Is it time for Florida to play in the legal lab/sandbox?
A giant, online provider of self-help legal forms and a Catholic order of nuns are among around two dozen entities that have applied under the Utah Supreme Court’s new legal lab that encourages creative ways to offer legal services to consumers.
The head of that program, past Utah State Bar President John Lund, and Utah Supreme Court Justice Deno Himonas discussed how the program operates with the Bar’s Special Committee to Improve the Delivery of Legal Services, which is considering whether to recommend that Florida set up its own legal lab. The committee at its April 6 meeting also heard from Crispin Passmore, who helped set up a legal lab — also called a regulatory sandbox — in Great Britain.
The committee took no action at the meeting although members closely questioned the trio.
The legal lab/sandbox idea is to allow individuals and organizations to propose innovative ways of providing legal services while still meeting core values of the legal profession to protect consumers. Applicants can get waivers from some regulatory rules, but in exchange agree to be closely monitored by the lab to measure how many people are being helped, the cost, effectiveness of the program, and any complaints it generates.
Utah and Arizona have approved such labs, and California is considering it. Jurisdictions in Canada have also set up labs, as has Great Britain.
The key, according to Lund, Himonas, and Passmore, is that while there should be flexibility in business structures and approaches, there should be none on compromising client protections and core legal profession values whether services are provided by lawyers or nonlawyers.
“It’s not about less regulation, it’s about better types of regulation. It’s about regulation affecting customers,” Passmore said. “We can do that by changing the structures and restrictions without changing the ethical restrictions on attorneys.”
In response to a question about risks associated with programs approved by a legal lab, he added, “You manage that risk by being clear from the start what’s non-negotiable and what’s non-negotiable to me are those core values. Those standards cannot be weakened through a sandbox.”
Passmore also said that since Great Britain adopted its sandbox regulations in 2014-15, approved programs run entirely or partly by nonlawyers have had a slightly lower complaint and discipline rate than those run by lawyers.
Lund and Himonas said Utah decided not to limit legal lab applicants to certain areas of law or certain types of organizations.
“One of the assumptions we made going in is we don’t know what we don’t know about innovation and where that innovation might happen,” Himonas said.
Lund said even though Utah might be considered a small legal marketplace, it has attracted a wide variety of programs into its lab.
That includes online companies like RocketLawyer with its forms services and Hello Divorce, which is in California, Colorado, and Utah.
“At the other end of it, we have more what I call the Steve Jobs of their time. They’re working in their garage, they have an idea for a business, and they can demonstrate it’s a viable concept,” Lund said, adding those are mostly solo and small-firm lawyer efforts although they may have private investors.
A third type comes from nonprofit organizations. Lund said the Utah Supreme Court has recently approved two nonprofit programs that help consumers with debt collections problems. One is aimed at those with medical debts including using a diversion program to avoid court. The other is run by the Sisters of the Holy Cross.
“Those are very much experiments. These are things the court is allowing people to try to see if they are helpful, if they are something consumers like,” Lund said.
Another program is aimed toward social workers and advocates who are working with domestic violence victims to help, with attorney supervision, those victims fill out requests for protective orders and other forms.
Since legal labs are intended to generate information about whether programs actually address consumer needs, Lund and Himonas spent considerable time discussing Utah’s operation.
Lund said the executive committee of Utah’s Office of Legal Services Innovation brings diverse experiences to evaluating and monitoring programs approved in its sandbox. That includes a MacArthur Foundation Fellows award winning social scientist, a former economist with the National Center of State Courts, and the current Utah State Bar president.
The office has also hired a data scientist professor to determine what information program participants must provide and to review the periodic reports participants file.
In response to a question, Lund said the office does evaluate applicants based on perceived risk. Smaller programs that are associated with lawyers are generally considered low risk such as the bankruptcy attorney whose request was to allow his paralegal to be a 10% owner of the firm.
The further the operation is from a traditional legal practice and the more involved nonlawyers or online services are in providing services, the more high risk the program is rated and it will consequently have closer and more frequent scrutiny, he said.
“What that means is we’re going to follow them more carefully, we’re going to require more data from them…we’re going to utilize audit services to test what’s happening,” Lund said. He said individuals may also be sent in to test the program without the knowledge of the provider.
All consumers are informed up front the provider is part of a test and informed how to make a complaint if they are dissatisfied, he said.
Programs, Lund said, have incentives to follow rules and provide valuable services because otherwise their permission to operate can be revoked, and they are also subject to normal civil tort and contract sanctions.
Former Bar President John Stewart, chair of the special committee, asked about selling such a concept to a traditionally conservative legal profession. Lund replied by citing repeated studies and surveys that show about 15% of the U.S. population gets legal services it needs and about 85% does not.
“I don’t know how lawyers can claim that something else doesn’t need to be tried in the face of that fact,” Lund said. “It’s not a very strong position to stand on.”
The Utah Office of Legal Services Innovation has a webpage at https://utahinnovationoffice.org/.
The special committee has also posted a report from the office, information from Passmore, and other reports and data it has collected on its Bar webpage at: https://www.floridabar.org/about/cmtes/cmtes-me/special-committee-to-improve-the-delivery-of-legal-services/.
The Supreme Court created the special committee in late 2019 and charged it with reviewing Bar rules to improve the delivery of legal services to consumers and “to assure Florida lawyers play a proper and prominent role in the provision of these services.” Its final report is due to the court and the Bar Board of Governors by July 1.