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Utah’s regulatory experiment: A conversation with members of Utah Work Group on Regulatory Reform

Originally published by Thomson Reuters

· Access to Justice,Regulations,Utah Access

In August, the Utah State Supreme Court took a bold step. The Court unanimously voted to create a provisional regulatory body, the Office of Legal Services Innovation, to oversee a two-year experiment in profoundly re-imagining how legal services are regulated. The goal is to increase access to and affordability of legal services for U.S. citizens by spurring innovation in service delivery models.

The Court based its decision on recommendations made by the Utah Work Group on Regulatory Reform. Recently, Rose Ors of ClientSmart spoke to three of the people involved in the task force to learn how it was formed, why it chose the “regulatory sandbox” approach, and what success looks like. She spoke to John Lund, co-chair of the Regulatory Reform task force and a trial lawyer at Parsons Behle & Latimer; Lucy Ricca, the Executive Director of Utah’s Office of Legal Services Innovation and a former Executive Director of the Stanford Center on the Legal Profession; and Rebecca Sandefur, a sociologist, legal scholar, and professor at Arizona State University.

Rose Ors: The 10-member task force included members of the Utah court system and the Utah bar, leading academics, and other legal innovation experts. What benefits did convening such a diverse group provide?

John Lund: Justice Deno Himonas, the task force’s co-chair, and I wanted to create an environment where every team member was an active contributor. A small group allowed for that level of involvement. We also did not want to have a team composed solely of lawyers. We wanted a mix of expertise and viewpoints that would bring a fresh perspective to the challenge at hand.

Becky Sandefur: Change rarely comes from inside institutions. Change mostly happens by borrowing concepts and methods from other disciplines. A case in point is the contribution made by our team member, Margaret Hagan, the Director of the Stanford Institute of Design. She introduced the group to the regulatory sandbox idea.

Lucy Ricca: I agree with Becky and John about the benefit of not having only lawyers in the room. Having Becky and Tom Clarke, a national court consultant, in the group was invaluable. During our meetings, they were continually asking the lawyers, “Wait, why are you approaching it like that? Why are you making that assumption? Let’s think about it like this.” These questions pushed us to rethink and re-imagine what we could do.

Rose Ors: What is a regulatory sandbox, and how does it work?

John Lund: A regulatory sandbox is a controlled environment where consumer-centered innovations can be tested and evaluated. The goal is to have legal service providers develop new offerings that the regulator can be confident will, if approved, benefit the public.

The regulator calls for applications and specifies which regulations are open to being relaxed. Applicants must detail what innovations they intend to offer and how these innovations will work. Applicants must also measure the benefits and risks to the public of the services. Those whose applications are accepted then roll out their services to the market and collect data on their performance. At the end of the evaluation period, the regulator decides whether to approve the innovation permanently.

Rose Ors: That seems to be a radical rethinking of the regulatory process. Rather than regulators dictating what is permitted, the innovators demonstrate to the regulators what should be allowed. Why do you favor that approach?

John Lund: One of the primary benefits is the data the approach provides to determine whether a proposed change works or whether it harms consumers. We can be much more confident that changes approved after the evaluation period will provide the intended benefits. The data may also provide better insights into what the public does or does not want.

Becky Sandefur: I appreciate the caution involved in initially confining changes to a “pilot” period. It is reasonable and decently humble to recognize that we don’t know what will be safe and effective for consumers. We should try to figure that out before opening the flood gates to radically new ways of providing legal services.

Lucy Ricca: We also must recognize that economic and technological developments are outpacing the regulatory framework. We need a space in which you allow services and models that push the envelope to provide feedback that will inform policymaking.

Also, I think a sandbox makes it more appealing for tech companies, professional services firms, and venture capital groups to offer legal services because it lessens uncertainty. They decide what they want to provide and how success will be measured. They can invest knowing that regulators will most likely permanently allow their innovations if they achieve the targeted outcomes. You need to incentivize innovators to create affordable services for ordinary people, or you will never be able to scale even the coolest ideas about non-lawyer practice.

Rose Ors: How are the entities in the sandbox monitored?

Becky Sandefur: When an entity applies, the Innovation Office and then the Court assess a risk level. The higher the risk level — measured by how far an entity’s service model departs from the traditional practice of law — the more detailed and more frequent the entity’s reporting must be. The requirements could include an audit of the provider’s first 20 cases to evaluate the work quality.

While the Innovation Office monitors the sandbox entities, five teams of external researchers will independently assess how the sandbox is meeting its regulatory objectives. Independent oversight is essential because it is difficult for an organization to look at how well they achieve their own goals.

John Lund: We require entities to report consumer complaints, and we have a mechanism for consumers to report complaints directly to us. We have a badge that informs consumers the entity is regulated by the Innovation Office and provides our contact information. Entities must display this badge on their website and their brick and mortar location if they have one.

Rose Ors: What does success look like in two years?

John Lund: Early on in this journey, Justice Himonas said to me that if we do nothing more than persuade California, the fifth-largest economy in the world, to move in our direction, that will be a significant measure of success. Ideally, we can help leaders in other jurisdictions challenge the guild-like organizations that hinder access to justice.

Lucy Ricca: My goal is that our work demonstrates that regulation can go beyond merely preventing harm to the public. It will show that evidence-based, consumer-centered regulation can bring high-quality, affordable legal services to millions of people.

Becky Sandefur: The fact that Utah has had the conviction and courage to develop a framework to rethink decades-old regulations is an enormous accomplishment. You’re talking about coming out of 60 or 80 years of complete stasis. The change is a victory in itself.

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