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The board of trustees of the State Bar of California voted unanimously Thursday to let the public weigh in on recommendations that would allow attorneys to share fees with nonlawyers and ultimately open door to outside ownership of law firms.

The 23-member board was responding to the work of the Task Force on Access Through Innovation of Legal Services. The group was created in 2018 to look for ways to encourage technological solutions to drive down the cost of legal work, thereby making it easier for the state's residents to secure assistance.

The state bar task force, which was split between lawyers and nonlawyers, came back with a series of recommendations that included changing bar rules to allow “technology-driven delivery systems”  and permitting some degree of fee-sharing.

Joanna Mendoza, a solo practitioner who is on the board of trustees and served on the task force, said the proposals were motivated by the fact that 80% of the people in the state who need legal services are not going to lawyers.

“I think lawyers, generally speaking, have a fear of a change like this,” Mendoza said in advance of the vote. “But there's no justification not to try it.”

The task force's recommendations on fee-sharing have the widest possibility to upend the industry. Rather than agree on one definitive approach, the group outlined two prospective strategies. The more restrained option would allow attorneys to share revenues with nonlawyers only if their firm remains solely focused on providing legal services.

The bolder one would do away with the existing prohibition on fee-sharing and allow nonlawyer investment and revenue-sharing under any circumstances, as long as a firm's clients consent.

“It invites others who are not lawyers to the table to bring new knowledge, ideas, funding and ultimately change,” the task force said of the plan in its recommendations.

Some law firm observers have expressed concern that the change could open the doors for the Big Four accounting firms to enter the market for legal services in the state. But the task force, in its recommendations, said the existing justice gap was severe enough to justify the daring move.

An additional recommendation would allow lawyers to engage in ancillary law-related activities that are not regulated by the state bar. A majority of jurisdictions currently allow such work, but California does not.

After the public comment period ends, the task force will finalize its recommendations, and the board of trustees will take a final vote in January. The Supreme Court of California must then approve any changes to the regulations.

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