The State Bar of California’s board of trustees approved the most ambitious of three regulatory sandbox proposals to test new and innovative ways of delivering legal services it considered during its meeting Thursday.
The board overwhelmingly supported forming a sandbox working group that will examine permitting nonlawyer ownership of law firms and fee-sharing, among other rule changes, bucking its vice chair’s recommendation that the new group not be charged with reviewing alternative business models.
“This is a significant step, and I think it will lead to an exciting future,” board chair Alan Steinbrecher said of the panel’s affirmative vote.
The California bar acted two months after its board delayed a sandbox-related vote, with its leadership saying in March they needed more time to consult with the state’s Legislature and supreme court.
The postponement prompted legal regulatory reform supporters to redouble their efforts to convince the bar to back a sandbox working group that the bar’s Task Force on Access Through Innovation of Legal Services had recommended. The task force’s final report suggested a sandbox would provide a way to examine possible changes to existing laws and rules “that otherwise inhibit the development of innovative legal services delivery systems.”
During the board meeting held Thursday via Zoom, many bar trustees said they saw no reason to limit the types of regulatory changes a sandbox working group could explore.
“We are California, probably the most innovative place in the world,” said Chris Iglesias, a nonlawyer trustee. “I think If there is a way to bring that innovation into the legal field, at least we would have those ideas and thoughts.”
But board Vice Chair Sean SeLegue argued in favor of pursuing the sandbox working group option that would not have included study of nonlawyer ownership, which was one of two new alternatives for the board to consider after consulting its stakeholders. SeLegue, a partner at Arnold & Porter in San Francisco, said he felt giving a working group the clear directive to focus on how consumer-facing technology could strengthen access to justice would be a better approach than a group examining issues that included nonlawyer ownership.
“I think that sort of study requires more thought, more vetting and more structuring to make it successful,” he said.
Trustee Mark Broughton disagreed, saying the bar should not let those criticizing even the consideration of broad regulatory reforms deter progress.
“I don’t think fear of change should prevent us from moving forward and exploring all of the options and pursuing meaningful steps toward closing that justice gap,” said Broughton, a Fresno-based criminal defense lawyer.
The board voted 9-2 in favor of Broughton’s motion for a sandbox working group that will be able to consider a wide array of regulatory changes, including nonlawyer ownership and fee sharing.
The bar panel’s vote was cheered by regulatory reform advocates, including Jason Solomon, executive director of the Stanford Center on the Legal Profession. He also praised the bar task force led by Lee Smalley Edmon, a 2nd District Court of Appeal justice in California, who advocated on Thursday for the option the board ultimately adopted.
“I think this terrific decision is a tribute to the careful work of Justice Edmon and the task force and the important voices of the nonlawyer members of the board saying that it’s time to put consumers first when regulating the legal services market,” Solomon wrote in an email.
Meanwhile, California is not alone in examining ways to broadly open its legal marketplace. Utah recently announced proposals that could pave the way for nonlawyers to own or invest in law firms.