Commentary

• Jurisdiction: Utah,United States
• Citation: Vol. 35 No. 6 Pg. 17
• Pages: 17
• Publication year: 2022

CommentaryNo. Vol. 35 No. 6 Pg. 17Utah Bar JournalDecember, 2022

November, 2022

The Sandbox

by Jeffrey D. Eisenberg

Introduction

In January, the Utah Association of Justice asked me to chair a committee to investigate the "Sandbox" experiment and evaluate whether suggestions should be made for it that would benefit consumers. I have studied information about the Sandbox project available online, and literature concerning the United Kingdom's legal deregulation project. I've met with former Utah Supreme Court Justice Constandinos Himonas, John Lund, the Office for Legal Services Innovation (OLSI)'s Chairman of the Board, and Sue Crismon, OLSI's Executive Director. I've talked to numerous present and former Bar Commissioners and Officers.

The purpose of this article is to inform the Bar of developments related to the Sandbox, to raise concerns about aspects of the project, and to offer ideas about how the Bar and supreme court can better work together.

What is the Sandbox?

Article VIII, Section 4 of the Utah Constitution provides: "The Supreme Court by rule shall govern the practice of law, including admission to practice law and the conduct and discipline of persons admitted to practice law." I've learned that the Utah Supreme Court and some in the Utah Legislature disagree about the extent to which the court can or should expand its regulatory power to cover businesses controlled by non-lawyers. The creation of the Sandbox indicates that the court assumes it has plenary authority to do so.

In August 2018, the Utah Supreme Court established a Work Group on Regulatory Reform (the Work Group). In August 2019, the Work Group submitted a report, Narrowing the Access to Justice Gap by Reimagining Regulation. In August 2020, under Order 15, the court established a new program, the "Sandbox" to test new models of legal service delivery in the hopes of making legal services more accessible and more affordable to underserved populations and in under resourced practice areas. Sandbox experiments include non-lawyer controlled and managed entities. Utah Supreme Court Standing

Order No. 15, August 14, 2020, https://www.utcourts.gov/utc/rules-approved/wp-content/uploads/sites/4/2020/08/ FINAL-Utah-Supreme-Court-Standing-Order-No.-15.pdf. The court also created the Utah Office of Legal Services Innovation (OLSI) to evaluate, recommend, and regulate businesses providing "nontraditional" legal services (Sandbox entities) and to design and implement systems to test whether these services were harming consumers. The OLSI was also given responsibility to report empirical data to the court about whether Sandbox provider services were harming consumers. The original project was authorized for two years; last year, the court extended it for an additional five years. Utah Supreme Court Press Notifications, Utah Supreme Court to Extend Regulatory Sandbox to Seven Years (May 3, 2021).

Standing Order 15 begins with: "The access-to-justice crisis across the globe, the United States, and Utah has reached the breaking point. .. The overarching goal of this reform is to improve access to justice." Standing Order No. 15, 1, 7. In this and other communications issued by the court, the Work Group, and OLSI, it has been stressed that most citizens are currently unrepresented by a lawyer in areas such as: debt collection enforcement, divorce and domestic law, landlord-tenant proceedings, and misdemeanor criminal cases.

The regulatory requirements of Sandbox entities differ from those of bar licensed attorneys in several critical ways. First, non-lawyers who own manage or work for Sandbox entities are exempt from compliance with the Utah Rules of Professional Conduct and are not subject to discipline for violations of those duties. See Office of Legal Services Innovation, Interested Applicants: Eligibility (6), https:utahinnovationoffice.org/ sandbox/interested/ (last accessed Oct. 14, 2022). Second, Sandbox entities can, in some cases, share legal fees with non-lawyers, including investors. Id., Frequently Asked Questions, https:utahinnovationsoffice.org/sandbox/frequently-asked-questions/. Third, persons in the Sandbox who are not lawyers or paralegals can provide legal services under certain circumstances and not all Sandbox projects are lawyer led or involve lawyers as some part of the business model. Office of Legal Services Innovation Letter to Utah State Bar Regulatory Reform Committee 4 (Feb. 23, 2021), http://utahinnova-tionoffice.org/knowledge-center/ Resources/Press Releases/ Letter to Bar Committee -February 2021.pdf. Last, I can find no indication that the court is requiring all Sandbox entities, or non lawyer personnel that own, control, or manage such entities, to act as fiduciaries.

JEFFREY D. EISENBERG is a practicing trial lawyer with more than thirty years? experience representing consumers in product liability, professional malpractice, insurance bad faith, civil rights, sexual abuse, catastrophic injury and wrongful death cases. He now practices at Eisenberg, Lowrance, Lundell, Lofgren.

What does OLSI data show?

OLSI's August 2022 Sandbox Activity Report provides some insight into the programs approved in the Sandbox and the types of legal services being provided. Of the forty-seven approved Alternative Service Providers (ASP), twenty-six are reporting data to OLSI. OLSI reports that over 27,000 legal services have been provided to over 20,000 unduplicated clients. Over 3,300 legal services were delivered by non-lawyers. There have only been three "audits" completed of sandbox entities, and one in progress. OLSI and the court have not released information about the audit process to allow the bar or public to evaluate the rigor or efficacy of any audits.

Although the Work Group and court identified consumer credit, marriage/family law, and misdemeanor criminal cases as the main areas where there is an "access to justice" gap, to date these represent only 7% of the legal matters provided by ASPs in the Sandbox. Of the remaining 93% of legal matters handled so far by Sandbox entities, the vast majority have been in the areas of business law, military and veteran's benefits, accident/injury claims, and trusts and estates.

I've spoken to many lawyers who misunderstand several aspects of the Sandbox project. First, many lawyers have assumed that businesses can only operate in the Sandbox if lawyers own the majority interest in the business. In fact, some approved Sandbox entities are majority owned by non-lawyers.

Sandbox projects in areas of law which have been underserved by Bar licensed lawyers and law firms. In fact, many Sandbox entities and projects are delivering services in areas where lawyers are plentiful, even ubiquitous, including, personal injury, estate planning, business and corporate legal advice and entity formation.

Third, some lawyers assume that to have their projects approved, Sandbox applicants must promise to deliver services to low-income consumers in need of legal help. But some approved applicants have not made that commitment, and it is not required to enter the Sandbox. Office of Legal Services Innovation Letter to Utah State Bar Regulatory Reform Committee 2-3 (Feb. 23, 2021), https://utahinnovationoffice.org/wp-content/uploads/2021/04/ Open-Letter-to-Bar-Committee-Feb-2021.pdf.

Where is the Sandbox Headed?

In Order 15, the court stated, "we will never volunteer ourselves across the access-to-justice divide and what is needed is marketbased, far-reaching reform focused on opening the legal market to new providers, business models, and service options." Utah Supreme Court Standing Order No. 15, 2 (Aug. 14, 2020)...