other private information be disclosed to the nonlawyers? Why?

Enforcement of nonlawyer’s duties to the client

22. How will this program define the nonlawyers’ legal and ethical duties to the client? The duties of lawyers to their clients have been defined by case law, statutory law, rules of procedure, rules of conduct, and other means developed over many years. Rules of professional conduct for the nonlawyer should be established and enforced.

Effect on errors and omissions insurance premiums for the lawyer participating in a project allowed by regulatory reform

23. What effect will a lawyer’s participation by sharing fees or duties with a nonlawyer have on premiums and availability of errors and omissions insurance for the lawyer?

Dispute resolution

24. Nonlawyers should be required to consent to jurisdiction of the State of Utah and agree that Utah laws govern any disputes with the client.

25. Mandatory arbitration clauses should be prohibited for these projects. Arbitration can be helpful and save money for parties with assets sufficient to afford to pay for arbitration. Most people who cannot afford to pay a lawyer would not be able to afford to pay for an arbitrator. Small claims court jurisdictional financial limit could be increased. Any dispute should be subject to Utah court jurisdiction with venue in the county where the client resides.

26. Who will be responsible to respond to the client’s questions and complaints about the service? That information, along with procedures and solutions regarding complaints, should be provided to the client in writing in the initial contract for services signed by the client, the lawyer, and the nonlawyer.

27. Which areas of law have the highest need for regulatory reform? Why not start with a few areas of law in which the poor are most underserved? For example:
= Defense of debt collection
= Defense of landlord tenant issues
= Protection against payday lending
= Protection against other predatory lending

Composition of the Innovation Office: Section 2.1 of the proposed standing order regarding Office Composition provides: “The Utah Supreme Court will appoint the members of the Innovation Office. The Innovation Office will consist of a Chair, Vice-Chair, and seven additional members, all serving on a volunteer basis. In the event of a vacancy, or on its own motion, the Supreme Court will appoint, depending on the vacancy, a new Chair, Vice-Chair, or member.”

28. What sources of funds will pay for the program? What is the budget? What grants were provided, the duration of each grant, the amount of funds, the source of the funds? For any grant provided by an entity, what is the source of the funds, what are the obligations of the Utah Supreme Court, the Utah State Bar, the Innovation Office, etc., to the entity providing the funds? Many other questions arise about this topic.

29. Since there are only 12 members of the Innovation Office – and all serving on a volunteer basis: Depending on the number and scope of applications, it seems a larger staff will be necessary to assure protection of the public/potential clients. Who has the time to spend to volunteer to assure that the new legal services are of high quality? Members of the Innovation Office should include lawyers with several years in law practice. It doesn’t seem to me that 12 members would be sufficient. For each application the Innovation Office should have sufficient resources to call upon several lawyers who are licensed in Utah and experienced in the particular area of law that the applicant proposed to address.

Regulatory Scope per 3.3 of the proposed standing order

30. What will be the process for developing regulations? Members of the Utah State Bar should have opportunity to provide input and comments on proposed regulations.

31. What enforcement tools will be available to the Innovation Office?

32. Regarding the requirement for the lawyer to set forth “in writing to a client the financial and managerial structure of the organization in which the lawyer practices,” how much detail? How is this writing to be communicated so that the client understands the risks associated with having a lawyer who is doing business with the nonlawyer?

To protect the public from harassment and irritation, Rule 7 should be tightened, not relaxed

33. Rule 7 and its subparts, of the Utah Rules of Professional Conduct, should not be amended other than to tighten restrictions on advertising. Both lawyers and nonlawyers who are accepted by the Sandbox should be prohibited from making initial contacts by cold phone calls or uninvited emails or texts to seek to establish business with potential clients.

Part Three.

The following is the comment of one estate planning lawyer after watching the July 17, 2020 Zoom conference:

Justice Himonas indicated that 80% or so of the legal needs in Utah are not being met because people are either not educated as to when they need help or its too expensive. It appears his solution is not to educate the public, but to drive the price so low that the 80% will all buy it because it’s cheap by allowing non-lawyers to use computer programs to provide services. While I am a firm believer in using technology to create documents, you can train a chimpanzee to operate a keyboard. Knowing what options to use is the real value. Ten years ago, Jonathan Blattmachr said that clients would eventually not pay for the documents produced but for the expertise to determine what should be produced.

If low cost was the answer. Legal Zoom would be filling the needs of the 80%.

The argument that allowing non-lawyers to do legal work so you can drive the price down so the 80% will be willing to pay for legal services is meritless. A good portion of the 80% can afford decent legal representation, they either choose not be pay the expense or they don’t know what they need and what’s available. Yes, its costly to get good legal work and its usually outside the normal budget items, but so is buying a decent car or buying a house or paying for a medical procedure not covered by insurance.

Just because something is not on Amazon.com or at Walmart, doesn’t mean it’s not of value. Determining that the only way to fill a need is to slash the price by allowing anyone with a computer and printer to provide the service is shortsighted at best. Some professional services take significant expertise and training. Having my heart surgery done at the drive through next to the car wash will be cheaper and all 80% of the public can get the service.

It was clear to me that the panelists were of the opinion that there was no expertise needed to do any estate planning, not just simple wills. Mass production by untrained personnel at the lowest cost was more than sufficient. We all know the lawyer who is the cheapest, who meets with his client for 30 minutes and then has a document produced by a computer which is signed in front of an office staff. The cost is cheap and the product is worth the price.

I do not engage the cheapest doctor, or auto mechanic and I don’t buy my food at the cheapest place available. It’s not that I don’t care about the cost, I care about getting decent quality.

I am offended at the attitude that I do not produce value equal to the cost. Yes we can be expensive and yes using our services takes some budgeting, but sometimes getting real value is worth making a sacrifice. My doctor doesn’t take my insurance, but I pay the bill because I get good care and it’s worth it to me.

I appreciate having this opportunity to provide comments regarding the proposed changes to the practice of law to make it more affordable to the people who interact with our justice system. I have been practicing law for over 25 years, predominantly in civil litigation but with a somewhat general civil practice and have had individual clients with a wide variety of issues that needed help. I hope that I can bring some of what I have learned to the table to help. In the FAQ prepared by the task force, it states numbers I disagree with. I do not know where they obtained their numbers, but I bill much more than 2.2 hours in an 8 hour day and I am very careful about tracking my time. I do not think this “reason” for “dramatic changes” is a legitimate claim. Also in the FAQ’s, it states that the reason for the “dramatic changes” is that the need for legal help is great and the areas they identify are nearly all litigation/court based (employment disputes, divorce, custody, wage theft, eviction, consumer debt and small business matters). Except for the vague item of “small business matters” nothing of the stated critical need for legal reform involved civil transactional work. I think this distinction is important to keep in mind as we evaluate the “sandbox” paradigm that is being suggested, especially since the task force states one of the primary goals is to provide high quality and affordable legal services that those with the greatest identified need (divorce, eviction, consumer debt) currently find unavailable.

While I appreciate what the Utah Supreme Court is attempting to do to reform the practice of law, as I think about this “sandbox” and the way it is currently being described, it appears to focus most of its attention to the transactional side of the use of lawyers, except, perhaps, for personal injury matters. It would seem that there is a hope that having other businesses come in to “play” in the “sandbox” will infuse money into the system in a way that somehow pays for litigation involving consumer debt, divorce, custody disputes, evictions, etc. that the individual needing the service cannot otherwise afford. I am having a hard time seeing an accounting firm, banker, realtor, engineer, or any other professional trying to wade into quasi-legal representation as it relates to the myriad rules of civil or criminal procedure. I don’t understand how any other group of people would want to become enmeshed in what can become a virtual black hole of process, motions, posturing, discovery disputes, etc. as a way they want to make a profit while adhering to all of the rules of professional conduct associated with providing legal services. I just don’t think it will impact this area of legal services, where the need is greatest.

To me the “sandbox” approach seems to be a way for non-lawyers to try to reach into what others may view as the profitable side of the practice of law. In my view, this will end up being a vain attempt to try to make a “show” as though we are addressing a problem when there is little or no hope that the stated objectives will actually be met. It is these people that cannot afford legal counsel in these areas stated above that would benefit from legal assistance – whether in justice/small claims court or District Court, that are the real reason for needing legal reform to begin with. Therefore, I think their needs are the place to start and finish our focus of attention.

In order to address these issues, we must look further than just fees (splitting, sharing, etc.) and advertising that impacts the attorneys that are appearing in court. From what I have observed in my 25 years of litigating in a variety of venues throughout our State, both in District and Justice/small claims court, it is the entire system that needs reform as the adage “time is money” aptly reflects the current court process. Having worked in the private sector for a decade and been involved in litigation before ever applying to law school, I know a bit about what it looks like from the private individual side of the bar as well as the litigator side. I think that there are some institutional changes that could be made in the court system which I think will have a greater impact on the target population than the “sandbox.”

The Utah legislature has already done much to impact the affordability of legal services by legislating in certain areas, such as expedited hearings in evictions, guardianship, probate and other areas. Anytime the length of time to get before the person adjudicating the issue can be shortened, the fees go down and make it more affordable. I believe that one way to achieve this is an expansion of the jurisdictional limits as to what small claims court can handle or greatly increase the number of justice court judges. I know this requires legislative action as it was a bill not too long ago that raised the monetary limit in Small Claims to $10,000 (which I know some opposed). I think it could be raised much higher as to the amount in controversy – at least to $25,000 or $30,000, or possibly up to and including a Tier 1 ($50,000) case. I also think that the types of cases could be expanded as well (evictions, trespass, injunctions come to mind).

There are administrative law judges in a variety of different areas that handle matters not based on the monetary limit, but the legal issues, some quite complex (labor commission, DOPL matters, etc.), where the matter is expedited and rules of civil procedure and evidence do not necessarily fully apply similar to Small Claims court. In some situations when a decision is appealed in these other administrative settings, it is a decision on the record that the District Court is to review and determine if the adjudicative body acted appropriately, more like an appeal rather than a de novo review that is done in Small Claims court.

It would seem that the Small Claims court could serve more like that kind of setting for certain kinds of cases in its expanded jurisdiction so that a decision gets finalized quickly and rather than a strictly de novo review, it is more of an appellate-type review. Due process can be met and still have matters move quickly. In this setting, a small business owner (dba or closely held LLC, etc) who can represent themselves in a small claims action could take care of a lot of issues that come up as it relates to debt collection, etc. The defendant may be more likely to be able to hire legal counsel because the attorney knows that it will be a brief representation (a matter of months) which makes taking on a new matter more “doable” and making the fee much less due to the expedited nature. This might require hiring more justice court judges, or getting attorneys as judge pro tem, in some jurisdictions, but that is preferable as a way to benefit this part of our community. There will be pros and cons to discuss, but getting cases resolved quickly will have a big impact on affordability of legal services.

On behalf of the Duke Center on Law & Technology, the NuLawLab at Northeastern University School of Law, Vermont Law School’s Center for Legal Innovation, and Cat Moon, Director of Innovation Design at Vanderbilt Law, we write in support of the Utah Supreme Court’s Regulatory Reform Proposal. An annotated version of this comment is available here: https://drive.google.com/file/d/1sJtT-As3o2mz5s-y4xgCPbXwlaQ7eHf7/view?usp=sharing

This comment on the Petition to Adopt Standing Order 15; Redline Rules 5.4A and 5.4B; and Clean Rules 5.4A and 5.4B is shaped by our mutual proximity to innovation in legal-services delivery and our commitment to improving the law for all. We write to express our strong support for the Task Force on Regulatory Reform’s proposal that Utah amend the Utah Rules of Professional Conduct and establish an Office of Legal Services Innovation that will oversee a Regulatory Sandbox wherein nontraditional legal services and providers can operate.

We believe that enabling lawyers to harness the power of technology in the delivery of legal services is a key component of the broader efforts that are necessary to increase access to justice. To be sure, any efforts at regulatory restructuring require careful deliberation to ensure the protection of both the integrity of the legal profession and consumers of legal services. Toward these ends, the rule changes currently under consideration would not only establish the necessary infrastructure to encourage legal innovation without compromising lawyer’s duties or professional independence, but also would institute a full, end-to-end system of consumer protection that does not exist with current regulatory structures.

A History of Access Challenges

The Task Force’s report summarizes the relevant statistics: the US is tied for 99th out of 126 countries for the accessibility and affordability of our civil justice system, and “86% of civil legal problems reported by low-income Americans in [2016–17] received inadequate or no legal help.” Even at glance, the data paints a bleak picture of America’s “unrepresented majority,” priced out of bespoke legal representation and too often beyond the resource capacities of underfunded civil legal aid organizations.

Yet it should come as no surprise that, in a justice system founded on the presumption of two competently represented parties, having an attorney increases a litigant’s likelihood of success. On the flip side, “unrepresented lay people fare poorly when they attempt to navigate this system on their own.” This means that tens of millions of Americans, already disadvantaged socioeconomically, are yet further disadvantaged when they turn to the legal system for recourse in high stakes issues such as eviction, domestic abuse, or child custody.

Though the legal community is not blind to the breadth and depth of this access crisis, our community has yet to accept meaningfully that legal practitioners working within current regulatory and commercial structures cannot meet the public’s civil legal needs. Present-day legal aid expenditures amount to a mere 3.5% of the estimated full cost of providing low-income individuals with necessary legal assistance, and—insofar as only 16% of lawyers lend financial support to legal assistance organizations—crowdsourcing the remaining 96.5% seems unrealistic. “Low” and “pro bono” solutions fare no better. Plainly, the legal community cannot ‘volunteer’ its way out of the unrepresented litigant crisis. As such, choosing to maintain the regulatory status quo means choosing to exclude millions from access to the law to help address their important issues. New models of service delivery are necessary; we need the kinds of innovation that this proposal aims to support.

Tech-Enabled Scaling

To move the needle on access, we need an exponential increase in the public accessibility of legal assistance, a magnitude that requires the fundamental recalibration of our approach to legal service delivery. While incapable of providing fully automated solutions, modern technology tools can play significant roles in these efforts to democratize access to legal help. Especially where one-to-one models of lawyer-litigant legal aid fall short, optimizing scalability through technology would allow the legal community to harness the advantages of one-to-many service delivery.

Nevertheless, the current regulatory system hinders technological innovation and scalability by limiting who can (and cannot) provide legal services or contribute meaningfully to legal services innovation. Between state regulation of the unauthorized practice of law (UPL) and Rule 5.4’s prohibition against nonlawyers owning or controlling interests in law firms, legal services innovation is limited to demonstrably ineffective calls for more lawyers, more affordable lawyers, more access to lawyers, or some combination of these 1-to-1 models that have proven difficult to scale.

End-to-End Consumer Protection

Though UPL ostensibly exists to “protect the public from bad legal advice and representation and from inferior legal or law-related services,” in practice UPL fails to balance quality, effectiveness, and equitable reach of legal services in an era of technological change. Likewise, Rule 5.4 does little to balance concerns for quality with fundamental needs to enhance access. By precluding law practitioners from partnering effectively with technologists, social workers, venture capitalists, accountants, and others, Rule 5.4 stymies the cross-disciplinary collaboration necessary to foster innovation.

Worst of all, beyond undermining innovation, neither UPL nor Rule 5.4 as currently implemented effectively protects consumers. Both regulatory approaches focus only on who delivers services, even though certification as a lawyer is only a loose and imperfect proxy for the quality of service provision. The primary benefit of the Task Force’s proposed Office of Legal Services Innovation is that—in overseeing a sandbox in which nontraditional legal services and providers can operate—it will focus on the effectiveness and equity of service delivery as primary measurements of success. In this way, such a regulatory framework offers end-to-end consumer protection and fosters the kinds of innovation that might finally, meaningfully enhance access to legal services.

For all of these reasons, the undersigned centers, labs, and individuals support the Petition to Adopt Standing Order 15; Redline Rules 5.4A and 5.4B; and Clean Rules 5.4A and 5.4B.

Sincerely,

The Duke Center on Law & Technology

The NuLawLab at Northeastern University School of Law

Vermont Law School’s Center for Legal Innovation

Prof. Cat Moon, Director of Innovation Design at Vanderbilt Law

About Us

The Duke Law Center on Law & Technology (DCLT) coordinates many of Duke’s activities in legal technology, including using human-centered design principles to understand, re-imagine, and lead the next generation of tech-enabled legal practice to ensure that rapidly emerging technologies empower and ennoble people. Notably, through the Duke Law Tech Lab, the DCLT works with early-stage legal technology startups pushing to increase access to legal services. Jeff Ward serves as Director of the DCLT (law.duke.edu/dclt).

The NuLawLab is the interdisciplinary innovation laboratory at Northeastern University School of Law. Dan Jackson serves as Executive Director of the NuLawLab (https://www.nulawlab.org/).

Vermont Law School’s Center for Legal Innovation (CLI) is dedicated to helping to create a future where innovation and entrepreneurial energy redefine legal education, the practice of law, and law itself. The CLI focuses on the current challenges for effective and affordable legal education and providing legal services access to all. To accomplish this, CLI champions the use of technology and business innovation in the legal industry. Jeannette Eicks and Oliver Goodenough lead the CLI (https://www.vermontlaw.edu/academics/centers-and-programs/center-for-legal-innovation).

Cat Moon is Director of Innovation Design at Vanderbilt Law and co-founded and produces the Summit on Law and Innovation (SoLI), which brings together experts across legal, technology, and other disciplines in collaborative legal innovation projects (c.moon@vanderbilt.edu).

The PDF version of these comments can be found at: https://www.responsivelaw.org/uploads/1/0/8/6/108638213/utahsandboxcomments

Comment On: Utah Supreme Court Regulatory Reform Proposal

Responsive Law thanks the Utah Supreme Court for the opportunity to present these comments. Responsive Law is a national nonprofit organization working to make the civil legal system more affordable, accessible, and accountable to its consumers. We advocate for policies that expand how and by whom legal services may be provided so that people of all income levels can get the legal help they need. We urge the Court to implement the Sandbox proposal and put a new regulator in place to ensure that people at all income levels have safe and affordable access to the legal help they need.

I. Low- and Middle-Income Consumers Cannot Afford Legal Help at Any Level

The growing access to justice crisis in the United States extends from the poorest Americans to those of modest means and beyond, encompassing most of the middle class. In the World Justice Project 2020 report, the United States ranks 109th out of 128 countries in affordability and accessibility of its civil justice system.[1] Americans cannot afford assistance with everyday legal needs despite the fact that the average household will face a significant legal problem every year.[2] More Americans suffer from a lack of access to justice than do their peers in England and the Netherlands, where there are fewer restrictions on how legal services can be offered.[3] In fact, the Court’s Implementation Task Force has recognized the lack of access in Utah itself: “In Utah’s largest district, in 93% of family and civil law disputes, one party did not have a lawyer.”[4]

Furthermore, the access to justice problem has been exacerbated by the current COVID-19 pandemic. Especially in areas of domestic violence, landlord-tenant law, and healthcare and consumer debt, many Americans will likely face a greater number of legal issues than this country has seen in the past. Even as the pandemic drastically increases the demand for legal services, it also diminishes consumer ability to pay. A risk- and outcomes-based regulatory plan will be necessary in the coming years to provide new, affordable, and high-quality innovations in the legal realm.

II. Consumers Have Little Awareness of Their Legal Needs or How to Find Legal Help

Most low- and middle-income individuals, families, and organizations have little awareness of how to go about getting help for their legal matters. Due to a lack of sophistication regarding the legal system, many individuals fail to recognize when their problems require legal help. As noted by the American Bar Association Commission on the Future of Legal Services, past promotional efforts by state bars have proven insufficient to raise public awareness of the need for legal assistance.[5]

Moreover, even when a given consumer does recognize that their issue is legal in nature, they may be unable to determine what sort of aid they need and how it can be located. A 2013 study found that two-thirds of random adults in a mid-sized American city experienced at least one significant civil justice legal issue within an 18-month period; however, only one-fifth of those experiencing such a situation sought any formal help.[6] A significant factor in the justice gap stems from the inherent difficulty in identifying particular consumers’ needs and connecting them to appropriate legal aid providers. Under the regulatory regimes currently active in many states, the system through which consumers access legal services is “confusing, opaque, and inefficient for many people.”[7] When faced with a civil justice issue, up to half of those who do not choose to seek outside help fail to do so because they believe that such help would be ineffective, too difficult to locate, or too costly.[8]

III. Misconceptions Regarding The Sandbox Proposal

Many individuals and organizations have submitted comments regarding the Sandbox and regulatory reforms, outlining problems they believe the proposal poses. In many cases, these concerns are representative of misapprehensions and misperceptions that opponents of alternative business structures have previously raised in Utah and elsewhere.

a.The Sandbox Proposal Permits Only Lawyers to Practice Law

In fact, proposed Rules 5.4A and 5.4B explicitly prohibit the practice of law by non-lawyers, even if they own a business that employs lawyers. Further, lawyers in the Sandbox, no matter what entity employs them, are subject to the regulatory body, which is in turn subject to the Supreme Court. There is also no indication in the proposal that any kind of tech, AI, or other non-lawyer software would be permitted to “practice law.”

b. The Sandbox Proposal Does Not Change Any Ethical Rules
Governing Attorneys Besides Rule 5.4

Lawyers operating under the proposed Sandbox will retain all of the same duties to their clients in areas of confidentiality, zealousness, competence, professional independence, and everything else covered by the Rules of Professional Conduct. The only change from traditional rules is that lawyers who choose to be regulated will be permitted to share fees with non-lawyers and non-lawyer entities, subject to findings of minimal to no risk. As with all professions that operate under a similar structure to the Sandbox, lawyers and law firms will maintain all of their professional ethics responsibilities as they are covered in the proposal and in the Rules of Professional Responsibility.

c. Restrictions on Law Firm Ownership Are Ineffective in
Protecting Lawyers’ Professional Independence

Opponents of eliminating Rule 5.4 have cited the importance of protecting lawyers’ professional independence. However, Rule 5.4 is not a particularly effective means of safeguarding that value. Lawyers’ professional independence is already protected by numerous other provisions of the Rules of Professional Conduct.

Additionally, the frequent argument that non-lawyers would exercise improper influence over lawyers in their employ simultaneously overstates and understates lawyers’ ethical propriety. It assumes that lawyers who own firms are saints who have no possible motivation to exercise undue pressure on subordinate lawyers to act against their clients’ best interests (e.g., padding of hours, pressure to settle a contingency-fee case). At the same time, it assumes that lawyers have so little backbone that they would ignore all their obligations to their clients if pressured by their corporate employer.

Risk-based regulation will not lead to elimination of lawyer independence. On the contrary, by regulating entities rather than just individual lawyers, it will be able to use data to understand where this value may be threatened within a firm’s structure, and how to intervene to protect it.

d. The Sandbox Provides an Additional Degree of Consumer
Protection By Regulating Both Firms and Individual Lawyers

The current regulatory structure for lawyers governs individual lawyers, but not the businesses through which they provide services. As a result, while consumers are protected from the incompetence or misconduct of their lawyers, there is no way for consumers to be protected from systemic problems that may exist at a law firm.

In contrast, consumers using a company in the Sandbox will be protected by two sets of regulations. As mentioned above, the existing Rules of Professional Conduct (with the exception of fee sharing restrictions) would still apply. In addition, companies in the Sandbox would be regulated in a way that is common in other industries—although new to law—with the new regulator functioning as an inspector to maintain regulatory standards and protect consumers.

The proposal will allow the Sandbox regulator to collect data through 5.4B’s notification and application processes; an “outcomes-based” approach in which the regulator will focus on how consumers are actually being harmed and formulate plans to combat those harms with innovative and flexible solutions. This is a marked and welcome change from the traditional, mechanistic “rules-based” approach, focused purely on technical compliance rather than actual consumer outcomes. With this approach, not only will the regulator be able to intake, review, assess, and respond to data from voluntary applicants, but approval is dependent on a finding of “no risk” or “minimal risk.” This process is designed to catch bad faith actors from the outset.

Additionally, these processes are subject to further review by the Utah Supreme Court whenever the regulator finds it necessary to deny an applicant or remove a participant from the Sandbox. All such decisions are based on actual data indicating the risk the individual or entity poses to consumers in the state, regardless of economic status. Any finding of “more than minimal risk” will be placed under further review by the regulator and by the Court for final removal or denial.

Furthermore, the proposed Sandbox is a “risk-based” approach, assessing consumer risk under various business structures for legal services and designing specific and targeted regulations to protect consumers from foreseen harms. This proposal specifically allows the regulator to tailor the Sandbox to best benefit consumers and lawyers at the same time. Rather than taking an all-or-nothing approach when it comes to new structures and practices, regulators using a risk-based approach can design regulations that preserve flexibility and access while ensuring that clients are protected. What’s more, this process focuses more on prevention than post-act damage mitigation.

Finally, consumer surveys show support for policies allowing non-lawyers to have ownership stake or partnership in law firms, so long as regulations exist to catch bad actors.[9] Rule 5.4B will permit the new regulator to do just that: expand access to services while acting as another level of protection against consumer risk. Not only will the regulator be an inspector for individual lawyers, but it will also assess entities, such as law firms, which has been uncommon in regulatory bodies in the past.

iv. Relaxing or Eliminating Rule 5.4 is a Necessary Condition for Making Legal Help Safer and More Affordable

a. The Sandbox Proposal Permits Outside Investment, Which
Will Allow Lawyers to Garner More Financial Resources, Free
Up Time to Spend on Clients, and Increase Productivity

Allowing the corporate practice of law is a necessary condition to fill the gap in providing adequate legal help. Just as H&R Block and TurboTax have made navigating the tax code widely accessible and affordable, a mass‐market law firm could allow Utahns to affordably and accessibly navigate the legal system. The economies of scale that can only be achieved by outside investment would bring down the costs of legal services. Almost every law firm providing services to middle‐income individuals and small businesses on issues such as family law, employment law, housing, and basic corporate and business law is a small business of no more than a dozen attorneys. A large, well-capitalized firm specializing in these issues could provide standardized training to the attorneys it works with, perform quality control on services offered to clients, and let lawyers focus on practicing law rather than finding clients, maintaining trust accounts, and collecting fees.[10]

b. The Proposal Puts Law on a Level Playing Field with Other
Professions

The concept of ownership from outside the profession is not an outlier in the professional world: For example, the corporate “practice” of medicine is far from unusual in the United States. While most states prohibit corporations from directly practicing medicine, all states “provide an exception for professional corporations and many states provide an exception for employment of physicians by certain entities.”[11]

Under this proposal, Rule 5.4B would be similar to corporate practice of medicine laws and statutes. Lawyers would be able to work for a range of different types of employers, without being restricted by the employer’s corporate structure.

c. Lawyers in the Sandbox Should Not Be Subject to a Double
Standard Compared to Lawyers in Traditional Firms

Some commenters have suggested requiring lawyers in the Sandbox to have malpractice insurance or to guarantee that they will serve a certain quota of underserved clients.

It’s worth noting that no such requirements currently apply to Utah lawyers. We would welcome a requirement that all Utah lawyers be required to have malpractice insurance, but there is no reason to apply such a requirement solely to Sandbox lawyers. In fact, a Sandbox firm is less likely to need malpractice insurance, as regulators would be able to assess and minimize risk at the firm level.

Similarly, while a minimal means focus is laudable, a minimal means requirement would unduly tax innovation and flexibility in this area, wasting precious time and energy on definitions, measurement, and compliance. We believe this proposal, unweighted by such bloat, would be an enormous step in the direction of expanded access to legal services.

v. Simplifying Advertising Rules Will Raise Public Awareness of Lawyer Services and Make Those Services More Accessible

While most of the attention given to this regulatory proposal has focused on the Sandbox, we would be remiss in failing to address the proposed changes to lawyer advertising rules. Advertising has an important role to play in making the public aware of the legal components of their problems and the availability of legal services. It also serves as a valuable aggregator of legal information and resources.

The current advertising rules are archaic, overreaching, and unreasonably restrict lawyers’ ability to provide information to consumers about the availability of legal services. This is particularly true as the growth of electronic media has exposed the inaptness of rules created in an era prior to either the internet or the recognition that advertising is protected by the First Amendment. Any excess advertising regulation represents another barrier preventing consumers from connecting with lawyers and making informed decisions about their legal needs. Changes to advertising rules will only increase the effectiveness of Rules 5.4A and B and expand access to justice across the state.

The proposal would strengthen Rule 7.1 to provide all of the consumer protection needed, while loosening unnecessary restrictions on lawyers. The proposed changes focus on false and misleading communications, as well as prohibiting interactions involving coercion, duress, and harassment. Under the current rules, lawyers face outdated, byzantine restrictions on the methods and messages they can use when trying to reach potential clients. The Task Force correctly determined that there is no need for specific regulation around attorney-matching services or other forms of marketing. Broadly prohibiting false and deceptive practices is sufficient to protect the public and provide a basis for discipline when required. We should actively welcome rules that provide flexibility for new development in communications technology, rather than being trapped in the expectations and methods of a particular time.

Repealing Rules 7.1-7.5 and replacing them with a strengthened 7.1 would greatly increase the ability of lawyers and law firms to use modern digital marketplaces and marketing methods to reach the public. A recent study of California residents shows that 66 percent of Californians who are comfortable using the internet have looked online for legal help.[12] There is no reason to expect that this number would vary greatly for Utah. Furthermore, this number will only continue to grow as younger generations start facing legal issues of their own. By removing restrictive barriers and leaving an improved Rule 7.1, in combination with an overhaul of Rule 5.4, the proposal will undoubtedly help to provide many underrepresented Utahns with the legal assistance they need.

vi. Conclusion

The access to justice crisis in America is growing and cannot be improved without systemic changes to the rules and business models applicable to legal services. Adopting the proposed Sandbox regulations is a critical step, especially as the COVID-19 pandemic increases in severity. Uncertainty and consumer legal problems are only going to proliferate in the months ahead. Regulatory reforms that allow for flexibility and address actual public harms are critical. An updated Rule 5.4 will not only facilitate a broader range of practices for lawyers to expand their businesses, but it will also ensure that consumers are better protected from bad actors than they have been in the past. Modernized attorney advertising rules will allow for better-informed consumers. These changes are necessary, proportionate, and must be prioritized at an historic time of crisis and uncertainty in the United States. On behalf of the overwhelming majority of Utahns who cannot afford legal help, we urge the Court to adopt the proposed Sandbox regulations.

Tom Gordon
Executive Director, Responsive Law
___________________________________________
1. World Justice Project, WJP Rule of Law Index 2020, available at https://worldjusticeproject.org/rule-of-law-index/factors/2020/United%20States/Civil%20Justice.
2. Gillian K. Hadfield & Jamie Heine, Life in the Law—Thick World: The Legal Resource Landscape for Ordinary Americans in Beyond Elite Law: Access to Civil Justice for Americans of Average Means (Samuel Estreicher & Joy Radice eds., 2015) (observing that fifty to sixty percent of low- and moderate- income American households face an average of two legal problems annually).
3. Id.
4. Utah Implementation Task Force on Regulatory Reform, “Frequently Asked Questions,” 2020, https://uploads-ssl.webflow.com/5d03efebc4cbd6d7c884b485/5eb4ce994c8c0c802e2c6bc2_Utah%20FAQs%20FINAL.pdf.
5. ABA Commission on the Future of Legal Services, “Report on the Future of Legal Services in the United States,” 2016, http://abafuturesreport.com/#1.
6. Sandefur, Rebecca L., Accessing Justice in the Contemporary USA: Findings from the Community Needs and Services Study (Aug. 8, 2014). Available at https://ssrn.com/abstract=2478040.
7. Carter, Stephen, “The Legal Services Corporation Launches Pilot Program to Increase Access to Justice,” quoting Legal Services Corporation President James L. Sandman, Apr. 19, 2016, http://www.lsc.gov/media-center/press-releases/2016/legal-services-corporation-launches-pilot-program-increase-access-0.
8. Sandefur, supra, n. 2.
9. State of Arizona Public Opinion Survey, Arizona Supreme Court Task Force on the Delivery of Legal Services, (Jan. 20-24, 2020).
10. Lawyers spend only 2.3 hours a day on billable tasks and collect an average of only 1.6 hours of their billable time (Clio 2019 Legal Trends Report, https://www.clio.com/resources/legal-trends/ reported on at https://abovethelaw.com/2019/11/clios-latest-legal-trends-report-reveals-a-troubling-truth-about-lawyers/).
11. Issue Brief: Corporate Practice of Medicine, American Medical Association (2015), available at https://www.ama-assn.org/media/7661/download.
12. ATILS Task Force Study, The State Bar of California, (Mar. 2020), available at http://www.calbar.ca.gov/Portals/0/documents/ATILS-TaskForce-Study-Technical-Report.pdf.

Utah Housing Coalition (UHC) is a state-wide membership-based non-profit organization located in Salt Lake City, UT. Through Education, Advocacy, and Community Partnerships, UHC is dedicated to promoting equitable and sustainable communities to ensure all Utahns have a safe and affordable place to call home.

Many of our members serve low-income renters across the state. We are well aware about the barriers this population faces in the rental market and legal representation when they receive eviction notices, eviction and debt collection judgments, and wage garnishments. Utah Legal Services provides great services to our state, but they can not simply cover all of the hundreds of eviction cases happening monthly. The volunteer attorneys through the Utah Bar services are a great resource; however, it is difficult to provide proper representation when they meet with their clients for a few minutes at the courthouse every Wednesday. Private attorneys and their law firms are unable to support a sustainable business model by providing low or no-cost legal representation to low-income renters and individuals who are unable to afford many basic necessities.

Thus, UHC supports the Supreme Court Regulatory Reform Proposal. We welcome the reform to have trained and licensed professionals that are not members of the Utah State Bar under traditional admission requirements to have the ability to provide legal representation to low-income individuals. This reform is much needed in our state and is overdue for those who have limited means and is essential for our judicial system to efficiently deliver outcomes that are fair and accessible to all.

Chief Justice Matthew B. Durrant
Utah Supreme Court
320 E. Capitol Street
Salt Lake City, UT 84103

Re: April 24, 2020 Utah Supreme Court Standing Order No. 15 and Associated Proposed Changes to the Rules of Professional Conduct

Dear Chief Justice Durrant:

I write on behalf of Holland & Hart LLP in response to the Utah Supreme Court’s April 24, 2020 Standing Order No. 15 and associated changes to the Rules of Professional Conduct (“Regulatory Reform Proposal”).

Holland & Hart has a long-standing national reputation as a firm committed to providing legal and civic pro bono services to non-profit organizations that help others, and to those who are indigent or would otherwise go without legal help. The firm expects and requires that all of its lawyers donate a portion of their time and services and recognizes the unmet legal needs in our community. We applaud and support the stated aim of the Regulatory Reform Proposal to increase access to legal services for those who could not otherwise afford them.

We also welcome regulatory reform that allows us to better serve our clients and appreciate the potential in the Regulatory Reform Proposal to do so. That said, Holland & Hart shares the concerns and recommendations outlined by the Utah State Bar Committee on Regulatory Reform (dated July 8, 2020), and as outlined by Attorneys’ Liability Assurance Society Ltd., a Risk Retention Group (ALAS) (dated July 22, 2020), which we understand have both been conveyed to the Utah Supreme Court. Before such reform occurs beyond the access-to-justice context, we believe that a deeper analysis and discussion with stakeholders outside the access-to-justice context would lead to reform that supports innovation and improvements to the practice of law while protecting consumers. Without such an analysis and discussion, we are concerned about unintended consequences that could harm Utah consumers and attorneys with potentially no material impact on improving access to justice.

We applaud the Utah Supreme Court’s efforts to address the critical need for legal services by people of limited means, and we are hopeful that the proposal can be narrowed to ensure that need is served by making access-to-justice a requirement of the regulatory sandbox proposals.
Very truly yours,

James L. Barnett
Administrative Partner
for Holland & Hart LLP’s Salt Lake City Office

The proposed sandbox changes will not succeed in increasing access to legal services. Instead, they will likely diminish the standing of the law in the eyes of the public. Over my 30 plus years of legal practice, I have seen a decline in civility between lawyers as a result of mainstream culture seeping into the profession. The proposed changes will hasten that decline as well as hasten the decline in respect for the profession that most lawyers have worked so hard to earn.

Kathleen McConkie
Attorney at Law

It looks like I lost my formatting and footnotes.

As stated by Charles F. Kettering, “a problem well stated is a problem half solved”. The Utah Supreme Court has proposed to reform in an effort to “strengthen access to justice.” Unfortunately, “access to justice” means different things to different people and does not define the problem that is to be addressed. For a problem to be properly and effectively addressed, it needs to be clearly defined. I am in favor of solving specific problems and shortcomings with the justice system. I am adamantly opposed to some of the proposed solutions currently being considered and strongly believe that they are counter to the stated goals.

I have independently researched the issue, read articles, participated in webinars, reviewed comments, and thought about the problem. I concur with some that have commented that it appears that comments provided by the legal community will not be considered and that the decision has already been made. I was very disheartened and extremely disappointed in a comment made by a member of the judiciary in a webinar that any attorney that does not support the proposed reforms is solely acting out of self-interest and protectionism. The comment reflected an attitude that opposing or divergent views will be summarily dismissed and has the effect of stifling free speech and silencing dissent and comment. I sincerely believe that because of this attitude, real or perceived, will result in most members in the legal community remaining silent on these important issues. I hope and trust that all views and comments will be thoughtfully considered.

As recognized by the Court, 86% of the civil legal problems reported by low-income people is that they received inadequate or no legal help. The Court has recognized that there is an access-to-justice problem. In other words, people need access to affordable meaningful legal services, including competent advice and access to the courts. As stated by the Court, the overarching objective is “to ensure consumers have access to a well-developed, high-quality, innovative, affordable, and competitive market for legal services”. While this sounds nice, it does not specifically identify an issue to be addressed or solved. From the information provided, I understand that the three main areas of concern are (1) landlord/tenant issues, including evictions, (2) estate/wills/probate, and (3) family law and divorces.

Court Reform. Access to justice includes the ability to appear before judges and to receive timely rulings, orders, and decisions. Of the three main areas of the law identified, all three concern litigation related issues: unlawful detainer/eviction matters, probate proceedings, and divorces and restraining orders. The proposals contained in the revised rules do not address access to the court system. The various reforms are meaningless unless true justice is established through the court system.

Access and Timeliness. Access to the court system can be address by the courts without changing the attorney licensure rules. As an example, a client had a hearing before a judge last December. The judge stated that the ruling will be issued within three weeks, which is the typical time frame for this type of ruling. The ruling will determine how the case progresses. It has now been approximately seven months and the judge has yet to rule on the issue presented in the motion despite following up multiple times with the court. Given that new cases have been suspended due to the COVID-19 situation, there is no justification for this delay. Any legal reform must address the actual litigation process and address the access to courts and the timeliness of judicial decisions. Having more people represent parties does not solve this problem. It may just make the backlog of cases greater. If there is a need to have more people provide legal services to meet the legal demand, there also needs to be more judges, courthouses, and other facilities.

Competency. While people need to be provided competent legal services, the judicial decisions should be made by competent judges that know the specific area of the law. It is not feasible or expected that any one attorney knows all aspects of every legal subject matter. Attorneys tend to focus on certain practice areas. While a party may retain a competent attorney with knowledge and experience in a certain subject matter, if the matter is litigated, the odds are that the judge will not be well versed in that area of the law. As a result, the rulings may not be the best and justice will not be served. I suspect that one of the reasons for delays in making decisions is that a judge is unfamiliar with the subject matter and is uncertain of the ruling. To foster competency and trust in the legal system and to address the timeliness of decisions, it should be considered that judges be trained and educated in certain areas of the law and to just hear cases involving those subject matters. Instead of having to research legal issues for each case that comes up, which takes time and creates delays, judges can already be knowledgeable in certain areas and have a good knowledge base. This is already done in probate and other areas. Access to justice is just not access to the court system, but access to competent legal services and decisions made by competent judges that are knowledgeable in the applicable area of the law. In addition, cases can be recorded for consistency and to provide a basis for appeal. Additional funding should be provided so that rulings and decisions are issued on a timely manner.

Competency. One of the main elements of access to justice is access to competent legal services, especially to marginalized and poor people. By allowing unlicensed persons to provide legal services, persons may not be provided with competent advice or meaningful service. To ensure that proper advice and meaningful service is provided, those providing legal services are property trained, educated and licensed, with appropriate continuing education requirements. For example, LPPs need to be trained and licensed. In order to provide legal advice on any particular subject, LPPs need to pass a test to demonstrate competency and should be required to participate in mandatory CLE and be re-licensed. Likewise, attorneys to be licensed in Utah should pass the Bar Exam, participate in mandatory CLE and be licensed. While there is a high passage rate, the reason for the high passage rate may be because the exam requires applicants to study and learn the material. Without the exam, persons will not study and learn the material.

Attorneys, like medical doctors, solve complex and unique life changing issues for people by representing and advising their clients; they don’t simply have clients check boxes or sign and submit forms with the Court. Untrained non-lawyers are unable to provide clients with proper legal advice because they lack adequate expertise in the law. Nobody would be content relying on advice from a non-doctor, even an experienced nurse, on their unique cancerous medical condition, why would we be content relying upon an untrained non-lawyer’s legal advice. Similar to how every human body is unique and medical doctors must carefully plan to successfully treat a patient of their unique and particular health issue, attorneys must also carefully plan and strategize to protect their clients’ interests, a boilerplate form may be sufficient in some instances (and there are plenty of examples of forms available on the internet) but it cannot be sufficiently tailored to and adequately protect a client’s interest in most instances. Non-trained and non-licensed persons should not give legal advice.

Affordability. To address the affordability issue, the cost of legal services needs to be decreased and the ability of LPPs and parties to participate pro se in matters need to be increased. Creating another profit layer through ownership by unlicensed attorneys or the payment of referral fees (which I suspect is a major driving force in the rule changes) will increase the cost of legal services. Below are some ideas on how the cost of legal services can be decreased:

Pro Se Representation. For some matters, the court may allow parties to represent themselves pro se before the court.

Licensed Paralegal Practitioner. The Court recently adopted the licensed paralegal practitioner program, which is similar to the licensed limited licensed legal technician’s programs that have been adopted by other states. The LPPs can perform legal services for very specific areas under the supervision of attorneys similar to LLLPs in Oregon and California. The State should wait and evaluate the effectiveness of the LPP program and its impact on legal services before adopting more drastic measures. The adoption of LLLPs and LPPs seem to be the most popular and accepted means to provide meaningful legal services at a lower cost. While LPPs do not need to attend law school and pass a bar exam, they still must have knowledge and competency in an area of the law and be licensed in order to provide legal advice. The idea is that LPPs will charge a lower fee. Use of LPPs should be encouraged and can be provided as part of community outreach programs discussed below.

Mandatory Landlord/Tenant Mediation Program. For residential landlord/tenant disputes and evictions, the court has established a landlord/tenant mediation program. Before an order of restitution can be issued in an unlawful detainer action, the parties need to participate in mediation. Attorneys and trained mediators volunteer to provide the pro bono mediation services. This program allows tenants to participate in mediation before an eviction proceeding occurs. This program can be expanded to include additional pro bono legal services to advise tenants, such through a family law/divorce program, estate planning and probate program, etc. The Landlord/Tenant Mediation Program does address some of the concerns expressed regarding landlord/tenant matters.

Community Outreach Programs. Similar to issues related to police reform, promoting rights awareness and training community members or LPPs to help low-income and marginalized groups. For example, trained social workers and LPPs can provide assistance and act as a liaison with these groups through community clinics and support centers. This may be the most effective means of addressing the issue and can be combined with the police/justice reform. As part of the community clinics and support centers, justice facilities can be included that would include meeting rooms for consultations and mediations and courtrooms where judges can go to the local community. This would address the barrier of the poor having to travel to a centralized courthouse.

Incentivize Pro-Bono Work. Incentivizing licensed and experienced attorneys to provide pro-bono legal services for the underprivileged and marginalized groups would remedy many of the issues listed above. Attorneys would be able to provide adequate representation, would be able to maintain client priority and keep legal costs down. The State could incentivize attorneys and law firms to provide more pro-bono work by providing them with a tax credit for pro-bono work. In addition, if need be, pro bono hours could be required as a condition of licensure. I believe that there are approximately 8,250 actively licensed attorneys in the state. If each attorney is required to perform 20 hours of pro bono hours every two years as part of their license renewal, that would be 165,000 hours or approximately 82,500 hours per year. That would be the equivalent of 50 full time attorneys. In addition, greater hours could be required of newly admitted attorneys. The attorneys can provide services in their particular practice areas to ensure competent legal representation and representation can be through their standard process, which would include conflict checks, etc. This is probably the most effective means of addressing the access to justice issue.

Allow 3L’s to Practice Law in a Limited Capacity. Many law students are enthusiastic and passionate about justice and actively seek opportunities to participate in legal clinics such as the Rocky Mountain Innocence Clinic, as well as PBI programs which include services such as American Indian Law, Debtors Counseling, Expungement, Family Law, Medical-Legal, Rainbow Law, Street Law, Community Legal Sites. Allowing 3Ls, who already have two years’ experience, would be able to represent individuals before the Court thus providing greater access to justice. Other states have adopted this practice by allowing 3Ls be a licensed legal intern. The 3Ls would primarily work with the poor and marginalized persons, thus directly addressing the access to justice for these groups.

Encourage Local Law Schools to Admit More Law Students. Admitting more law students will produce more lawyers who will enter into the legal profession. With more lawyers in the legal market there will be greater number of lawyers to provide legal services thus creating greater access to justice.

Increase Funding for Legal Aid and Justice Reform. The State had over a billion-dollar surplus in 2018, while the COVID-19 pandemic will dramatically impact the State’s finances, it appears that access to justice must involve greater funding and investment in judges, legal aid, and infrastructure, such as courthouses and community centers. By expanding legal aid, legal services would be made available to those who otherwise would be unable to obtain such services on their own thereby increasing access to justice.

One will notice that the solutions proposed above are not included in the proposed reforms. In fact, many of the proposed reforms appear to be counter to the solutions and will make the problem worse. Instead of providing competent legal services to poor and marginalized persons and addressing true reform to the justice system, the proposed reforms tend to be concerned with the dissemination of information, allowing corporate and non-attorney ownership of law firms, and sharing of legal fees with non-attorneys.

Dissemination of Legal Information/Advertising/Modification of Rule 7.1 through 7.5. I believe that many law firms avoid sharing legal information because it would be deemed advertising and in violation of the advertising rules or be deemed legal advice and be subject to other various rules. Many law firms and attorneys issue bulletins or legal alerts to clients. These are not sent to the general public because it may run afoul of advertising rules. If there is a concern about dissemination of legal information, I am in favor of loosening the advertising rules so that law firms can provide legal information to the general public. Once the advertising restraints are lifted, attorneys and law firms may develop technology or apps to disseminate this information. The marketplace will encourage this. The dissemination of information may be through podcasts, videos, articles, apps, etc. The courts and bar can work with law firms to disseminate information. Before opening the door to non-licensed attorneys to provide legal information, I strongly suggest that attorneys and law firms be given an opportunity to address the issue. Loosing advertising rules will also allow attorneys to reach out to the public and inform the public of the services that they offer. Other than personal injury attorneys, many people may not know who to contact for their legal needs.

Fee Sharing and Ownership of Law Firms/Modification of Rule 5.4. I AM STRONGLY OPPOSED TO CHANGES TO RULE 5.4. It is common that professionals and practitioners in licensed occupations are not allowed to share compensation with non-licensed persons. A common example is in the real estate industry where real estate broker cannot share real estate commissions with non-licensed individuals. Most states prohibit the sharing of real estate commissions with unlicensed persons. In addition, this practice is also prohibited by federal law in most cases (See Real Estate Settlement and Procedures Act). It is illegal for a licensed real estate broker to pay a commission share a commission with someone for performing work for which a license is required. Likewise, attorneys are prohibited from sharing fees with persons that are not licensed attorneys. The rationale is similar in both industries. My thoughts concerning this rule change are below.

Professional Independence. One of the principal purposes behind the prohibition about sharing compensation is to protect and maintain professional independence. One of the bedrock principals of the legal profession is that attorneys must maintain professional independence to advise clients without outside influence. The same holds true for other occupations, such as real estate brokers, where there is a duty of loyalty and a fiduciary relationship. If outside parties have an ownership interest in a law firm, there will be interests competing with the lawyers’ fiduciary duty and duty of loyalty to the client. This is such a common place understanding that it is difficult for me to comprehend why the rule change is proposed. It appears that it is recognized that professional independence is a concern, so it is repetitively stated that attorneys’ professional independence will not be compromised. Just saying this does not address the reality that it in fact will be compromised.

As proposed by James Moliterno, law professor at Washington and Lee, one of the purposes of the movement for the involvement of non-lawyers in the law profession is to regulate the legal profession in light of cultural trends. According to Professor Moliterno, “History demonstrates that lawyers are inept at being their own exclusive regulators. Lawyers tend to look backward to precedent and sideways to existing articulations of law. When lawyers do look forward, their primary task is to predict and guard against risk. It is not in lawyers’ nature to be forward-looking planners or sensitive to cultural trends. . . .” As such, one of the primary purposes of having nonlawyers involved in law firms or have non-lawyer ownership of law firms is to enable community or special interest groups to have the ability to exert influence on the law firm in order to influence the clients and the types of cases the law firm takes in light of “cultural trends”. If any entity or investor has an ownership interest in law firms, those parties will have influence over the management of the law firm. As a result, clients with a culturally disfavored position may be denied as clients or pressure will be exerted on attorneys as to what advice to give to the client. The direct result is to deny justice to clients that take culturally unpopular positions.

While this concern may be dismissed, the reality is that we do not live in a utopian or perfect world and third party investors or owners will exert influence or control over law firms and attorneys. Some proponents of the rule change are counting on it. For example, if a company or investor group invests in a law firm and the law firm is approached by a client that wants to take an unpopular position, outside public interest groups may exert influence on the company or investor group (such as boycotts or activities that will turn away sponsors or advertisers from the company) that has an ownership interest in the law firm. The company in turn will exert influence within the law firm. There are many current examples of special interest groups exerting influence on advertisers to drop sponsorship or advertisements from companies with whom the special interest group disagree. By not allowing ownership of law firms by unlicensed attorneys (such as investment groups), the law firm is somewhat insulated from outside political and other pressures whereby it can fulfil its fiduciary duty and duty of loyalty to its client. One cannot honestly believe that if Atticus Finch was a member of a law firm where outside interests had an ownership interest in his law firm that he would defend Tom Robinson given the current cultural standards at the time.

Allowing non-lawyer ownership of law firms will inevitably lead to the non-lawyer entity exerting influence on the law firm, which will weaken the professional independence of attorneys. This risk is widely acknowledged and recognized by states and the federal government when establishing rules and laws that prohibit the sharing of compensation with third parties. Because of this risk, the rule and comments state that the lawyer’s professional judgment needs to be protected. These comments further acknowledge the risk of the loss of the lawyers’ professional judgment. In light of this risk, why make the rule change? No other jurisdiction has allowed this in light of the risk and there is no reason or justification for Utah to do so. No valid argument has been provided that allowing fee sharing with non-lawyers or non-lawyer ownership of law firms will enhance access to justice. Instead, the opposite will be true. No matter how often the rules may state or emphasize that professional independence must be honored, if one is honest with oneself, one knows that professional independence will be compromised. This is the reason why rules have been universally adopted to prevent this possibility.

Third Parties to Profit from Legal Services Instead of Providing Access to Justice. Third parties primarily would like to invest in legal services so that they can make money. One of the identified reasons for the rule change is for developers of software applications to be able to be able to share in legal fees paid to attorneys. There is nothing currently that prevents a developer from developing an app and providing referrals to law firms or attorneys that will provide legal services. If the app is popular, advertisers may purchase space on the app. The app developers, however, obviously want to be paid through the fees paid to attorneys, most likely through attorneys’ fees paid by the client for the services provided. It appears that the business model for the app developer is as follows: Law firms can pay money to the app developer as “advertising” and have the law firms advertise on the app (hence the rationale to lessen the advertising rules for lawyers). The app will refer potential clients to law firms that enter into a referral agreement with the app developer. If the app refers a client to a law firm and the law firm provides legal services, a portion of the fee paid by the client will then be paid to the app developer as a referral fee. Since the additional cost of the referral fee needs to be covered, the fees charged by the law firm will likely increase. While law firms may view this as a way to “advertise” their services and a way for the app developer to make a lot of money, this business model does not increase access to justice or make legal services more affordable to clients. The proposed change in Rule 5.A(c) specifically is drafted to allow the actions described in the above example. By adjusting the advertising rules, law firms can simply advertise on the app and pay a fee to the app developer. Inasmuch as the app developers to prominently involved in the advocation in the change to the rules, it appears that one of the primary reasons for the rule changes is to benefit the app developers. Technology platforms can provide knowledge and information regarding the law so long as the information is reviewed by and attorney. If parties need specific advice, the parties can consult an attorney or other licensed provider that can provide competent advice.

Ethics and Malpractice. Attorneys are held to a high standard of ethical care for their clients. To become an attorney in Utah, candidates must attend three years of an accredited law school, pass various background checks and pass the bar exam to ensure they can adequately represent their clients. Licensure is intended to ensure the public that the person you are hiring is competent to practice in that profession. Many occupations require state licenses before one can practice in that occupation, examples include barbers, fishermen, milk samplers, preschool teachers, real estate agents, security guards and teachers’ assistants. If a milk sampler or fisherman must be licensed before they can work in their occupation then it seems to be important that those practicing in a profession as significant as the law should be competent and the public should be ensured that those practicing law are competent. It is through licensing that the State and the Courts can enforce compliance with ethical standards and effectuate change. As a condition of licensing, the State and Courts can mandate focused education on access issues or require attorneys to participate in pro bono activities or otherwise address access to justice.

Insurance. Although lawyers are not required to carry a malpractice insurance policy it is generally beneficial to both lawyers and their clients. Insurance companies are unlikely to be willing to provide a policy for firms who have inexperienced, non-lawyers practicing law because there is a much greater likelihood of these non-lawyers committing malpractice thus meaning that the insurance company is more likely to pay out, and if insurance companies do provide a policy to cover such persons the policy is likely to be much more expensive and firms may be unwilling to carry that policy and hire such persons. Likewise, if non-attorneys have an ownership interest in a law firm, it is uncertain how the insurance company would address the risk associated with such non-attorney owners since they would also be covered by insurance policies.

Conflicts. Currently, attorneys’ greatest responsibility is to protect their client’s interests. By allowing non-lawyers to invest in law firms, the law firms will have a responsibility to the investors and shareholders to the detriment to their clients. The non-lawyer investors are interested in the return on investment and to make a profit, they will be unconcerned with rules of ethics, conflict checks or even the client if it means making money. There is a history of investors buying or investing in companies, and to save a penny, cut costs on what made the initial business worth frequenting to begin with. There is an inherent non-waivable conflict if there is a conflict between a law firm, an attorney within a law firm, or an owner of a law firm and a client. As such, as part of a conflict search, most firms have attorneys within the firm review the potential matter and client and indicate if there is a conflict. It is uncertain how this is to be performed if there is a non-attorney owner. If an investor group or corporation is a part owner of the law firm, it would seem that the law firm would need to deny representation if there is a potential conflict with the non-attorney owner. Somehow a mechanism would need to be developed to determine conflicts, which may be very difficult to do. This system does not seem to foster greater access to justice, but rather limit access to legal services.

Conflicting Standards. Different industries have different standards. If different professionals, such as real estate brokerages, accounting firms, and law firms have different ethical standards regarding duties owed to clients, cross ownership across professional platforms create conflicts between the duties owed. For examples, lawyers have a strict duty of confidentiality. Real estate brokers, however, are legally and ethically obligated to disclose to buyers/adverse parties material issues related to property.

Homie Legal Services. By opening up legal services, there is a risk that legal services may become like Homie where some legal information may be provided, but conflict checks are not performed, competent advice is not provided, and other ethical duties are not adhered to. Providing bare generic legal information or very basic legal services does not address the access to justice problem and does not result in the poor and marginalized groups being provided competent legal services.

Regional Firms and Dual Licensed Lawyers. Many states disallow any firm with licensed lawyers with that State from splitting fees with non-lawyers, whether hired or as investors. For instance, California has a rule stating, “[n]either a member nor a law firm shall directly share legal fees with a person who is not a lawyer . . . .” Rules similar to California’s would disallow regional firms in Utah with offices or lawyers licensed in these states from hiring non-lawyers to practice law or to invest in the law firm which already disqualifies a number of firms in Salt Lake from following the Courts proposal. Modifying the rule for Utah firms will create a quagmire of problems. This rule may result in any dual licensed attorney (or any law firm having attorneys practicing in Utah) being banned from practicing in other states. Before one changes the rules, the outcome must be clearly known.

Greater Expenses for Legal Services. Allowing non-lawyers to invest in law firms will make legal services more expensive, not less expensive. Investors expect to make money off of their investments and will demand that they receive a return on their investment. This simply adds another layer of compensation to persons who do not perform legal work. Another layer of compensation or profit disbursement will likely result in higher legal fees since attorneys and those performing legal services still need to be paid. Instead of making legal services less expensive and making legal services form affordable to provide access to justice, legal services will become less affordable.

Referral Fees. Some non-lawyers may not want to actually invest in a law firm but would rather be paid referral fees for referring business to a law firm. A plausible example is an app developer who wants to develop an app or website (technology platforms) to refer individuals to lawyers for legal services. As exchange for the referral, the app developer would demand a fee for the referral. The app isn’t going to display or recommend the best or most competent lawyer for the job, but instead refer the person to the attorney who is going to pay the highest referral fee. The referral fee is just an extra expense the attorney will need to pay and does not create any value to the client. The referral fee will result in an increase in the cost of legal services and make legal services less affordable. Hence, instead of making legal services less expensive and making legal services form affordable to provide access to justice, legal services will become less affordable. If the concern is that people may not know of an attorney, the advertising rules can be adjusted to allow attorneys and law firms to market themselves. As is common in the real estate practice, home builders and others will give a cash discount if home buyers use their “preferred” appraiser, lender, title company, etc. With the proposed rule change, I guess we can include preferred law firm. I believe it is problematic for a company to refer one of their “clients” (a person they are adverse to) to a law firm and the law firm pays a referral fee back to the company, which then offers a discount to the “client”/adverse party. In this case, the law firm will be more loyal to the company that refers it business than to the “client”/adverse party. The party making the referral will not be interested in the competency of the attorney, in fact, they may want the legal services to be as incompetent as possible since they may be on the opposing side.

Forms. Alternatively, a technology platform may provide boilerplate forms, such as leases, purchase and sale agreements, wills, estate documents, contracts, etc. As previously recognized, these platforms already exist and form documents are readily available. As such, the rule change is not necessary. If the technology platform is intended to customize the form, then legal advice will be given and the advice may not be competent or necessarily satisfy the needs to the client. A form cannot replace a trained and experienced attorney.

Sandbox. It seems to me that the regulatory sandbox is merely a way to get past the valid concerns expressed by the legal community and to adopt reforms. Instead of trusting that Utah will “get it right,” we should be honest to ourselves, about ourselves. Many Utahns believe us to be morally superior to many of our fellow states but in reality, we are not. Utah, mainly Utah County, has a major fraud problem. “Utah has a long-held reputation as the fraud capital of the United States . . . . Overall, Utah investors lost over $1.5 billion in those [Ponzi] scams . . . .” In fact, fraud in Utah is so bad that the FBI’s Salt Lake field office is directed at fraud found only in Utah. The only other office that handles fraud in the United States is in Quantico. Before, issues and concerns are casually dismissed claiming faith in Utahn’s morality let us first consider the reality of where we are. I have encountered many instances where licensed attorneys simply ignore or dismiss conflicts. I have attended national CLEs where Utah was recognized as the problem child of the county, such as SEC compliance issues, where licensed attorneys attempt to skirt the issues. In some instances, the violations from Utah are so pervasive that the SEC had to change the rules to avoid widescale actions against Utah attorneys. The Court recognizes that the “approach does not remove all incidence of harm from the market” and that there may be “no effective enforcement action even though some customers may experience harm”. Given Utah’s reputation and the actual incidence of fraud and not complying with the rules, it is naïve to believe that unlicensed attorneys would comply with the professional responsibility requirements imposed on attorneys. Given the consequences, I would suggest that all of the issues be carefully thought through and resolved before changing the rules. It seems like a lot of national commentators are suggesting that we “jump off the cliff” and see what happens without even inspecting the area below to see if there are rocks. I suggest that we take a measured and prudent approach by adopting policies that are within the existing rules and have the greatest impact to enhance access to justice.

In summary, there are many policies and reforms that can be adopted to address access to justice to provide affordable and competent legal services within the existing rules and framework. Unfortunately, the proposed rule changes do not adequately address the problems and actually will increase the cost of legal services and/or make less competent legal services available to poor and marginalized people.

This comment has two parts.

Part 1:

I agree that we need to narrow the access to justice gap. However, I disagree with the current solution of the Regulatory Sandbox to allow companies to come in and provide nontraditional legal services and not have continuous oversight throughout the life of the company.

After listening to Judge Himonas speak about the implementation of the Regulatory Sandbox, I have grave concerns about this “solution” to the access to justice gap. One concern was when Judge Himonas talked about how in the beginning, a company allowed into the Regulatory Sandbox first operates in the limited parameters of the Regulatory Sandbox with ample oversight. However, the company can “graduate” and move out of the sandbox and operate without any real regulation or oversight in regards to the ethical practice of law. Companies providing nontraditional legal services, without ample oversight and continued monitoring, will degrade the integrity of the legal profession and the quality of law.

Currently, for lawyers and licensed paralegal practitioners, there are several requirements, many continuing requirements, a person must meet in order to receive the privilege or license to practice law in Utah and ensure legal justice is being administered ethically. Several of the requirements, or similar requirements, apply to Utah attorneys and licensed paralegal practitioners. Below are requirements specifically for attorneys, even though licensed paralegal practitioners are subject to most of the requirements listed below.

Utah attorneys are required to:
1. Pay thousands of dollars to attend and graduate from an accredited law school;
2. Learn about and pass a test on the ethical rules Utah attorneys must follow when admitted to the Utah Bar and practicing law in Utah,
3. Take an oath and accept the responsibility for “the quality of justice”;
4.accept and follow stringent ethical rules or face disciplinary measures of the OPC;
5. Follow the Rules of Professional Conduct even if performing only activities “related” to the practice of law
6. Pay several hundred dollars yearly to maintain mandatory membership in The Utah Bar in order to continue their license to practice law;
7. Pay annually into a consumer protection fund that reimburses clients for losses by the dishonest conduct committed by a lawyer or a licensed paralegal practitioner in Utah for the purpose “to promote public confidence in the administration of justice and the integrity of the legal profession.”;
8. Invest time and money over every two-year-period for continued education (a quarter of the required credits must be on ethics or professional responsibility); and
9. Pay thousands of dollars each year for malpractice insurance to help compensate that attorney’s clients who are wronged by his or her inappropriate representation (I am unsure if this is a general requirement of the Utah Bar, but it is required to participate in several of the Bar’s programs and offerings (i.e. Modest Means program, NLTP, etc…).

Each member in a nontraditional legal service providers organization should be required to:

1. Pay for each person providing nontraditional legal services within its organization to join and continue with a regulatory organization similar to the Utah Bar, after the organization is no longer within the bounds of the Regulatory Sandbox, to advance the same directives as the Utah Bar (i.e. advance the administration of justice, to provide for the regulation and discipline of nontraditional legal service providers, provide continuing education on duties of ethically practicing law, etc….)
2. Receive intense training on the ethical rules of practicing law, and required for that organization—all to prevent harm to the public without an avenue to ensure the integrity of legal services being offered in Utah.
3. Have the same responsibility for the quality of justice.
4.Accept and follow stringent ethical rules or face disciplinary measures of a similar body to the OPC;
5. Pay yearly to maintain mandatory membership in the organization that will regulate and discipline nontraditional legal service providers;
6. Pay annually into a fund to reimburse clients for losses by the dishonest conduct committed by a nontraditional legal services in Utah to promote public confidence in the administration of justice and the integrity of the legal services provided;
7. To continue to invest time and money every year for continued education, especially for ethical education; and
8. Pay for a similar malpractice insurance that attorneys have to compensate clients who are wronged by inappropriate representation.

Etc…

Recently, a licensed paralegal was allowed to become a licensed paralegal practitioner. However, they are put under the same oversight, scrutiny, ethical requirements, as lawyers when practicing law—they are required to renew licensing with the Utah Bar, they must take a certain amount of training, etc…

Part 2:

A concern I have with the Regulatory Sandbox is the unintended effect on the pool of lawyers that are available to the public in coming years. Already, law school admissions have dropped. About 8-10 years ago, I started hearing young college students contemplating graduate decrees discuss avoiding going to law school to practice law. When I joined the discussion and asked why, they said the requirements to obtain and maintain a license to practice are too high compared to other professions and it is hard to have a decent income, especially as a solo practitioner. After viewing articles on the subject, they discuss the dramatic drop in law school admissions and applicants in 2010, and have only moderately recovered—some 2019 articles discussed the fact that law schools are having to lower their standards on the admission to new law students (accepting more with lower LSATS and GPA).

Already, the attorneys are at a huge disadvantage to other businesses, due to the high cost of obtaining a license to practice law (law school, malpractice insurance, continuous training, discussed in the previous section) maintaining a right to practice law. A negative affect and concern of this legal sandbox is the effect it has on deterring future law students from entering law school due to the cost of becoming a lawyer and maintaining a license and law business. The Regulatory Sandbox creates additional obstacles to entering and practicing law

Additionally, attorneys who traditionally provide pro bono service to the underserved will need to focus that time, energy, and lost money to employ extensive advertising in order to compete with these companies and organizations who can cut corners due to not being held to the same standards as attorneys and licensed paralegal practitioners.

In conclusion, these nontraditional legal service providers need to be held to the same legal practice standards as attorneys and licensed paralegal practitioners and they need the proper oversight throughout the company’s entire existence.

There are rare moments when the opportunity for systemic change presents itself for an industry. The legal profession is at such a crossroads, perhaps long past the crossroads, making the time for bold leadership like that of the Utah Supreme Court critical.

As a profession, we have made nary a dent in the access to justice problem over the decades. Indeed, the problem has become worse if anything in the last decade or so. The Covid pandemic will only exacerbate these numbers. We need to understand and acknowledge that the lack of access is not reserved to lower wealth populations, but plagues those in moderate and middle income populations.

In the United States and Canada we have held onto the monopoly of legal services for centuries, despite the fact that consumers are leaving in droves to find legal help elsewhere. LegalZoom estimates that every three minutes someone starts a new business on their website, every four minutes someone starts a will. Avvo.com reported 325,000 hits a day to their website. 325,000 hits a day. Imagine the magnitude of that number.

While we as profession fret over losing our independence of judgment, consumers seek alternative means to resolve their issues outside the profession every single minute. When I was Executive Director of the Washington State Bar Association, we implemented the new Limited License Legal Technician license as well as spent time talking to regulators in other countries about entity regulation and alternative business structures. The most important lesson we took away from all of those conversations was that lawyers didn’t lose their independent judgment, rather, the ethics and professional expectations of those professionals from other industries who partnered with lawyers to advance legal services were brought up to our high standards as a profession. There was no loss of independence of judgment by the attorneys.

Importantly, by making this bold move in the regulatory arena, the Utah Supreme Court is MAINTAINING CONTROL over the regulation of the practice of law in Utah. In 2007, the British Parliament marched the other way when it passed the 2007 Legal Services Act and overnight took self regulation away from lawyers in one of the most sophisticated economies and democracies in our world. Utah legal professionals should thankful that their Supreme Court is leading in the vanguard, rather than risking coming from the rearguard to defend against a loss of self regulation.

Change is hard for humans. Change is particularly hard for lawyers, as we are trained to be precedent bound and risk averse. These attributes are so critical when working with our clients. But in the larger scheme of serving the consuming public, our problem solving must seek to implement systemic change to the system.

Over the years, as I have worked to advance regulatory advancements for our profession, some have questioned if I am a lawyer hater. On the contrary, I am proud to be a lawyer and seek to save a profession that is becoming obsolete as evidenced both by consumers voting with their feet to find legal services and a widening gap for those in our country who cannot access the services they need to solve their every day legal problems.

Onward with the Utah Supreme Court’s proposed reform. By taking this action you are preserving our profession and the critical role we play in our nation to serve the public. Full speed ahead.

Stanford CLP

The Stanford Center on the Legal Profession is devoted to the study of precisely the kinds of questions that the Utah Supreme Court has tackled: how should lawyers be regulated in order to preserve the profession’s core values while increasing access to justice. Our director, Professor Deborah Rhode, has taught legal ethics at Stanford Law School for more than 30 years, was the founding president of the International Association of Legal Ethics, is the nation’s most frequently cited scholar on legal ethics, and has won multiple awards for her scholarship on regulation of the legal profession and access to justice.

Traditional Business Model is Obstacle to Access

The principal obstacle to increasing access to legal assistance is the cost of the business model in which legal services have conventionally been available to ordinary individual consumers and small businesses. That model relies largely on one-on-one lawyering, through traditional solo and small firm practices, generally billed on an hourly basis, supplemented by online assistance. The model forgoes the cost-reducing benefits of scale, branding, technology, and the ordinary efficiencies that would come from having lawyers specialize in legal functions, while others (software engineers, financial analysts, business managers, marketing experts, etc.) specialize in all the other functions.

Why has the traditional model of legal service delivery not achieved greater efficiencies and lower costs? The American approach to professional regulation is not the only answer, but it is clearly a major contributing factor. That approach is expressed primarily in the expansive rules on unauthorized practice of law and the restrictions on the corporate practice of law and fee sharing. These rules make the markets for legal services among the most, if not the most, intrusively regulated in the modern American economy. Even the practice of medicine is far more openly organized, particularly since the advent of health maintenance organizations.

The legal profession can be stronger – and consumers of legal services can be better served – if we make it easier for new “one to many” business models to emerge through greater use of technology, and partnerships with and service from allied professionals.

Reforming Rule 5.4 Is Critical

We therefore write to strongly encourage you to move forward with the proposed regulatory “sandbox” that would allow people and organizations to provide legal services without Rule 5.4’s prohibitions against fee-sharing, ownership, or investment by those who are not lawyers. Though we do not suggest this will be a full response to the challenges of unmet legal needs, we believe that reforming Rule 5.4 holds the promise of enabling new ways of providing competent and ethical legal services to Utah residents and small businesses who urgently need assistance.

In our view, the current prohibitions on fee sharing and outside investment by nonlawyers contribute to the lack of affordable choices for many individuals and organizations. Without the ability to enlist management and technology experts as full partners or investors, legal service providers are not able to benefit from the best expertise in how to reach and serve potential consumers. Countries that allow lay investment in or ownership of legal service providers consistently rank ahead of the United States in access to and affordability of legal services. Moreover, there is no evidence to support the claims of ethical problems that opponents of reform often invoke.

The experience of the UK and Australia is particularly instructive. England and Wales have allowed nonlawyer ownership and investment since 2011, and research from the Solicitors Regulation Authority finds no evidence that these models result in adverse effects on consumers. Rather, the research indicates increased choice and competition, improved services to consumers, reduced prices, and increased innovation in the provision of legal services. Australia has also successfully allowed such ownership and investment, which has helped enable the development of widely accessible law firms serving consumers in a breadth and scope not available in the U.S.

Some worry that if multidisciplinary practices and non-lawyer investment were allowed, lawyers’ independent professional judgment would be compromised. But the experience in the United Kingdom is that alternative business structures have thus far dealt better with complaints and had no more disciplinary sanctions than traditional lawyer-owned practices. Indeed, regulating legal service providers as entities can help improve practices that mitigate the risk of ethical violations. And of course, the existing ethical rules around conflicts of interest, confidentiality, and other issues would still apply to individual lawyers.

No doubt, conflicts of interest will arise that need to be handled carefully. But they are not different in kind from conflicts that already arise in current legal practice. Any provider may have conflicts that prevent it from taking on certain matters. This is a good reason to have many such providers who are subject to the same conflict of interest rules, whether 100% lawyer-owned or otherwise; it is not a reason to ban affiliations with nonlawyer providers entirely.

Allowing nontraditional legal service providers to participate in a regulatory sandbox should not and need not equal the “wild west” where anything goes, and the Standing Order recognizes this. The idea of a sandbox is to have a time-limited, controlled environment in which the regulator will monitor how services are being provided in order to make sure that consumers are protected. The Application Process (4.4) represents a cautious and thoughtful approach, with potential providers required to give information about their proposed approach, ownership and structure, plans for mitigating risk, and creation of consumer complaint processes. Applications that appear to present real risk of consumer harm can be rejected.

Critics often claim that allowing nonlawyer ownership and investment would somehow introduce the “profit motive” to the legal services market. But private-sector lawyers are already driven by their desire to maximize their own profits while providing ethical service. Reforming Rule 5.4 to permit full participation by other profit-seeking entities would not appreciably increase the risk of misconduct if appropriate regulatory safeguards are in place. A regulatory sandbox is a proven way to monitor potential problems and devise appropriate rules without risk to the public.

Consumer Focus for the Innovation Office and Sandbox

We believe an Innovation Office capable of diving into these issues with a consumer-focused (and not attorney-focused) lens is critical. Therefore, the members should include consumers, people with experience as regulators of other consumer markets such as financial services or insurance, and social scientists such as economists and sociologists. Consumers should include both individuals and small to medium-sized businesses who have experienced justice problems. If individuals are difficult to identify, one might include consumer-facing representatives of institutions that serve many individuals of modest means including health care institutions, community banks, and people from community-based organizations such as those that serve the elderly, veterans, or people with housing challenges.

A critical strength of your approach is the assumption that our current system of ex post attorney discipline in response to complaints is neither the only nor the best way to protect consumers in the legal services market. Rather, your regulatory principles’ use of a risk-based, data-driven approach — combined with the use of market surveys, expert audits, and “secret shopper” tests – holds great promise for optimizing the amount of high-quality legal services available while minimizing the risk of consumer harm. And this approach would be far superior for consumers than the status quo.

Covid-19 Implications

The one big thing that has changed since the Utah Supreme Court begun this work, of course, is the Covid-19 crisis, which has increased legal needs significantly. We have already seen in Utah and nationwide the effect of the justice gap: Large businesses with lawyers and connections at banks were able to get access to the PPP loans, while smaller businesses — many of them minority-owned — were left out. Thousands of individuals in Utah face justice problems related to housing, employment, debt, and more. Jim Sandman, the current chair of the American Bar Association’s Task Force on Legal Needs Arising Out of the 2020 Pandemic and former president of the Legal Services Corporation, has suggested that the “current Covid-19 pandemic makes this a particularly appropriate time to move ahead with regulatory reform,” and pointed to Utah’s sandbox as particularly promising.

We agree and encourage you to move forward with the standing order as soon as possible to accelerate services to people in Utah, and thank you for your continued work and leadership.

Jason Solomon
Executive Director, Stanford Center on the Legal Profession