Earlier this month, the Indiana Supreme Court approved funding a regulatory sandbox program in the state to develop alternative legal services models that help address the state’s attorney shortage.
The Court order is based on a recommendation from the Commission on Indiana’s Legal Future (Legal Future Commission), which the Indiana Supreme Court created in April 2024 to study the lawyer shortage and propose solutions.
In an interim report released in July 2024, the Commission called the lawyer shortage an “existential threat to the legal profession and those we serve.” The Commission cited the ABA in the report, stating that Indiana has only 2.3 lawyers per 1,000 residents, ranking in the bottom 10 of states nationally.
The Indiana Supreme Court has directed the Commission to develop “initial parameters” for the regulatory sandbox, which will be submitted to the Court for approval by March 1, 2025.
What is a legal regulatory sandbox?
The Commission recommended that Indiana’s regulatory sandbox be structured similarly to Utah’s Office of Legal Services Innovation (Innovation Office). Utah’s Innovation Office was established by the Utah Supreme Court in 2020 to ensure consumers have access to modern and affordable legal services in a competitive marketplace.
According to the Innovation Office’s website, a regulatory sandbox allows entities to explore new models or services (typically in highly regulated markets), and to provide data that may inform the marketplace and future regulatory changes.
The Utah Supreme Court authorizes and regulates entities in the sandbox. The authorization permits entities to practice law through nontraditional models without being subject to discipline “for that particular form of legal practice,” according to the Innovation Office’s website.
However, the entities and those working within them (including lawyers) are still subject to other forms of regulation and discipline.
Nontraditional models authorized in the sandbox may include alternative business structures, that allow investment or ownership by nonlawyers, as well as alternative legal providers, like technology and individuals, the Innovation Office’s website says.
This structure, according to Indiana’s Legal Future Commission, “allows entities to offer innovative forms of legal services in a controlled manner” while protecting the profession and consumers by maintaining a disciplinary process.
According to Reuters, 43 entities had been authorized or provisionally authorized in Utah’s sandbox as of June 2024.
Changes to regulatory rules in other states
Arizona was the first state to eliminate rules “barring non-lawyers from having an economic interest in law firms,” Reuters reports.
Currently, more than 100 businesses are approved to provide legal services under Arizona’s nontraditional ownership rules, which allow lawyers and those who aren’t lawyers to co-own businesses that provide legal services, if they are approved by the Arizona Supreme Court, Reuters noted.
Proposals to relax regulatory rules have “stalled or failed” in other states due to concerns about legal services providers that are not bound by lawyer ethical rules, Reuters said.
However, the outlet notes that Washington’s state bar and law practice board sent a proposal to amend regulatory requirements for those who provide legal services to the Washington Supreme Court in September.
Other initiatives approved by the Indiana Supreme Court
In all, Indiana’s Legal Future Commission sent its Supreme Court 27 interim recommendations aimed at addressing the state’s shortage of attorneys.
In addition to approving funding for the regulatory sandbox, the state Supreme Court approved funding initiatives like a startup subsidy for lawyers practicing in areas of high need, student loan assistance for those practicing in legal deserts, a grant program focused on local court technology needs, and technology development in detention facilities to allow defendants to more easily speak to counsel and appear remotely.
Staying up to date on issues impacting the legal profession is vital to your success. Subscribe here to get the Commission’s weekly news delivered to your inbox.
What Does It Mean To ‘Act Like a Lawyer’? Reconsidering Our Professional Identity