Legal Regulatory Reform & The Regulatory Sandbox
Law firms have traditionally been limited in their efforts to innovate by the prohibitions contained in the Rules of Professional Responsibility against the unauthorized practice of law, fee sharing arrangements with non-lawyers, and non-lawyer investments in law firms. These rules apply in most U.S. jurisdictions today, but recent legal regulatory reform by the Arizona and Utah Supreme Courts are changing the landscape in exciting ways that are likely to allow for the provision of legal services in new ways.
Arizona’s Supreme Court modified the state’s professional rules, effective 1/1/2021, to remove restrictions on non-lawyer investments in law firms, fee-sharing arrangements, and restrictions on referral fees. The new rules allow for the creation of alternative business structures (ABS) made up of both lawyers and non-lawyers. ABS entities, which are subject to licensing requirements, must have an Arizona-licensed attorney designated as the entity’s compliance lawyer. This individual is responsible for ensuring the members of the ABS comply with ethical obligations.
Arizona’s neighbor to the north, Utah, also made changes to its rules in August 2020 as part of a two-year “regulatory sandbox” pilot program. Under the pilot, entities with non-lawyer ownership or investments will be able to provide certain legal services, upon approval of their applications to the state’s new Office of Legal Services Innovation. Other changes to Utah’s rules include removal of restrictions on the payment of referral fees, removal of restrictions on non-lawyer ownership in law firms, and fee-sharing with non-lawyers, with notice to clients. During the two-year regulatory sandbox pilot program, the Utah Supreme Court will gather information and data about the benefits provided by new legal service providers and will assess potential risks, if any, to consumers from such arrangements.
These state-specific changes are intended to help address shortfalls in the states’ access to legal services by expanding access to affordable, high-quality, innovative, and competitive legal services. As the COVID-19 pandemic continues to change the way legal services are provided, it is likely that additional jurisdictions will be watching Arizona and Utah carefully, and may engage in similar legal regulatory reform.
Baer Reed attorney teams provide a variety of business and legal services to Fortune 100 and Am Law firms around the world. Contact us today to discuss how we can support your organization.
- On March 2, 2021
- Back to post list
Mr. Reyes graduated with honors from the Ateneo de Manila University, where he received the Procter and Gamble Student Excellence Award. He obtained his Juris Doctor degree from the Ateneo de Manila School of Law. During law school, Mr. Reyes was part of the Philippine delegation to the Willem C. Vis International Commercial Arbitration Moot held in Vienna, Austria. He was also a member of the Ateneo Society of International Law and the St. Thomas More Debate Society. He completed his internship at the Public Attorney’s Office. He wrote a thesis entitled: “To Kill A White Elephant: An Analysis of the Fiduciary Exception to the Corporate Attorney-Client Privilege”. Mr. Reyes is admitted to practice law in the Philippines and the State of New York.
Ms. Lardizabal-Manzano is a graduate of San Sebastian College-Recoletos, where she earned her B.A. in Political Science. In 2003, she received her law degree from Lyceum of the Philippines and was admitted to practice law in 2004.
Matthew Hersh earned a B.A. in Political Science from Columbia University in 1990 and graduated cum laude from Georgetown University Law Center in 1999. He also holds a master’s degree in international relations from the Georgetown University School of Foreign Service.
Cap. Avi Levak (Res. IDF) graduated from from Israel’s prestigious Ben-Gurion University of the Negev with a Bachelor of Science in Computer Science and Mathematics. He is also a Leadership and Communication coach trained in TuT coaching by Alon gal in Israel. Avi specializes in high-level, in-depth analysis of business and client needs, within systems and software strategy and architecture.
Ms. Tyler graduated cum laude from Georgetown University and received her law degree, cum laude, from Georgetown University Law Center. During law school, she interned at the United Nations Economic Commission for Europe. She also worked on The Tax Lawyer journal and was a member of the award-winning Barristers’ Council Mock Trial Team. Ms. Tyler is admitted to practice law in the State of California and the District of Columbia.
Ms. Cruz-Anonuevo graduated cum laude and top nine in her batch from Miriam College with a degree of Bachelor of Arts in InternationalStudies. She obtained her Juris Doctor degree from Ateneo de Manila University School of Law in Rockwell. During law school, she interned in Rivera, Santos, Maranan & Associates. She was also part of Ateneo’s Labor Law Bar Operations. She wrote her thesis on, “Stealing Privacy: Limitations on Media’s Photographic Invasion.,” Ms. Cruz-Anonuevo is admitted to practice law in the Philippines.
Ms. Aquino-Batallones obtained a Bachelor of Arts degree in Development Studies (with Minors in Global Politics and Hispanic Studies) from the Ateneo de Manila University. In 2011, she received her Juris Doctor degree from Ateneo de Manila University School of Law. During law school, she interned at Romulo Mabanta Buenaventura Sayoc & de los Angeles then became an intern of Ateneo Legal Services Center’s Clinical Legal Education Program.
Mr. De Guzman graduated from San Beda College with a degree of Bachelor of Arts Major in Economics and received his law degree from San Beda College of Law. He is multilingual and is fluent in three languages: Chinese, Filipino, and English. He was admitted to the Philippine Bar in 2003.