New York gives red light to alternative business structures

New York will not be following in the footsteps of Utah, Arizona and Utah in paving the way for alternative legal business models and non-lawyer ownership of law firms, a Working Group on Regulatory Innovation has said in a report.

Having examined the new regulations adopted by those states, the working group found that alternative business structures for law firms should not be permitted in New York at the present time but that the “experiments” under way in Arizona, Utah and California should be followed carefully. The report concludes: “If they are successful, the creation of an ABS model or models in New York State with the use of a “sandbox” should be reconsidered.”

On 13 August, the Utah Supreme Court made history by giving the green light to a regulatory sandbox that will allow, for the first time in the United States, law firms and corporations to experiment with new legal structures including allowing non-lawyers to practice and manage law firms.

You can read the New York working group’s report here: https://www.nycourts.gov/LegacyPDFS/publications/RWG-RegulatoryInnovation_Final_12.2.20.pdf

Legal IT Insider editor Caroline Hill spoke to John Lund, past president of the Utah Bar and co-chair of the Utah Implementation Task Force on Regulatory Reform, about what the changes mean and what we can expect over the next two years, including taking a look at the early applications. You can read that article here: https://legaltechnology.com/us-regulatory-reform-utah-sandbox-leader-john-lund-gives-us-insight-into-the-changes-you-can-expect/

The New York decision will be a blow to those campaigning to open up the US market to improve access to justice, which is one of the key drivers behind the Utah sandbox. Lund told us: “We’re talking about access to justice in the broader sense. There are a huge number of people who don’t think they can afford a lawyer. It isn’t just justice for the poor, it’s increasing access to justice across the board.”

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