Utah is currently considering groundbreaking legal reforms that may allow nonlawyers to own law firms and share in fees.
To understand these proposed reforms in greater detail, LitiCast spoke with Utah Supreme Court Justice Deno Himonas, Utah Implementation Task Force on Regulatory Reform co-chair John Lund, and Carson Pearson of Pearson Butler located in South Jordan, Utah.
Watch the entire conversation below.
Bridging the Enormous Access-to-Justice Gap
Speaking on the origins of the Task Force on Regulatory Reform and the sandbox it inspired, Justice Himonas says, “What’s driven all this is an enormous access-to-justice gap. This is the latest and biggest step the court has taken to bridge the gap.” He cites a recent report by the Utah Foundation, in which two-thirds of low-income Utahns said they could not afford an attorney if they needed one.
Lund says that for the people who don’t seek or obtain legal services, “It’s because there’s not good, clear access. There’s not good discrete services that would meet their one particular need without signing on for an undefined hourly rate arrangement with a law firm or lawyer. So what services will come into that space and meet consumer needs for legal services?”
Justice Himonas and Lund cite debt collection, wills and estates, and tenant protection as potential areas that could be ripe for innovation. The Utah Foundation report found that in debt collection cases, nearly 100% of collectors had lawyers versus just 2% of defendants. In eviction cases, 90% of property owners had legal representation versus just 5% of renters.
Lund also notes that there is interest and movement across the country in these types of reforms, most notably in Arizona. “If we set a good example, and prove with data that these things are safe and effective and affordable, we’re going to create a better case for a broader adoption of these types of approaches.”
“There Was a Day When Everybody Got Their Movies from Blockbuster”
Lund and Litify VP of Solution Engineering Dov Slansky point out that many of the reforms being broached are more about changing the distribution of legal services as opposed to the services themselves, which would still be in high demand.
“There was a day when everybody got their movies from Blockbuster,” Lund says. Now consumers stream them on their devices, and there are probably more people making movies than ever before. “If the distribution model for legal services changes, that does not mean that the opportunity to provide legal counsel to people is going to go away. It probably means it’s going to increase.”
Slanksy says that once Blockbuster’s monopoly came to an end and things opened up, the same studios, actors, and directors could reach a wider audience. “There’s simply more money to fund the industry.”
“Think about what that means for the consumer,” Lund says. “There’s much more content out there, and probably at lower cost, and more accessible. That’s the same place we’d like to provide consumers for legal services.”
Justice Himonas adds, “I don’t see TurboTax making CPAs go away. That hasn’t happened.” He says the legal needs market is huge, and that won’t change. It might even expand.
Bundling Services Could Drive Costs Down for Consumers
One opportunity that could arise out of Utah’s reforms would involve commingling or bundling professional services. “We’re hoping to be able to partner with professional organizations outside of our industry,” Carson Pearson says. “We’re already in conversation with some accounting services. I think there’s some bundling potential that can happen here.”
Slansky says there are people who will go to H&R Block to do their taxes, but they’ll never step foot in a lawyer’s office. What if you could do both at once?
Lund mentions that some contractors and small business owners aren’t great at keeping up with their legal and tax responsibilities. He’s considering “fundamental business service to support their operation,” consisting of both accounting and legal help, possibly in subscription form.
He also notes that “innovation at some segment of the market drives the cost down more broadly.”
Pearson says, “We’re hoping to be on the forefront of that evolution in delivering consumer-based legal services.”
How Fee-Splitting Could Benefit Clients
Pearson thinks that the reforms allowing fee-splitting between firms could also benefit consumers. Currently, he says that law firms aren’t incentivized to send a client to another firm that might have more expertise in a certain practice area or case type. If they could split fees, that would change, and clients would likely receive better service than they do now.
Asked whether fee-splitting could lead to the commodification of consumers, Justice Himonas emphasizes that under the new rules, all attorneys still have an ethical obligation to their clients. He also says the clients will be informed every step of the way, so they’ll retain agency and be able to make informed decisions about their cases.
“No lawyer is being absolved of their duty to be ethical and loyal and confidential,” Lund says.
More than anything, Lund, Pearson, and Himonas are excited about the potential for more access, innovation, and flexibility in the legal industry. On paper, these reforms should widen law firms’ reach, close the justice gap, and improve the service that clients receive.
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