California Legal Industry Reform
One of the first states to examine the access to justice gap, California is also one of the first states to abandon the pursuit of big and bold regulatory reforms. In 2022, the State Legislature removed access to funds previously slated for reform research, halting efforts. And yet the need for reforms hasn’t gone away.
“[L]egal regulators face a challenging environment in which the cost of traditional legal services is going up, access to legal services is going down, the growth rate of law firms is flat, and lawyers serving ordinary people are struggling to earn a living. … The legal industry is at an inflection point.”
What Legal Industry Reforms Are Being Considered in California?
After helping lead the charge on regulatory reforms to the legal industry, California is out of the game—perhaps indefinitely—in relation to nonlawyer law firm ownership. So what happened?
The state bar’s Closing the Justice Gap Working Group had been researching reform options and developing recommendations, especially around the creation of a regulatory sandbox (similar to what is already established in Utah). Final recommendations were due September 2022.
Then a blockade went up: Governor Gavin Newsom signed California Assembly Bill 2958, which prohibits any Bar funds from being put toward a sandbox program without State Legislature approval. (Approval that would, obviously, be an unlikely bet.) With funds removed, the Working Group cannot complete their work or research. Another working group dedicated to the creation of a paraprofessional program that would’ve allowed nonlawyers to provide limited legal services has also been hindered by the Bill.
Theories abound as to why California halted these regulatory reform efforts. Some proponents of the Bill cite inadequate disciplinary actions and oversight of rogue lawyers, claiming the Bar can’t handle any new problems until it takes care of these old ones. Others say they’re worried that nonlaywer-owned law firms would lead to the takeover of the legal industry by Big Tech. Some advocates for reform, however, say the real reason the Bill was pushed forward is because certain lawyers are worried that deregulation will lead to lower bottom lines.
When Will Legal Reforms in California Be Implemented?
There is a moratorium on looking further into the paraprofessional program until 2025. Considerations for a sandbox program are stalled indefinitely.
Why Is Legal Industry Reform in California Necessary?
Though reforms in California are currently halted, they continue to be necessary as the old ways aren’t working. As seen in other states, Californians often forgo legal help because they can’t afford or access a lawyer.
A 2019 California Justice Gap Study found two main problems persist when it comes to Californians and legal help: a knowledge gap (not knowing a problem has a legal solution or how to find legal assistance) and a service gap (the legal services system can’t serve all who seek/need assistance). The result? For 85 percent of their civil legal problems, Californians’ legal help is either insufficient or nonexistent.
But it’s not just consumers who are hurting. Increasingly, lawyers are hurting, too—especially those who serve people as opposed to corporations.
This is detailed in the 2018 Legal Market Landscape Report commissioned by the California State Bar. As the report says, “[L]egal regulators face a challenging environment in which the cost of traditional legal services is going up, access to legal services is going down, the growth rate of law firms is flat, and lawyers serving ordinary people are struggling to earn a living.”
Because of this, “The legal industry is at an inflection point.”
Are Other States Pursuing Legal Industry Reform?
Yes! At least a dozen states are considering legal industry reform and researching the access to justice gap.
Legal reform in Utah takes the form of the legal regulatory Sandbox, and Law on Call has been in operation there since Winter 2021. And in Arizona, legal reforms are already in place—Law on Call was recently approved to operate as an Alternative Business Structure in the state.