Utah become first US state to embrace ABSs

Utah: Welcome to non-lawyers

Utah has become the first US state to embrace alternative business structures (ABSs) in response to what has been described as an access-to-justice crisis.

The Utah Supreme Court (USC) voted unanimously last week to authorise a two-year pilot that will allow non-lawyers to own and manage law firms.

It follows changes made after a final consultation, the culmination of the work of a group on regulatory reform which was heavily influenced by the experience of ABSs in England and Wales.

Those changes include increasing transparency into the application and approval process, adding clearer channels for complaints regarding the new legal services, and more explicitly articulating the pilot’s access-to-justice goals.

Washington DC has long been the only state to permit non-lawyer ownership of any kind, although this is restricted to situations where the law firm has as its sole purpose the provision of legal services, all owners agree to abide by the rules of professional conduct for lawyers, and the managing lawyers undertake to be responsible for the non-lawyers.

The federal system means that the legal profession in each state in regulated by its supreme court.

The USC has established an Office of Legal Services Innovation to oversee and regulate “non-traditional legal services providers and the delivery of non-traditional legal services” through a regulatory sandbox.

The court said the “access-to-justice crisis across the globe, the United States, and Utah has reached the breaking point” – the 2020 World Justice Project rule of law index ranks the USA 109th of 128 countries, and last of what it calls the 37 ‘high-income’ countries, with other research showing how few low-income Americans can access civil justice.

In a statement, the USC said the need for more affordable legal help has peaked as a result of the Covid-19 pandemic.

“Many Utahns are facing crushing challenges that require legal help, including lost jobs, bankruptcy and debt, and health and family crises. Now more than ever new legal services and providers are needed to ease this crisis of access to justice.”

Justice Deno Himonas who, along with John Lund, past president of the Utah Bar, led the effort, said: “We cannot volunteer ourselves across the access-to-justice gap. We have spent billions of dollars trying this approach. It hasn’t worked. And hammering away at the problem with the same tools is Einstein’s very definition of insanity.

“What is needed is a market-based approach that simultaneously respects and protects consumer needs. That is the power and beauty of the Supreme Court’s rule changes and the legal regulatory sandbox.”

The USC has replaced the rule the bans ABSs with one allowing lawyers to practise in an organisation managed or owned, in whole or in part, by non-lawyers, as long as the client is given written notice that non-lawyers have a financial interest in it, and have managerial authority over the lawyer.

A similar task force in the state of Arizona has petitioned its supreme court to allow ABSs – and could make the change permanent rather than subject to a pilot, like Utah – while the Florida Bar has created a special committee to improve the delivery of legal services to investigate ABSs and related reforms. It has until 1 July 2021 to report.

The DC Bar, in Washington DC, consulted earlier this year on allowing ABSs.

Last month, a report from the Chicago Bar Association proposed allowing lawyers “to responsibly partner with other disciplines”, but not non-lawyer ownership.

Rather, it recommended setting up a new committee to examine the case for it.

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