The wait is officially over! A year has passed since the Utah Supreme Court initially green lighted a legal services sandbox in the state—a first-in-the-nation endeavor. The program is now up and running, with the Court recently establishing the regulatory sandbox pilot program. This is a monumental step in opening up a traditionally inflexible industry to new ideas and genuinely rethinking the way legal services can be provided.
As the legal system in the United States is not cheap by any stretch of the definition, this sandbox program can go a long way in helping Utahns gain access to critical services they may not otherwise be able to. This can be accomplished by allowing certain areas of law to be practiced by non-attorneys at a reduced rate, either under proper supervision or for trivial legal matters that can be competently performed by a person without a law degree, for example.
The Court also recently announced five companies that have been approved to participate in the sandbox program. The participants range from large names like Rocket Lawyer to small, local companies like 1Law, who are all experimenting with offering legal services in new and unique ways. From helping with class action lawsuits against dreaded robocalls to helping with divorce and property cases, these companies are trying to help Utahns across a wide array of issues and exploring innovative ways of providing such services, with an eye towards increased affordability.
A unique aspect for some of these companies is that they are exploring the opportunity to change the ownership structure of their firms. Traditionally, legal firms have been owned entirely by lawyers, whereas in the sandbox system, that is no longer a requirement. Some of the participants are exploring different arrangements, with one company expected to be over 50% owned by non-lawyers.
For a more in depth analysis of the legal services sandbox, read our recent op-ed in the Salt Lake Tribune covering the topic.
The legal services sandbox is not the only sandbox in the state. Utah also offers a similar program for the financial technologies industry, as well as for insurance companies. All of these sandbox programs correctly realize that some regulations might be too antiquated or inflexible to appropriately accommodate innovative ideas.
The programs offer an opportunity for regulators and businesses to work hand in hand to identify problematic policies and temporarily suspend them for a limited period of time. This creates an opportunity for the state and regulators to take a more proactive approach to regulatory reform, rather than being reactionary, waiting for a crisis like COVID or other emergencies to emerge.
Looking to the future, the state should realize that innovation can happen anywhere. Rather than try to create sandboxes in a piecemeal fashion, unintentionally picking winners and losers, the state should look to create a general sandbox that is industry agnostic—allowing any entrepreneur or business to enjoy a more flexible regulatory environment. Outdated regulations exist outside of just the legal, financial, and insurance industries, and a general sandbox can serve as a tool to remedy these inherent problems across a wide array of industries.
As businesses continue to adapt on the fly to the challenges that COVID presents, it is important that the state facilitates an environment of acceptance, rather than inadvertently (or intentionally) shutting things down before they start. A dynamic regulatory environment would make Utah a leader in economic development and entrepreneurship for years to come.