How Utah's judicial and state bar officials worked together for regulatory reform
The Utah Supreme Court. From left to right: Justice John A. Pearce, Associate Chief Justice Thomas R. Lee, Chief Justice Matthew B. Durrant, Justice Constandinos "Deno" Himonas and Justice Paige Petersen.
When Gillian Hadfield was asked whether she would speak to a spring 2018 gathering of state court leaders about how changing the way the legal profession is regulated could strengthen access to justice, she was initially hesitant.
For years, the economist and law professor, who was then based at the University of Southern California, had unsuccessfully urged bar associations to support ethics rules revisions that would allow alternative business models in the legal industry.
“I’ve been singing this song for a very long time, and nobody is joining in,” Hadfield recalls telling Thomas Clarke, the then-vice president of research and technology at the National Center for State Courts, who invited her to speak.
However, Clarke assured her that this particular group of state supreme court justices and court administrators from the western United States scheduled to gather in May 2018 was “a different group” that was “ready to do something.”
Clarke’s words prompted Hadfield to agree to present at the conference in Vancouver, Washington, but she decided to deviate from her typical ethics rules-focused message in hopes of generating a better response.
Hadfield instead urged supreme courts to form a regulatory body that would license and oversee nontraditional legal services providers, such as those with nonlawyer owners or investors. This approach would not only usher in new business structures that could bring down the high cost of legal assistance, she argued, but also ensure consumer protection.
Hadfield’s presentation resonated strongly with the Utah officials in attendance, according to John Lund, the Utah State Bar’s then-president. He recalls that it caused members of the Utah delegation “to sit around and say: ‘What do we do to deal with this?’”
Utah Supreme Court Justice Constandinos “Deno” Himonas was among those present who joined Lund in voicing support for exploring Hadfield’s recommendations, and Lund says the ensuing conversation “launched the idea of looking at regulatory reform in Utah.”
In the months that followed, the Utah Supreme Court created a working group that produced proposals to overhaul Utah’s regulation of the legal industry, and the court later formed a task force to advise it on implementing those measures.
The work of those two panels culminated in the state’s high court unanimously approving a comprehensive set of regulatory reforms in August that allowed for a significant opening of the legal market to nonlawyers during a two-year pilot period.
Additionally, the court’s actions cemented Utah’s somewhat surprising status as one of the two leaders, along with Arizona, of a growing number of states adopting or considering changes to how they regulate the legal profession.
Those involved say Utah has made such rapid regulatory reform progress due to its supreme court closely collaborating with state bar leadership, bringing in a variety of outside experts to provide guidance and offering consistent support for bold action even in the face of some opposition.
Teaming up
Given its relatively small population and reputation for being politically conservative, Utah wasn’t an obvious choice to blaze a trail for the rest of the country on access to justice.
“I don’t think anyone had Utah on their radar as the state likely to be leading the charge on regulatory reform in the legal space,” says Joanna Mendoza, who served on California’s Task Force on Access Through Innovation of Legal Services, which was formed to study regulatory changes in 2018.
Others, including Clarke from the National Center for State Courts, were less surprised. He points to Utah’s history of embracing access-to-justice innovations, including online dispute resolution for small claims cases and permitting licensed paralegal practitioners to handle some legal tasks.
“There is a culture there of trying new things that was already established long before the regulatory-reform project,” Clarke says.
Plus, there was a clear need for reform. A primary reason Hadfield’s Vancouver talk struck such a chord with Utah officials was that they were already quite concerned about the growing struggle of many members of the public in their state and nationwide to afford legal services.
In 2015, the Utah State Bar’s Futures Commission reported that defendants were self-represented in 98% of the debt collection cases and 97% of the eviction cases filed in Utah in the prior year. Meanwhile, on the national level, the Legal Services Corporation reported in 2017 that low-income Americans receive inadequate or no professional legal help for 86% of the civil legal problems they face annually.
But even though state bars and supreme courts across the nation have been well aware of the increasing justice gap, they frequently have resisted calls to permit nonlawyer ownership or investment in law firms as a way to address the problem. This reluctance has come amid attorneys’ concerns that profit motives would take precedence over the best interests of legal consumers and result in substandard service.
With that history in mind, Lund told Utah Supreme Court leaders at the Vancouver gathering that for lawyers to consider permitting new economic structures in the law, “they need to know that the court is supportive of their willingness to do that.”
In turn, Himonas told Lund that such an initiative would require state bar leadership being on board.
“It seemed important that it be a joint effort to make it work,” says Himonas, noting the two entities had successfully partnered on prior access-to-justice projects.
Both Lund and Himonas pledged support to the cause, prompting Lund’s work to ensure the bar would play a proactive role in the reform efforts being contemplated even after his term as president expired.
This led to H. Dickson Burton, Lund’s replacement as state bar president, requesting in an August 2018 letter that the Utah Supreme Court establish a panel to study regulatory reform.
In response, the court created a 12-member Work Group on Regulatory Reform in the latter stages of 2018 that was co-chaired by Himonas and Lund. The group’s members included Burton, Utah State Bar General Counsel Elizabeth Wright and Heather White, past co-chair of the state bar’s Innovation in Law Practice Committee.
Justice Deno Himonas.
Outside the box
The panel also featured regulatory reform proponents and access-to-justice experts from across North America.
Hadfield, who transitioned in 2018 to her current role as a professor of law and strategic management at the University of Toronto, was a member of the group, as was Clarke of the NCSC. Other academics included were Margaret Hagan, director of the Legal Design Lab at Stanford University; and Lucy Ricca, a fellow and former executive director of the Stanford Center on the Legal Profession.
“The issue for the task force was not—as it has been with almost every other bar/court task force— ‘Should we do this?’” Hadfield recalls. “It was: ‘How do we do this?’”
One way the group worked to answer that question was through participation in a design lab led by Hagan in which the panel tried to devise ethics rules changes that would allow the legal industry to harness the power of capital and technology while still protecting clients.
The work group also closely studied the regulatory reforms in the United Kingdom brought about by the Legal Services Act of 2007, which paved the way for alternative business structures. As part of that examination, leaders of the Utah group frequently sought the counsel of Crispin Passmore, the former executive director of the Solicitors Regulation Authority in the U.K.
“You want different perspectives at all times,” Himonas says.
After months of intensive efforts, the Utah work group unveiled its recommendations in an August 2019 report, titled Narrowing the Access-to-Justice Gap by Reimagining Regulation.
A primary component of the group’s proposals was the creation of a regulatory sandbox that would allow nontraditional legal services providers, including those with nonlawyer investors or owners, to test new ways of serving legal consumers without the fear of being accused of the unauthorized practice of law. Opening the legal market in this fashion would encourage capital investment in new technologies and service models that might not otherwise be funded, the work group argued.
Overall, the sandbox would provide an environment that “permits innovation to happen in designated areas while addressing risk and generating data to inform the regulatory process,” the report said.
Later in August 2019, the Utah Supreme Court issued a press release saying it had unanimously voted to pursue the work group’s recommended reforms and would create an implementation task force to help do so.
Arizona State University professor Rebecca Sandefur, who has extensively researched access-to-justice issues, joined the implementation group. She says Utah bringing in voices beyond just lawyers and judges played a key role in its regulatory reform progress.
“It is very difficult to do something new or innovative if all you have accessible to you are the perspectives that created the status quo,” says Sandefur, an American Bar Foundation faculty fellow.
Another benefit of utilizing outside advisers was their ability to dedicate extensive time to the reform efforts and secure the funding to do so, according to Utah officials.
Sticking together
Meanwhile, Lund and Himonas also endeavored to keep the state bar engaged with the reform implementation efforts.
Lund says he recommended the bar’s leadership form their own committee to independently assess the reform proposals, a suggestion the bar took.
In July, the bar’s Committee on Regulatory Reform published its findings and recommendations on the measures the supreme court formally released for public comment in April.
The report said bar members supported the court’s goal of increasing access to justice, but there was “a clear majority view that the methods and means proposed by the supreme court to meet this aspiration potentially might miss the mark.”
For example, the committee said there were concerns that the court’s proposals emphasized lowering the cost of legal services and products “without significant regard to the quality of such services and products.”
The committee recommended the court make several changes, such as requiring sandbox applicants to address an access-to-justice need for the poor and demonstrate they will deliver high-quality legal services and products.
In the press release the supreme court issued in August announcing its approval of a sandbox pilot program, the court said it “made a number of important changes” to the initial reform proposals in response to feedback from the bar and others.
These revisions included requiring greater transparency about the sandbox application and approval process, as well as more clearly spelling out the access-to-justice goals of the reforms.
“To their credit, I think they did listen and I think they did appreciate some of our recommendations,” says Erik Christiansen, a Parsons Behle & Latimer shareholder who co-chaired the bar’s regulatory reform committee.
Christiansen is also among those who say Utah’s regulatory reform push has benefited from having a smaller population of lawyers than many other jurisdictions, which has limited the impact of lawyer opposition to such changes.
As of late September, the Utah State Bar had just shy of 10,500 members, according to a bar spokesman.
“Small states are great incubators for innovation,” Christiansen says.
Court leadership
But even with the state bar’s close involvement and significant assistance from outside experts, it was still ultimately up to the five-justice Utah Supreme Court to determine whether any regulatory reforms would be implemented.
Chief Justice Matthew B. Durrant says the court had vigorous debate about the regulatory overhaul proposals, but unanimously determined the concerns raised by some members of the legal community did not outweigh the potential benefits of reform.
“We care very much what lawyers think about it, but we also have an obligation to the public,” Durrant says. “And so many needs are just not being met.”
The chief justice credits Himonas for his yeoman’s work as the court’s point person on regulatory reform, saying his “tirelessness and enthusiasm made him the perfect person to lead the charge.”
Himonas says his interest in the issue was driven by the legal system’s failures to ensure broad access to justice and his belief that “hammering away at the problem with the same tools is Einstein’s very definition of insanity.”
In August, Utah’s court-approved sandbox pilot that permits attorney fee sharing with nonlawyers launched. The supreme court shortly thereafter approved five applicants to begin operating as part of the trial run, and additional entities have been approved for entry in the weeks since.
At the conclusion of the two-year pilot period, the supreme court plans to determine whether the major reforms it adopted should continue based on its review of data collected from entities participating in the sandbox.
“My sincere hope is that we see that a number of these applicants really are advancing the access-to-justice cause,” Himonas says.
As for Hadfield, she is among the regulatory reform proponents who have called what Utah has accomplished to date “historic” and praised the supreme court for its courage to move forward.
“It’s shown the leadership that so many of us kept thinking was going to appear and did not for a very long time,” she says.
