Info for Interested Applicants
Are you considering applying for the Sandbox? Here are a few things to consider.
Under the regulation of the Innovation Office Sandbox authorization enables entities to develop and test innovative legal services methods that have the potential to reach consumers underserved in the current legal market.
The Innovation Office highly encourages you to review the Innovation Office Manual to prepare your application responses. You may only submit one application per entity.
There are a few qualifications for this mandate:
- Disbarred lawyers are barred from holding an ownership interest of greater than 10% in any Sandbox entity.
- The Sandbox is not meant to be a mechanism by which out-of-state lawyers can practice in Utah without otherwise completing the requirements imposed by the Utah State Bar.
- The Sandbox has nothing to do with selling services to the Utah State Court system. Authorization in the Sandbox does not make you a preferred vendor to or for the court system. It will not influence how the court system may or may not enter business arrangements with your organization.
- The Sandbox does not and cannot impact requirements imposed by other applicable Utah or federal laws, the laws or requirements imposed by other jurisdictions, or the requirements imposed by other regulatory bodies. Authorization to practice law in Utah through the Sandbox does not release any entity or individual therein from conforming to all other applicable laws and regulations.
- As Rule 5.4 and Standing Order No. 15 make clear, lawyers working with or in entities participating in the Sandbox must maintain their duties under the Rules of Professional Conduct unless an entity’s authorization contains an explicit waiver of a particular rule to enable the business model. If your business model needs a specific waiver of one of the rules of professional conduct, you should set that out clearly in your application.
- Nonlawyer providers within your proposed model are not required to conform to the Rules of Professional Conduct. However, you should consider and be clear about how you will ensure that the services provided by nonlawyers (whether human or software) will not cause consumer harm.
There is a $250 application fee you will be required to pay when you submit your application. In addition, the data reporting process is robust and will require significant human capital to complete. This “hidden” cost Should be considered. You can read more about the data reporting requirements in the Innovation Office Manual.
Public Nature of Applications
Your application will be made publicly available. You can make a claim of business confidentiality for specific information that would qualify for protection under Utah Code of Judicial Administration Rule 202.02 . Making false or materially misleading statements in this application is grounds for loss of authorization to practice within the Sandbox. Other criminal and civil sanctions may also apply.
Responsibility to Update
Should your answers to any of the application questions change, you are responsible for updating the information with the Innovation Office. Failure to promptly update information will be considered relevant to your regulatory status.
Frequently Asked Questions
What is the Sandbox?
The Sandbox is a mechanism by which the Utah Supreme Court permits entities to offer new and innovative legal providers and legal services. Although not a literal sandbox, the legal regulatory Sandbox creates a limited and controlled space outside of the traditional rules governing legal practice. The Innovation Office of Legal Services Innovation (“the Innovation Office”), created by the Court, oversees the Sandbox to assess, recommend, and monitor entities seeking to try new approaches to legal practice.
How long does the Sandbox last? What happens at the end?
The Court has given the Innovation Office initial authorization to work for seven years (starting September 1, 2020). At the end of the seven years, the Court will review the Sandbox experiment and determine the next steps. This could include extending the Sandbox period, allowing the Sandbox to become permanent, or terminating the Sandbox.
What are the requirements or qualifications to apply to the Sandbox?
The Sandbox is open to legal business models and services that would not have been permitted under the traditional rules of professional conduct and unauthorized practice of law rule. Specifically, under revised Rule 5.4 and the Utah Supreme Court’s Standing Order No. 15, the following kinds of business models and services may apply for authorization in the Sandbox:
- firms, companies, or organizations using Alternative Legal Providers (human or software) to practice law
- traditional law firms taking on nonlawyer investment or ownership
- traditional law firms and lawyers entering into profit-sharing relationships with nonlawyers (the Court is currently not authorizing entities to pay direct referral fees to non-lawyers outside of their ABS)
- nonlawyer-owned entities employing lawyers to practice law
- lawyers or firms entering joint ventures or other forms of business partnerships with nonlawyer entities or individuals to practice law
- entities providing intermediary services to connect lawyers to consumers in new ways
- other innovative methods or services not permitted under the traditional rules.
Some likely models and services are not identified in the above list. The rule of thumb is you should come into the sandbox if you don’t think you can do it under the rules. If you need authorization to get the necessary employees or investment, the Court will consider a provisional authorization period. Otherwise, we require that your model/service be ready to implement. This means that you have a clear plan and path to launch that you can implement upon authorization and that you will be able to launch soon thereafter.
Are there any bars to offering services in the Sandbox?
- A disbarred/suspended lawyer may not own more than 10% of any entity offering services in the Sandbox.
- Out-of-state lawyers cannot use the Sandbox to circumvent multijurisdictional practice rules.
- Owners or Managers with a criminal history involving fraud may be denied.
What kind of information does the Sandbox application require?
To apply, you must first request a code on the apply page, and then log in and submit an application through the Sandbox application portal
The goal is to help us understand the details of what you are proposing to do, how it differs from traditional legal services, and how it might pose risks to consumers. We encourage you to be detailed and transparent in the application – it will help make the process more smooth and more efficient if we don’t have to follow up with questions.
You will describe your entity structure, including:
- ownership interests
- who will report data to the Innovation Office
- whether you will be working with other professionals
- whether you will collect payment or sell consumer data
You must list all individuals and entities that make up your entity’s ownership and management. You must disclose whether any individual with an ownership or management interest is a disbarred or suspended lawyer or has a felony criminal record. Each owner and manager must also submit to a background and credit check, certify basic information, and may be required to submit fingerprint cards at the discretion of the Court.
The application asks who will provide your legal service offerings: lawyers / legal professionals, an intermediary platform, HALPs, or SALPs. What Legal Areas do you want to offer services in, and to what type of consumers?
If you propose a SALP, what will your software do, and how? If you propose a HALP, you will describe how they will be trained to ensure they competently serve your consumers.
If your entity does not have a legal professional to direct the quality assessment process, you must identify the specific, limited service you want to offer to address a specific, identified legal need or bundle of related legal needs.
You must explain how your services are “innovative” and how Sandbox authorization will allow your services to reach consumers currently underserved by the market. This could include reducing the cost of legal services, making legal services more accessible, or developing a new business model.
To participate in the Sandbox, the Court waives Rule 5.42 and the rules governing the unauthorized practice of law as needed and at its discretion.
If you need to seek additional waivers of other Rules of Professional Conduct to provide your anticipated services, the application lists common rules you may request waived. However, you may identify other unlisted rules for which you must also request a waiver.
The Innovation Office considers any additional rule waivers requested by applicant entities. Utah lawyers remain subject to all rules of professional conduct not explicitly waived. Entities also remain subject to other applicable state and federal laws and any rules of another state or other governing body.
You will explain how a consumer might find, engage, and benefit from your proposed services and how they might be harmed.
The application will ask about your quality assurance process: how you make sure your services are safe for consumers, what the process is for your consumers to file a complaint, what your process will be to address any consumer concerns, and how you will improve your services in light of concerns.
You will describe how you will identify, track, and mitigate consumer risks in your proposed Service Method, including quality control measures, oversight, training, provider testing, etc.
All entity managers and owners must adhere to the same fiduciary duties that lawyers owe their clients: loyalty, confidentiality, diligence, and candor. In addition, they must agree not to interfere with the lawyer’s professional judgment, which requires placing the client’s best interests above profits.
We also ask for a series of disclosures to help us assess potential risks. They are:
- Disclosing whether any owners or managers of your entity are either disbarred/suspended lawyers or have a felony criminal history.
- Disclosing whether the entity itself (or parent or affiliated companies) has a history of either state or federal misdemeanor or felony conviction, consent decree, or enforcement action resulting in sanctions.
- Disclosing whether the entity itself (or parent or affiliated companies) is, to your knowledge, under state or federal criminal investigation or enforcement action investigation.
- Disclosing whether the entity’s business model includes sharing or selling consumer data.
Are Sandbox applications confidential?
Applications are available to the public on our website.
the application allows you to designate any part of your application considered to be non-public under UCJA Rule 202.02 such as “confidential business information”. Those parts considered non-public will be redacted before the application is posted. However, keep in mind that identity of any owner or manager will be public.
I submitted a Sandbox application. Now what?
Once your application is submitted, it will be reviewed as follows:
-The Innovation Office will review your application to ensure it is complete and contact you if there are any issues. Once it has determined it is complete,
- it will draft a recommendation for the LSI Committee’s consideration, including recommended innovation category, which dictates your entity’s required disclosure, reporting, and other authorization requirements if authorized.
- Legal Services Committee Review.
- The Legal Services Innovation Committee (“Committee”) meets monthly to review applications and draft recommendations. They will vote to either recommend your application to the Supreme Court or it will vote to table or deny the application.
- A vote to table usually means additional questions or issues have been raised, and the Innovation Office will reach out to you for follow-up.
- A vote to deny means that your application is inappropriate for the Sandbox currently (e.g., not compliant with Utah or federal requirements, Sandbox regulation not necessary as it does not constitute the practice of law, or excessively high risk of consumer harm). You will have an opportunity to challenge that denial.
- Recommendation to the Supreme Court.
- The Committee presents the recommended applications to the Supreme Court at the Court’s monthly meeting.
- The Court has full discretion on the question of whether and with what scope to authorize the recommended entity.
- If the Court votes to authorize your entity, it will issue an authorization order, and you will receive an authorization packet from the Innovation Office detailing your authorization, disclosure requirements, and reporting requirements.
- The Court’s Order will set your innovation category. The Innovation Office Manual details what that categorization entails for your authorization requirements.
- You will need to schedule an authorization call with the Innovation Office to review your authorization, disclosure, and reporting requirements.
What is the cycle of Sandbox participation?
As shown above, the first stage is to apply to participate in the Sandbox. The second stage is participation in the Sandbox as an Authorized entity subject to reporting and disclosures as indicated. The final stage is licensure after your entity has completed the requisite number of services and any audits.
My entity has been authorized to offer legal services in the Sandbox. That means I am immune from investigation, enforcement, or prosecution by any agency, right?
Absolutely not. The Sandbox authorizes you to practice law through a nontraditional service model without being subjected to discipline by the Utah State Bar for that particular form of legal practice.
- If your entity violates state or federal law (consumer protection, disclosure, securities, etc.), you can absolutely be investigated and prosecuted for those violations.
- Consumers can also sue you for any torts your entity commits.
- Lawyers working with your entity can be disciplined if they violate the Rules of Professional Conduct in their license state
- Any other licensed professionals in your entity (accountants, medical providers, social workers, etc.) are subject to their professional discipline if they violate their rules.
I’m a Utah lawyer and have been approached by an entity authorized in the Sandbox. They want to hire me! Can I work for them?
Yes! Utah lawyers can practice law in these new entities, whether nonlawyer-owned firms, for-profit companies, or any other Alternative Business Structure. However, you need to know that your professional responsibility requirements and compliances with the Rules of Professional Conduct remain intact. Therefore, you need to ensure that you can comply with the new entity’s rules (confidentiality, conflicts, etc.). You need to be clear about this with your potential employer. If you have questions about your professional responsibility duties, you should contact the Utah State Bar’s Ethics Advisory Opinion Committee.
I’m a Utah lawyer and want to share fees with nonlawyers (e.g., pay referral fees). Do I need to come into the Sandbox?
Rule 5.4 currently states that lawyers may share fees with nonlawyers if:
(1) The fee to be shared is reasonable, and
(2) The Innovation Office authorized the arrangement for offer in the Sandbox (as per Standing Order No. 15).
This would indicate that any fee-sharing arrangements between lawyers and nonlawyers must be considered and authorized through the Innovation Office process for offer within the Sandbox.
However, on December 10, 2020, the Court issued a statement noting that it is halting consideration of “bare referral fee arrangements,” “those in which payment is made by the lawyer to the nonlawyer solely to compensate the nonlawyer for referring a potential client to the lawyer; there is no other business relationship between the lawyer and nonlawyer,” until the potential ethical issues can be given further consideration. Thus, the Innovation Office will not consider proposals for bare referral fee arrangements between lawyers and non-lawyers not in business together in a new ABS until further notice from the Court.
The Court stated, “The Court will, however, continue to consider and, as appropriate, authorize other innovative business arrangements and service models involving lawyers and nonlawyers that incorporate innovations beyond bare referral fee arrangements.” Thus, if your proposal includes profit sharing with nonlawyers as part of a more comprehensive business relationship, the Innovation Office can consider the proposal.
I’m a Utah lawyer and want to share fees with other lawyers. Do I have to come into the Sandbox?
No. Rule 5.4 only applies to lawyers sharing fees with nonlawyers.
I’m a lawyer from another state. I’m not licensed in Utah. Can I come into the Sandbox to practice in Utah?
No. The Sandbox is not a mechanism to circumvent multijurisdictional practice rules.
I’m a lawyer from another country, can I come into the Sandbox to practice in Utah?
Yes. However, for purposes of participating in the Sandbox, you would be considered a non-lawyer or Alternative Legal Provider and must apply as such. If you do not have a Utah licensed lawyer helping train you and directing the quality assurance of your services, you will need to limit the scope of your proposal to discreet services like uncontested divorces, eviction defense pleadings, debt collection advice, name change, etc.
I’ve been admitted to the Sandbox. Now, what happens?
You will have an authorization meeting with the Innovation Office to discuss the scope of your authorization, review disclosure, and data reporting requirements, and answer any questions you might have. You should be prepared to identify your launch date at that meeting.
Is it possible to exit the Sandbox? How does that work?
The Sandbox is a seven-year pilot project. The Court will not authorize any non-traditional legal services to operate outside the Sandbox unless and until the Court determines that the Sandbox has produced sufficient evidence to support such action. In particular, the Court will assess whether sufficient evidence has been produced to ensure that Utah consumers are not exposed to more harm from poor legal services than they would have been without the services provided by Sandbox entities.
If the Court determines it has sufficient evidence to consider exit, entities may apply to exit the Sandbox upon a showing of satisfactory participation in the Sandbox, including as a licensed entity. The Innovation Office will conduct a compliance review and determine if the entity has performed satisfactorily, i.e., there is no material consumer harm and strong compliance with all reporting and other regulatory requirements. The decision to recommend exit will be at the discretion of the LSI Committee. Authorization of Sandbox Exit is at the ultimate discretion of the Court.
I am a consumer and want to complain about the services I received from a provider in the Sandbox. Can you help me?
Our website has a fillable form for communicating complaints or concerns about legal services directly to the Innovation Office. Please include the following information:
- Which company provided the service;
- When and where you received the service; and
- A short description of your complaint.
Still have questions?
Please email your questions or request a call to discuss your concerns by contacting firstname.lastname@example.org.