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The Rise of Non-Law Firm Competitors: Mitigating Concerns of Job Replacement Through Regulatory Sandboxes

— December 21, 2020

Legal services have a reputation of being expensive and are therefore viewed as unattainable. The price tag of legal support is one that many Americans cannot afford. Given the complexity of many legal cases and lofty hourly fees associated with seeking resolution, often people find themselves in sticky situations when trying to navigate the legal sector. 

It’s crystal clear that legal services are simply not affordable for the lion’s share of Americans, creating what’s being called a “Justice Crisis in America.” The crisis is prompting states across the country to evaluate a wide range of solutions to make the legal support more affordable and more accessible to the general public. One solution legal professionals are exploring to solve this problem is setting up “regulatory sandboxes for legal innovation” to test out ways non-lawyer groups (e.g. technology providers and legal service providers) can help improve access.

What is a Regulatory Sandbox?

Regulations serve the purpose of balancing the rights and interests of a variety of individuals. Some regulations help improve conditions for workers, while other regulations help employers avoid liability risks. Regulations are necessary but can often become burdensome impediments to innovation, especially when regulations were created before many emerging technologies. The beauty of a regulatory sandbox is that it temporarily lifts or alters regulations, allowing novel technologies, financial products and business models to be tested with regulatory oversight. Regulatory oversight is critical to ensure proper protection and ethics with any technology implementation. 

After a period of observing the new product or process, regulatory authorities issue recommendations to adopt, change or issue a cease and desist order for the existing regulation(s). For example, in 2017 London-based remittance services used a Malaysian bank’s sandbox to test out a solution for a remote identification system that facilitated sending photos of ID’s with cell phones. After a successful sandbox trial, the new regulations were employed and expanded access to a variety of legal services to underserved and remote areas. Successfully being able to utilize digital tools in place of a manual process helped lessen the gap of access. 

The ability to employ methods that are not yet approved in real-time has been especially helpful in spearheading new business models to serve marginalized communities. Now, regulatory sandboxes for legal innovation are being employed in the U.S. to explore ways that non-lawyer ownership of legal services can improve underserved communities’ access to legal support. 

What Do Legislatures Hope to Accomplish with Non-Lawyer Ownership?

As introduced above, non-lawyer ownership of services is commonly seen with technology providers that have deep industry knowledge. These providers combine their priority technology and cloud platforms with their segment insight to develop solutions that help improve existing processes and access. Legislatures are responding to the urgent need to expand legal services to underserved constituents and are turning to non-lawyer parties. For example, in May 2020, the State Bar of California Board of Trustees voted 90-2 to continue to experimenting with changes that include non-lawyer ownership of law firms. The goal with this exploration is to make legal services, such as arbitration, mediation, and notary public services, more accessible and affordable for middle-income citizens in California. Very few people are in the position to afford paying $300-$400 an hour for family, landlord-tenant, or criminal lawyers, creating a cloud of insecurity for most individuals. In addition, access to affordable legal services such as business attorneys is an impediment to people looking to start or expand businesses. It’s hoped that creative partnerships with non-lawyers might improve the problem of access to proper legal services that the majority of individuals face.

Which States are Leading the Effort and How Do They Differ in Their Endeavors?

California and Utah are leading the efforts to create or extend sandboxes for legal innovations and explore non-lawyer ownership models. Utah unanimously endorsed a pilot program to assess changes in how the practice of law is governed, citing an urgent need to make services more accessible that’s been accelerated by the COVID-19 pandemic. The state hopes to find solutions that bridge the gap between services like LegalZoom, which provide forms but no legal advice, and full-service law firms that charge very high fees.

Some of the Utah lawyers supporting the initiative are seeking investment and partnership with accounting and technology firms, but others would simply like to be able to partner with their trusted paralegals. In California, there is consensus to address the “justice gap” for middle-class people, but there is more concern about non-lawyer ownership as a way to accomplish it. That said, supporters in California continuing to investigate non-lawyer ownership prevailed in a vote for a version of the Closing the Justice Gap Working Group. 

What Companies are Spearheading This Initiative?

Metallic humanoid head surrounded by binary code with human silhouettes in background; image by geralt, via
Metallic humanoid head surrounded by binary code with human silhouettes in background; image by geralt, via

Services such as paralegal assistance for pro se litigants in family, landlord-tenant, or bankruptcy courts, along with other areas can promptly help families in crisis. Beyond these grassroots initiatives, large accounting firms including KPMG, PwC, Deloitte and EY are promoting changes that will enable them to partner with law firms streamlining the services they provide. Since the regulatory sandbox concept originated in financial technology policymaking, it’s not surprising that legal technology companies are hoping that non-lawyer participation will create profitable opportunities, especially in the areas of e-discovery and the use of artificial intelligence for legal research.

What are the Requirements/Limitations for Non-Law firms to Participate?

The Utah sandbox is slated to last two years, causing concern that this limitation makes it difficult to encourage people to invest. In response to this scrutiny, the state’s Supreme Court did take this into consideration by crafting provisions that allow successful innovations to exit the sandbox and continue to do business. Companies created within the sandbox will have to continue reporting requirements but are able to continue to operate even if the sandbox shuts down. In Utah, as a result of comments on the initial proposals, additional safeguards were added including:

  • Increasing transparency for applications and approvals;
  • Adding clearer ways to lodge complaints about the new types of legal services; and
  • Preventing the involvement of disbarred or suspended lawyers or people with felony convictions.

Are the American Bar Association (ABA) And State Bar Associations Supportive?

Forbidding non-lawyers from partnering with lawyers is one of the most well-established taboos in the legal industry, and for the first time in its history, the ABA is seriously considering encouraging states to allow outside ownership of law firms. It’s somewhat surprising given ABA’s history for how much support the idea is currently receiving. In California, there is serious discussion about the benefits of repealing Bar Rule 5.4, which limits law firm ownership. There’s also some pushback over concerns about notaries who offer poor quality translation services and immigration assistance. Other critics fear that this might lead to less stringent standards for ethics, oversight and discipline. These concerns did not win the day, with California, Utah and other states supporting efforts to experiment with non-lawyer ownership.

Could Regulatory Sandboxes Lead to Bypassing the Need for a Lawyer Altogether?

There is always going to be a need for experienced and skilled lawyers offering high-quality services at reasonable prices. Similar to when looking up symptoms on WebMD, it can be helpful, but if a condition is worsening a doctor is the best option. The same triage principles apply for legal services. A form may be all you need to register a business, but if you’re getting sued for defamation, there’s no substitute for the advice of an experienced attorney. There is increasing use of non-lawyer mediators for family law disputes, but if there’s no agreement and it’s time for trial, you’ll need a lawyer. As sandbox programs continue to arise across the state, lawyers are becoming aware of how partnerships with technology companies, process serving companies, accounting firms, or even their own trusted paralegals may improve their ability to provide services and their bottom line.

About ABC Legal Services

ABC Legal is the nation’s leading service of process and court filing company and is the official process server to the U.S. Department of Justice. Docketly is a subsidiary of ABC Legal, providing appearance counsel on a digital, custom-built platform that smoothly integrates with our applications and services. ABC Legal’s applications are cloud-based and compatible for use on desktop, browser and smartphones. Our solutions and digital approach ensure process server partners, law firm customers and their clients save valuable time and resources when serving legal notices safely and with maximum compliance, control and transparency. ABC Legal is based in Seattle, WA, with more than 2,000 process servers throughout the U.S., as well as internationally in more than 75 countries. To learn more about ABC Legal, our solutions and subsidiary company Docketly, visit

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