California Innovation Task Force Approves 8 Recommendations, Including 'Regulatory Sandbox'
"I think there was a lot of unanimity. There were a few splits but overall it was a great group of people marching to the same drummer in trying to close the justice gap," said Justice Lee Smalley Edmon of the Second District, Division Three of the California Court of Appeals, the task force chairwoman.
February 25, 2020 at 01:00 AM
3 minute read
The original version of this story was published on The Recorder
A state bar committee on Monday moved to put the final touches on a set of proposals that members hope will expand the availability of legal help to Californians.
The Task Force on Access Through Innovation of Legal Services approved eight recommendations that will go to the bar's board of trustees next month and likely reignite the debate over the most controversial ideas.
The task force stopped short of calling for immediate changes that would allow non-lawyers to take an ownership stake in law firms. The group also opted for only a modest expansion of fee-sharing.
Instead, the 22 members pinned many of their hopes for reform on the creation of a trial program for entrepreneurs known as the "regulatory sandbox."
"It's very exciting," said the task force chairwoman, Justice Lee Smalley Edmon of the Second District, Division Three of the California Court of Appeals. "I think there was a lot of unanimity. There were a few splits, but overall it was a great group of people marching to the same drummer in trying to close the justice gap."
The proposals include:
- Expanding Rule of Professional Conduct 5.4 to allow lawyers to share non-court-awarded fees, such as those obtained through a settlement, with nonprofits. The proposal does not include businesses and other for-profit organizations.
- The creation of a pilot program, or regulatory sandbox, that would allow regulators to free participants of traditional restrictions on the unlicensed practice of law so they can develop legal services or products for underserved members of the public. Regulators would monitor participants during the trial period and collect data on how well the covered service operates.
- Asking for additional study of allowing non-lawyers to own law firms and other alternative ownership models. This proposal proved one of the most controversial for both the task force and members of the bar. In recommendation language added Monday, the task force said, "a substantial majority of the members agree that additional revisions may be warranted but that further study and data informing the specifics of these revisions is needed. Some believe that a regulatory sandbox will provide informative data while others believe that further changes to Rule 5.4 may be studied regardless of the sandbox."
- Easing restrictions on legal advertising to potentially expand lawyer referral services. Such changes could allow a business to offer consumers "a combination of online matching activities, limited scope representation, legal document production and/or a prepaid or subscription-based legal services plan," the task force report said.
The recommendations are scheduled to go to the bar's board of trustees March 12. Many of the proposals will require a public comment period, the formation of new committees to develop rules and the blessing of the California Supreme Court—and possibly the Legislature.
"The creation of a regulatory sandbox, the development of a regulatory body—it's going to take some time," Edmon said. "I'm hopeful that the board of trustees will approve the recommendations and then immediately create these bodies to take the next stop."
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