by Michael Djavaherian
Now there’s a headline you probably never thought you’d read. No, we have not gotten into the children’s play structures business. The Sandbox is a place that the State of Utah has created to allow legal service providers and law firms to “play” with business models and legal practices that otherwise wouldn’t be permitted. The goal is to improve efficiency, increase access to justice, modernize the practice of law, and ensure that consumers are protected.
Companies and lawyers requesting authorization to implement a practice that would not otherwise be compliant with state law or bar requirements must submit a detailed application describing the proposal, explaining how it will benefit Utah consumers, and providing assurances that the proposal will protect consumers from risk of harm. The Utah Supreme Court is the body that approves the requests after thorough review by Utah bar authorities.
XIRA’s application contained three requests:
- XIRA requested to be allowed to hold client deposits. Currently, Utah like most states requires a lawyer to place a client deposit in an IOLTA account at a bar-approved financial institution. The interest on those accounts is paid to the state bar to fund programs for clients who have suffered a loss due to their lawyer’s actions. The vast majority of lawyers manage the accounts properly, but almost everyone dislikes the extra administrative burden of handling trust accounting duties.
With XIRA handling the deposits, all those concerns are eliminated. When a lawyer wants a client retainer, he simply notifies XIRA of the amount, and XIRA collects it from the client. XIRA places the deposit in an interest-bearing insured account, and the interest is paid to the Utah State Bar. XIRA also handles the trust accounting for the lawyer. When the lawyer earns a fee or has an expense that entitles him or her to receive funds from the deposit, the lawyer makes a request to XIRA. The client is notified of the request and must approve it before it is paid. (This protects the client much more than the current system, where lawyers can pay themselves without client notice). No fees or charges are taken from the amount on deposit. If there are transaction costs, those are paid by the lawyer on funds transferred to the lawyer. It is a more modern, convenient and safer way to handle client deposits.
- XIRA requested to be allowed to list paralegals on its site, so that consumers who simply need a form to be filled out, or who need legal services of a type that Utah allows paralegals to perform without lawyer supervision can be made available to Utah consumers. This will improve access to legal help for people who otherwise could not afford it. No services that are not already allowed by Utah law will be provided, but by making paralegals accessible on XIRA’s videoconferencing platform, we will make them more easily found by those at the lower end of the legal services spectrum.
- Finally, XIRA requested to be allowed to receive five percent of the fees earned by lawyers on cases obtained by them through XIRA’s platform. This fee would allow XIRA to increase expenditures on marketing its platform to potential clients, and hopefully, bring more clients to the lawyers who list their profiles on XIRA. XIRA’s proposal would not increase the fees paid by clients, and the arrangement would be fully disclosed to clients.
XIRA hopes to go live in Utah by June 1 implementing these features (in addition to its existing GAVEL services) at that time. For lawyers in other states, it will not have any immediate impact. But, with many states re-examining old ways of doing things and considering creating their own sandboxes, the changes proposed by XIRA may well be coming to your state soon. Arizona has recently made significant changes. California has a commission considering similar reforms. Stay tuned!