News Releases

Board Approves Public Comment on Tech Task Force’s Regulatory Reform Options Under Consideration

Menu of Options Intended to Expand Access to Legal Services While Maintaining Public Protection

The State Bar Board of Trustees on July 11 authorized a 60-day public comment period for a sweeping set of regulatory reform options for improving access to legal services, developed by the Task Force on Access Through Innovation of Legal Services (ATILS).

Formed by the Board of Trustees in 2018, ATILS is charged with identifying possible regulatory changes that could remove barriers to innovation and enhance the delivery of, and access to, legal services. The Board directed the Task Force to balance the dual goals of public protection and increased access.

“For the last six months, the Task Force has worked diligently—and with a great deal of dedication and passion—to focus on changes that could open up access in a world where the cost of legal services is going up, access is perilously low, and few lawyers can make a living serving ordinary people,” said Task Force Chair Justice Lee Edmon. “We hope that putting these regulatory reform options out for public comment will spark a dynamic discussion in various communities whose interests they touch—we look forward to what we will learn from the public comment that will help us refine and finalize recommendations that will ultimately be submitted to the Board of Trustees and the Supreme Court for consideration.”

The Task Force’s 16 reform options under consideration represent a groundbreaking menu of possible changes to certain key regulatory issues, including:

• Exceptions to current restrictions on the unauthorized practice of law;
• The prospect of non-attorney ownership; and
• Entity regulation.

Beginning next week, the State Bar will seek written comment from consumers, legal service providers, technology experts, and lawyers as vital input for evaluating the options. The Task Force also plans to hold a public hearing to receive oral testimony. The hearing, to take place on August 10, 2019, at the State Bar’s San Francisco office, is timed to coincide with this year’s annual meeting of the American Bar Association.

The 23-member Task Force includes 11 public members, 10 lawyers, and two judges. The non-attorney majority is designed to help ensure that the Task Force focuses on protecting the interests of the public. The Task Force will deliver its final report to the Board of Trustees no later than December 31, 2019.

Other actions taken by the Board of Trustees on July 11 included:

Approval of 2020 Grant Distribution of Interest on Lawyers' Trust Accounts (IOLTA)

The Board approved a 2020 grant distribution of $55.6 million in IOLTA funds, a total that represents a new record and a 400 percent increase over the grant distribution just two years ago. This dramatic leap in IOLTA revenue is largely the result of two factors: an improving economy that has driven rising interest rates, and the State Bar’s efforts to work with banks to maximize interest revenue.

IOLTA is the interest from pooled attorney bank accounts that hold nominal or short-term client funds. Average daily balances in IOLTA accounts totaled almost $4.8 billion in 2018. The State Bar distributes the interest revenue to legal aid programs throughout California.

IOLTA revenue depends on interest rates, which plunged in 2008 and remained low for 10 years. Under statute, banks are required to offer IOLTA accounts interest rates comparable to those paid to other similarly situated depositors.

In 2018, the State Bar began recertifying the nearly 200 eligible financial institutions that offer IOLTA accounts. Staff reviewed financial products to ensure that IOLTA interest rates comply with the requirements. That effort continued this year. A single negotiation with Wells Fargo—the largest holder of IOLTA accounts in California and the State Bar’s own bank—yielded an interest rate increase of more than 50 basis points, increasing the potential amount of interest by nearly $5 million annually.

Each year, the Board of Trustees sets the amount of IOLTA grants available for distribution to qualified nonprofit legal aid organizations who provide free legal services to indigent Californians in civil legal matters. Since 1984, approximately 58 percent of State Bar legal aid grant funds have come from IOLTA.

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The State Bar of California's mission is to protect the public and includes the primary functions of licensing, regulation and discipline of attorneys; the advancement of the ethical and competent practice of law; and support of efforts for greater access to, and inclusion in, the legal system.