COMPLIANCE
Regulatory Sandboxes and Non-Law Ownership By HEATHER THOMAS
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here is an increasing drive for legal industry standards to evolve and accommodate the present. One trend that general counsel (or any legal professional concerned with compliance, regulation and the legal issues that arise from new engagements) should watch for is the use of regulatory sandboxes and their ability to alter standards in industries normally resistant to change. In August 2020, Arizona courts pushed through a measure dropping regulations around lawyer
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exclusivity in companies practicing law. They join courts in Washington, D.C. and various countries abroad that are experimenting with non-law ownership in law firms. In the United States, most states are being more cautious in their approach and seeking confirmation that restructuring legal organizations would not cause a systematic collapse of legal ethics. Some states are turning to regulatory sandboxes as a method to experiment without disrupting
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the larger regulatory systems in place. Regulatory sandboxes allow changes to rules and regulations to be tested on a small scale under time constraints before permanent, large-scale adoption. Participants operate within a defined space under a new set of rules to see how the regulations fare under actual circumstances. A committee or team provides regulatory oversight, evaluating how well the participants can play by the new rules without larger repercussions. BACK TO CONTENTS
