The Washington State Bar wants to relax the rules on who can practice law, in what it hopes will allow businesses not run by lawyers the chance to innovate how the industry provides legal services and expand who is able to afford them.

If approved by the Washington State Supreme Court, a new regulatory framework would open the door for applicants to seek temporary exemptions from the core tenets that have governed the legal profession for more than a century — including that only those who are licensed by the high court can own law firms and practice law in the Evergreen State.

"Shifting something that we've done this way for a hundred plus years — it's scary for all of us," Terra Nevitt, executive director of the Washington State Bar Association, told Law360. "But the future is here, so we feel like we can't stick our head in the sand."

The Practice of Law Board, created by the state's high court to work on legal licensing issues, and Washington State Bar Association are slated to present the "Pilot Project to Test Entity Regulation" and solicit feedback at the WSBA Board of Governors meeting on Friday. Per the justices' request, they intend to send the draft order establishing the pilot to the state Supreme Court later this month.

The pilot would be among the first of its kind in the nation, following a pioneering project in Utah and more permanent regulatory reforms in Arizona. The two states have seen a proliferation of novel solutions to age-old legal problems.

In Utah, a chatbot can determine if a dog bite or car crash is grounds for a personal injury suit; another website can provide customized guidance to get users through divorce proceedings. Other online tools made possible by these experiments let users challenge traffic tickets and see if a criminal record might be expungeable — all in just a matter of clicks.

Washington state officials say the framework will help the state get a glimpse of the impact of emerging models — and gauge their potential to expand access to affordable legal services for middle- and low-income residents — while minimizing the risk of consumer harm and unintended consequences.

"Our data tells us that our current business models aren't meeting the needs of all of the people in our community," Nevitt told Law360. "That tells me we need to innovate the models, and if our regulations are getting in the way, I think it's worth testing them."

As outlined in the draft order, future applicants recommended by the bar association and approved by the justices could get a timebound hall pass from traditional requirements as long as they document outcomes and adhere to other terms.

Bar officials say they've been eying the concept of entity regulation and nonlawyer practitioners for years as technology has continued to revolutionize the legal landscape. They see opportunities for professionals who aren't attorneys by trade and companies from different sectors to draw on their own expertise to chip away at the barriers people face when navigating various legal issues.

The WSBA Board of Governors voted in November to back the pilot and partner with the Practice of Law Board on the proposal.

Proponents say the framework would help Washington businesses and nonprofits explore ways in which technology can streamline the delivery of legal services — and perhaps lower the cost. Practice of Law Board member Craig Shank, a former Microsoft executive, said he sees the potential for the general public to benefit from the level of resources larger companies and institutions have at their fingertips.

"There is a wide range of ways that adding the capabilities of technology can make things more effective in delivering to citizens," said Shank, who held titles at Microsoft including vice president of corporate external and legal affairs until 2019. "I've had to do this at companies for years."

If a client has several thousand salespeople when a firm is hired, "and it grows to two times that size in year three, it turns out that your bosses are not going to give you two times as many lawyers to deliver services," Shank told Law360. "You have to find ways to deliver those services in smaller packages, in more efficient packages."

State officials said it's too early to say who prospective applicants might be — and what form their proposals might take. But Arizona's reforms and Utah's pilot offer some examples.

In August 2020, Utah approved a "regulatory sandbox" to allow technology platforms and other law-oriented businesses to experiment with legal service structures that wouldn't be permitted under traditional restrictions. Arizona, on the other hand, forged ahead later that same month by formally changing its legal rules outright to allow alternative models, including law firms owned by nonattorneys.

Stanford researchers who've monitored the changes in Arizona and Utah reported a surge in innovation. Novel players in the legal industry have taken a variety of shapes, from companies that expanded their offerings by including legal services to nonprofits and other community-based organizations relying on nonlawyers to practice law.

Existing companies including Rocket Lawyer, Legalzoom and Axiom have hired lawyers under the relaxed restrictions in the southwestern states. Hello Divorce, for example, has recruited attorneys to help deliver step-by-step advice for customers going through divorce proceedings. Other "one-stop-shops" offer consumers access to lawyers as well as other professionals such as accountants or financial advisors.

"We're seeing these law companies come into Arizona and Utah that are allowing service providers to provide more holistic services to consumers," said Natalie Knowlton, a special projects advisor who works on regulatory reform issues for Stanford Law School's Deborah L. Rhode Center on the Legal Profession. "Those have been, I think, really valuable to the legal services landscape."

Another popular site is OffTheRecord.com, a user-friendly platform that allows Utahans to fight traffic tickets by matching them with a local attorney.

Others have introduced technological solutions that use artificial intelligence to assist consumers with legal matters. ZAF Legal has launched a chatbot that can help users determine if they have a personal injury case after a car crash, slip-and-fall or other accident.

Public benefit corporation Rasa Legal has introduced AI-driven software that lets Utah and Arizona residents with criminal histories find out within minutes whether their records are eligible for expungement. In Utah, the company charges $15 for the eligibility screening and offers to guide qualifying users through the expungement process at a rate of $250 per case.

"These are up-and-coming. You don't see many of them," Knowlton told Law360. "With generative AI, you can absolutely see how an increasing number of providers will be looking to software-only types of solutions, which under traditional rules would fall within the unauthorized practice of law. So entity regulation, as envisioned by Utah and Washington, would allow for those types of services and products."

Critics argue outside influence and profit motives could erode ethical and standards specific to the legal profession, undercut business for traditional firms and subject consumers to poor — or even harmful — legal advice.

But consumers have made relatively few complaints with the proliferation of novel resources in Utah, according to the state's Office of Legal Services Innovation. From the launch of the pilot in January 2021 through the beginning of this year, just 14 consumer complaints had been filed. Meanwhile, roughly 24,000 customers had sought legal services from pilot participants, the office reported. More than 50 entities have been authorized by the office to operate in the sandbox.

"Another theme that we have seen and are seeing is that lawyers are playing essential roles at the entities that are emerging in Arizona and Utah," Knowlton said. "So it's not the case, as some imagine, that nonlawyers would come in and establish law firms without lawyer involvement or without lawyers on the management or founding team."

Washington state regulators have been watching advancements in Arizona and Utah while devising their proposal, Nevitt said.

"That's the benefit in this case if not being the first — we get a chance to see and to hopefully positively tweak," Nevitt said. "We're just so grateful that they've laid the groundwork so that we can learn from their experiences, and that's what we've tried to do."

To minimize any risk of consumers being exploited for profit, architects of the Evergreen State project have made one of its primary objectives to explore whether any proposed reforms will better serve the public by enabling more people — particularly low- and moderate-income Washingtonians — to get quality legal services.

"One criticism, which I think we address with our model, is, 'Is this really serving the public? Is this really serving access to justice? Or is it just an opportunity for companies to make money?'" Nevitt said. "We're not opposed to companies making money for providing a good service, but certainly we do think that access to justice is relevant."

Under the current proposal, beta-test applicants would have to submit a detailed plan, including a hypothesis about the impacts of the temporary rule change they seek and a study to test the reform.

The state bar association would be responsible for developing a process to evaluate the applications and recommend qualifying proposals to the state Supreme Court for final approval. There is no set timetable for when the court might rule on the proposal.

Participants would be expected to comply with terms laid out in an authorizing order, including reporting requirements and adherence to all other regulations and laws aside from any that are temporarily lifted.

The state bar association would also establish monitoring and oversight standards for participants, including a process for receiving and investigating complaints.

"A lot of thought has gone into creating a safe testing environment where we're really keeping an eye on protection of the public, as well as access to justice," Nevitt said, "and making sure that if we want to approve any regulatory changes, that we know we're approving them because, one, they're safe and, two, they're effective."

--Editing by Dave Trumbore.

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