New rules issued for Utah's regulatory sandbox program
A controversial decision allowing nonlegal entities to own or invest in Utah law firms will be subject to additional regulations, the Utah Supreme Court decided last month. (Image from Shutterstock)
A controversial decision allowing nonlegal entities to own or invest in Utah law firms will be subject to additional regulations, the Utah Supreme Court decided last month.
In its updated September decree, the state supreme court declared that new applicants have to demonstrate that it will reach underserved Utah consumers, that national and international companies only serving a small number of Utah residents don’t qualify, and that for-profit entities that primarily help with immigration-related services also won’t be considered for the sandbox program.
The Utah Supreme Court also instituted an innovation requirement for new applicants, allowing the courts to use their resources to regulate entities that could shrink that access-to-justice gap.
The new rules follow a groundbreaking 2020 decision to make Utah the first state with a regulatory sandbox, allowing lawyers and nonlawyers to offer nontraditional legal services under the state supreme court’s supervision. The goal was to provide free legal advice to empower community-based organizations and to alleviate the justice gap for Utah residents.
In 2015, before the addition of the regulatory sandbox program, the Utah State Bar’s Futures Commission said defendants were self-represented in 98% of debt collection cases and 97% of eviction cases.
Utah’s pilot program, designed to rectify this issue, resulted in 30 entities approved by the Utah Supreme Court, and more than 3,000 legal services have been sought by nearly 2,500 unique clients, according to a report published in 2021 by the Utah Office of Legal Services Innovation, an office of the Utah Supreme Court.
The report also found that the sandbox program providers are providing essential legal services to the state, including end-of-life planning, business law, and marriage and family law. For example, Holy Cross Ministries, a nonprofit, planned to train community health workers to be bilingual medical debt legal advocates to assist with the 22,000 medical debt lawsuits in Utah, according to research from the University of Arizona James E. Rogers College of Law.
But detractors said they wanted more transparency about the application and approval process and additional goals explaining the need for the reforms.
“We care very much what lawyers think about it, but we also have an obligation to the public,” Utah Supreme Court Chief Justice Matthew Durrant told the ABA Journal in 2020 when the decision was being considered. “And so many needs are just not being met.”
Utah’s regulatory sandbox pilot was initially approved for two years and then expanded to seven years. Now, four years after its launch, some changes have been made.
“The court’s objectives for regulatory reform are significant and need sufficient time to truly work and create real change in the legal services market in Utah,” Durrant said in a 2021 statement. “We have already seen innovations in legal services in the short two years. We are eager to see even more.”
