Column

The Paradigm Shift of Regulatory Sandboxes

Earlier this fall, the Law Society of British Columbia made headlines when it announced the creation of an “Innovation Sandbox” that would allow unauthorized providers of legal services to deliver those services in BC on a pilot-project basis while the regulator assesses their reliability and effectiveness. From The Lawyer’s Daily:

Proposals to enter the innovation sandbox must include a summary of the services that the provider is proposing to pilot, who are expected to be clients, how the services will increase access to justice, as well as information about the provider and an assessment of any risks to the public. If accepted into the sandbox, successful applicants will be given the opportunity to demonstrate that their proposal effectively meets the needs of B.C. citizens in the areas of legal advice and assistance covered in the proposal.

See also this roundup of Sandbox initiatives across North America from CBA National.

The LSBC Sandbox is modelled on a similar project recently launched by the State Bar of Utah, which has already received several applications from innovative legal services providers seeking to close the access-to-justice gap in that state. California has been considering a similar initiative for several months now.

(An important detail is that these Sandboxes are not exclusive to “non-lawyer” providers. The LSBC took pains to make clear that lawyers and law firms are also invited to join its Sandbox with an unorthodox idea or structure not currently allowed by regulation. The Utah Sandbox has already garnered applications from law firms wishing to invite equity partners into the firm from outside the legal profession.)

I think this is a great step forward — but that opinion is not unanimous. There are people (primarily lawyers) who think the law society has gone too far and is risking lawyers’ livelihoods by opening the market to non-lawyer providers. There are also people (primarily not lawyers) who think the law society has not gone far enough, that the Sandbox will suffer the same fate as authorized paralegal programs and will fail to really address the A2J crisis.

I’ve run out of things to say to the first group — any lawyer who really believes a paraprofessional is going to put him or her out of business needs to find another line of work. But I was recently speaking with someone from the second group whose skepticism is intense. Here are some of the thoughts I shared with them.

The key difference between the Sandboxes and the “regulated paraprofessional” programs of the past lies in what Trudi Brown, chair of the LSBC’s Licensed Paralegal Task Force, calls the “top-down vs. the grassroots” approach. Under the top-down approach, lawyers use their regulatory power to carve out exceptions to their exclusivity and allow paraprofessionals to serve people at the edges of the market.

What experience has shown is that lawyers will make those exceptions narrow and put up significant barriers to access them. It’s been more than 20 years since Ontario’s law society, at the direction of the provincial government, reluctantly agreed to license and regulate independent paralegals. Yet paralegals’ scope of practice has been so constrained as to make them effectively irrelevant to the larger legal marketplace. Family law lawyers in Ontario seem determined to ensure the same thing happens with the proposed family law services providers in that province.

Limited-license legal technicians (LLLTs) in Washington were an even better example — their scope of practice was ridiculously narrow and the price of admission unbearably high. The Supreme Court of Washington shut the program down earlier this year, but the program had made very little headway, because it was designed by lawyers not to have any significant impact on the legal services market.

The Sandboxes take a different and, I think, better approach. Rather than lawyers generously permitting “non-lawyers” to fill legal needs they’re not interested in serving, the Sandbox opens its doors and says, “Anyone who wants to provide legal services, come in and show us what you’ve got.” They’re offering a new approach to regulating the delivery of legal services — a demand approach (what the market needs), rather than a supply approach (what lawyers are willing to do and allow).

The important aspect here is that so far, nobody involved with these efforts is talking much about “the practice of law.” That’s a phrase we have to throw away for good, because it’s used primarily as a protectionist measure, to define the group of tasks lawyers wanted to keep for themselves.

“Does this new provider engage in the practice of law?” is the wrong question, and I hope and trust the Sandbox administrators won’t ask it. They should instead be asking, “Does this entity provide reliable, accurate, and ethical services and outcomes in legal matters?” Because that’s the question regulators ask themselves about lawyers — and if that’s the standard for lawyers, why shouldn’t it be applied to everyone?

But what’s even more important and remarkable is that this is happening at all. More than one Canadian law society is already reaching out to established “non-lawyer” service providers and offering them assurances, based on meeting some basic criteria about public protection, that they can keep doing what they’ve been doing. That in itself is a landmark pivot for legal regulators.

I was fortunate enough to (remotely) address the annual meeting of the Federation of Law Societies of Canada a couple of months ago. One of the things I advised them was that law societies’ number-one priority was “advancing the public interest” — that has to be their North Star. But what I really wanted them to understand was that “the public interest” is not synonymous with “only lawyers provide legal services.”

Legal system reformers who aren’t lawyers are baffled and (understandably) a little cynical about the ferocity with which lawyers protect the market from non-lawyer providers. What I try to explain to them is that for many lawyers, the equivalence between “public interest” and “lawyers only” is an article of faith. It’s core to their professional identity and purpose.

Most lawyers believe that lawyers are incredibly important and necessary to society; that belief is crucial to their professional identity. I tend to think that’s why lawyers fight non-lawyer providers so hard — because these providers offend them. I’m not saying that’s justified — I’m saying that that’s why it’s so hard to bring about change in this area.

So these Sandboxes might look, from outside the profession, like a very small step forward. But viewed from the inside, I think they’re something close to a paradigm shift, and their potential impact is significant. They represent the possibility of fundamental change for the better in the underlying premise of legal services regulation. I’m a fan, and I hope you will be one as well.

Comments

  1. Opposed. Too many potential cheaters will enter the stream from all out of our jurisdiction. For example labor is cheap in India. With modern electronics look out. The law Society has a hard enough time governing its members. I suppose also the fees of the Law Society would go up to the lawyers to pay for this program.

  2. Interesting idea – glad I read about it here, and I’m curious how it will pan out. The legal profession needs all the new ideas and outside innovation it can get.

    As you imply, law firms and the profession generally are not particularly tech-savvy nor do they seem particularly eager to adopt actual legal technology to do legally assistive labour. (I know everyone in law protests that they are heavily tech reliant and aware, but in reality, they aren’t – they just think they are.)

    There are plenty of services out there that skirt the borders of legal practice that could use a chance to flourish. The most obvious example is e-discovery/document review services, most of which, including dedicated law firms with discovery/review units, use non-lawyers to do some if not the bulk of the actual document review, be it objective or subjective coding.

    I think one thing that lawyers ought to be concerned about is the liability and society fees that they get saddled with, whereas its unclear if the new kids in the sandbox are similarly burdened. It puts lawyers who might be interested in trying out some new toys at a disadvantage.

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