Washington Lawyer - May 2020 - 15

FEATURE
Legal Services petitioned the Arizona Supreme Court to make changes to
its ethics Rule 5.4 and others. The rule change, which includes loosening
firm ownership requirements while also maintaining professional independence and confidentiality regulations, could be considered at an August
2020 rules conference and take effect as soon as January 2021.

is charged with proposing regulatory reforms to improve access to legal
services for consumers. By evaluating technologies and modifying
rules, the task force is hoping to expand access and provide sustainable
incomes for attorneys. The task force plans to identify and recommend
ethics rules changes to the Illinois Supreme Court by fall 2020.

"The proposals are not all intended to provide access to justice but [also]
to foster innovation and efficiency in law firms providing legal services,"
says Lynda C. Shely, partner with The Shely Group PC and former director
of ethics for the State Bar of Arizona. "In addition to adding a safeguard
provision in Rule 5.3 requiring every firm to designate one responsible
lawyer who must implement appropriate policies and procedures for
supervising all nonlawyers in a firm, the court task force also proposes
'entity' regulation by the court. Administrative code provisions will establish certification of alternative business structures and impose a code of
ethics on the entities."

"In short, we are experiencing a market failure in the market for consumer
legal services," notes the task force. "Because the legal market is shaped in
large part by our Rules of Professional Conduct, we have an opportunity
to take a fresh look at these Rules to spark innovation in the consumer
legal market, promote the sustainable practice and business of law, and
better serve people who need legal help."
In January, the Connecticut Bar Association announced the formation
of the State of the Legal Profession Task Force to consider alternative
business models, ethics rules, reforms for law schools, and best ways
to use technology to advance the legal profession. The task force is
expected to release its report by 2021.

Arizona's task force was able to move forward so dramatically because
it had concluded there was no compelling reason to keep Rule 5.4. "The
legal profession cannot continue to pretend that lawyers operate in a
vacuum, surrounded and aided only by other lawyers, or that lawyers
practice law in a hierarchy in which only lawyers should be owners,"
noted the task force. "Nonlawyers are instrumental in helping lawyers
deliver legal services, and they bring valuable skills to the table."

Other states are also looking at regulatory innovations around professional conduct that would address two issues that keep resurfacing -
the licensing of nonlawyers to provide specific legal services and the
credentialing of online legal service providers. The Florida Special
Committee on Technologies Affecting the Practice of Law has proposed
rule changes to allow registration of online service providers, and a New
Mexico Supreme Court work group has recommended limited licenses
for legal technicians. Currently, Arizona, New York, Utah, and Washington
state permit licensed legal technicians, paralegal practitioners, document
preparers, and court navigators who are not lawyers to provide legal
services to clients.

Running on a similar track, the Utah Work Group on Regulatory Reform
proposed a multipronged approach for its revisions in 2019. It recommended that the state allow nonlawyer investment and participation in
business entities that provide legal services. Additionally, it proposed the
creation of a new regulatory body, supervised by the Utah Supreme
Court, to establish a regulatory framework for legal service entities. The
recommendations were adopted by the state's Supreme Court, and the
implementation phase is underway.

While these early efforts seem to imply widespread agreement with
the changes, there are those who feel that revisions to Rule 5.4 are illconsidered and threaten the profession's ethical infrastructure. But others
suggest that the revisions are coming, and the smart move is to be in
the room while people are working on changes.

Meanwhile, the State Bar of California Task Force on Access Through
Innovation of Legal Services has proposed significant changes to regulations, including allowing nonlawyers to provide specified legal services,
sanctioning entities that provide legal services to be composed of
lawyers and nonlawyers, and establishing regulations for technologies
that perform the analytical functions of an attorney.
That final recommendation has caused more discontent than the first two
combined. Several legal technology companies have been looking for
ways to assist consumers by streamlining costs for certain services. Those
efforts, ranging from LegalZoom.com to DoNotPay, an app that guides
people through the small claims system, could be dramatically curbed or
banned in California if the definition of "analytical functions" is too narrow.
Joining these three states in revamping regulations are Connecticut and
Illinois. The Task Force on the Sustainable Practice of Law & Innovation,
created by the Chicago Bar Association and the Chicago Bar Foundation,

Courtesy of IAALS

One of the unique features of the Utah experiment is the launch of a regulatory "sandbox" to create a controlled environment to pilot and assess
consumer-related legal innovations. This approach would allow the Utah
Supreme Court to evaluate and validate potential programs to see if they
require regulatory changes for permanent implementation. For example,
a tech company using artificial intelligence to assist consumers completing legal documents might operate within the sandbox to give Utah
a chance to evaluate its services.

There are always challenges in having multijurisdiction
businesses in terms of meeting the ethical requirements. Those already exist with respect to Big Law
firms. This just expands those issues.
SCOTT BALES
Institute for the Advancement of the American Legal System

MAY 2020

WASHINGTON LAWYER

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Washington Lawyer - May 2020

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