Law Society of Alberta Introduces Innovation Sandbox
On October 1, 2021, the Benchers approved the creation of an Innovation Sandbox, where legal service providers are encouraged to develop innovative models for the delivery of legal services that cannot currently be offered due to existing regulatory requirements.
Changes in technology, the emergence of alternative service providers and an increasingly globalized legal market has changed the legal environment in Alberta and in fact, around the world. As these changes continue to shape the future of the delivery of legal services, law and the lawyers who practise it, accessible and affordable legal services continue to be an unmet need for the public.
About the Innovation Sandbox
The Innovation Sandbox allows the Law Society to support innovators in testing new ideas and models for the delivery of legal services in a controlled environment, with the Law Society providing both guidance and oversight.
That guidance and oversight will be provided by the Law Society’s Innovating Regulation Working Group (IRWG). The IRWG’s mandate is to explore how the Law Society can allow for greater flexibility in its current regulatory framework and minimize regulatory barriers to both encourage and foster innovation in the delivery of legal services in Alberta.
The IRWG is now working to operationalize the Innovation Sandbox in Alberta, with online applications to participate in the Sandbox expected to open in the first quarter of 2022.
The concept of the Innovation Sandbox is widely used in the financial services sector and is growing in popularity in legal services. Utah, British Columbia, Ontario and the United Kingdom are four noteworthy jurisdictions that have launched innovation sandboxes for the legal profession. Other jurisdictions in Canada and the United States are examining the concept and are at various stages of implementation.
Participating in the Innovation Sandbox
Lawyers who wish to participate in the Innovation Sandbox pilot must be active and practicing members of the Law.
Proposals for the Innovation Sandbox can come from lawyers and law firms in Alberta but can also come from non-lawyers and entities that are not law firms. The intent of the Innovation Sandbox is to assist those who are interested in developing innovative delivery models for legal services that can potentially benefit the public – whether in the form of efficiency, accessibility, affordability, or more.
The Innovation Sandbox is intended to be exploratory and innovative. For this reason, eligibility at the initial application stage will be open to the widest possible range of providers. Any legal function could be involved, and any entity can apply – lawyers, non-lawyers, not-for-profits and for-profit corporations, just to name a few. The eligibility criteria can be reviewed here.
Applicants who apply for entry into the Innovation Sandbox will be required to explain their proposed delivery model and how it fits within the Law Society’s framework of an Innovation Sandbox, along with other details about their organization.
Applicants who are approved to operate a delivery model in the Innovation Sandbox are required to sign an agreement with the Law Society for the delivery of legal services in a pilot format. The agreement will set out the requirements with which the applicant must comply during the pilot, including the duration of the pilot, maintaining eligibility requirements, conditions imposed, disclosure, complaint handling, monitoring and reporting. The IRWG and the applicant together will determine the duration of the pilot, but pilots will generally be two years in duration.
At the conclusion of each pilot, the applicant may continue to operate the delivery model unless the Law Society determines otherwise.
Frequently Asked Questions
An Innovation Sandbox is a “safe space” in which legal service providers are encouraged to develop innovative models for the delivery of legal services that cannot be offered due to existing regulatory requirements.
An Innovation Sandbox allows the Law Society to support providers in testing new ideas and models for the delivery of legal services in a controlled environment.
The core principle of an Innovation Sandbox is that innovation in the delivery of legal services can occur when there is support and encouragement. The Innovation Sandbox is a means for the Law Society to provide guidance and oversight to providers to develop innovative models for delivering legal services that may be of value to the public.
Two of the four key goals of the Law Society’s 2020-2024 Strategic Plan are focused on Innovation and Proactive Regulation (reducing regulatory barriers to innovation in the delivery of legal services, reducing regulatory oversight where possible, and increasing innovation, efficiency and transparency of all regulatory and governance processes) and Access (reducing regulatory barriers to innovation in the delivery of legal services, collaboration with other legal organizations and service providers to address unmet legal needs and increasing support for lawyers providing accessible legal services in innovative ways). The sandbox will help to fulfill the Law Society’s mandate of regulating the legal profession in the public interest and work to achieve our strategic goals.
The Legal Profession Act and the Rules of the Law Society prescribe that only lawyers may provide legal services and regulate what lawyers and, to a certain extent, law firms can do. Anyone who is not regulated by the Law Society is currently prohibited from providing legal services to the public. Lawyers are required to conduct their practices and deliver legal services in strict compliance with the Rules and the Code of Conduct.
The requirement to deliver legal services only in compliance with the Law Society’s regulatory framework does not necessarily foster innovation in the delivery of legal services. Anyone who wants to provide delivery models for legal services that are innovative but outside of the Rules of the Law Society of Alberta or the Code of Conduct cannot do so without encountering regulatory intervention.
In the structured, safe environment of an Innovation Sandbox, the Law Society can relax its regulatory requirements (the requirements in the Rules or the Code) which can foster innovation in the delivery of legal services. Lawyers, firms and other providers can explore, develop and implement new and innovative concepts, services and business models without the threat of enforcement if the innovation breaches the current requirements.
Proposals for innovative legal services delivery models can come from lawyers and law firms in Alberta as well as organizations that do not presently offer legal services. The intent of the Innovation Sandbox is to assist those who are interested in developing innovative delivery models for legal services that can potentially benefit members of the public – whether in the form of efficiency, accessibility or affordability, or all three, or more.
The sandbox is intended to be exploratory and innovative. For this reason, eligibility at the initial application stage will be open to the widest possible range of providers. Any legal function could be involved and any entity could apply – lawyers, non-lawyers, not-for-profits and for-profit corporations.
The Law Society will evaluate applications based on the approved eligibility criteria. If an application meets the eligibility criteria, it will be accepted into the Innovation Sandbox. Eligibility criteria may include the following:
- In Scope – The proposed delivery model must advance a goal of the Law Society’s Strategic Plan, including Innovation & Proactive Regulation, Access, Competence & Wellness, and Equity, Diversity & Inclusion
- Benefit to the Public – The proposed delivery model must offer a reasonable prospect of identifiable and clear benefits to the public, such as improved efficiencies, lower cost, or greater access.
- Access is Necessary – The Innovation Sandbox is designed for legal service delivery models that are outside of the Legal Profession Act, the Rules of the Law Society of Alberta or the Code of Conduct.
- Genuine Innovation – Proposed delivery models should be innovative in Alberta, address gaps or offer a significantly different way of delivering legal services.
- Client Safeguards – The proposed delivery model must identify any reasonably foreseeable risks that may be posed to the public during a pilot, and safeguards that will be put in place to mitigate these risks and protect clients.
- Business Operating Permits – Any business permits required by the local or the provincial government must be obtained prior to operating the delivery model in Alberta.
- Readiness – The applicant must indicate when they will be ready to implement the proposed delivery model in a live environment. Readiness will be established by having a well-developed business plan, that sets out clear objectives, measures for success, safeguards for the public along with the necessary tools and resources in place.
- Exit Strategy – Applicants are required to have a clear exit strategy either for a pre-determined end date, or earlier if the IRWG determines that a delivery model must cease operations during the pilot.
The Innovation Sandbox operates as a standalone program at the Law Society and will not have an expiry date. Applicants who are accepted into the Innovation Sandbox will operate their delivery model through a pilot for a period of at least two years.
An applicant must submit an application that proposes a new model for delivering legal services. Applicants who apply for entry into the Innovation Sandbox will be required to explain their proposed delivery model and how it fits within the Law Society’s framework of an Innovation Sandbox.
The Innovation Sandbox will have eligibility criteria that an application must meet. Those criteria been approved by the Law Society.
The Law Society reviews the application and determines if it meets the eligibility criteria. If the application is accepted (with or without conditions) into the Innovation Sandbox, the Rules or the provisions of the Code that prohibit the operation of the proposed delivery model are identified and relaxed or waived.
Once the applicant’s delivery model is approved for the Innovation Sandbox, the applicant is required to sign an agreement with the Law Society, acknowledging the requirements with which the applicant is required to comply, potential risks and proposed conditions to mitigate identified risks.
The proposed delivery model will be tested and implemented in a controlled environment through a pilot for a specified operating period. The Law Society and the applicant will together determine the duration of the pilot, but generally pilots will be two years in duration. The Law Society will oversee and monitor the implementation of the delivery model during the pilot.
Any proposed legal service delivery model will be tested and implemented in a controlled environment through a pilot for a specified operating period. The IRWG and the applicant will together determine the duration of the pilot, but generally pilots will be at least two years in duration.
During the operation of the pilot, providers are encouraged to contact the Law Society for any information or support they may need. A contact person may be provided to check-in with the provider and offer support on an as-needed basis.
What happens if an applicant’s proposal doesn’t meet the eligibility criteria for the Innovation Sandbox?
If an application does not meet the eligibility criteria, the application will be denied in a written decision which will clearly articulate how the application did not meet the eligibility criteria. The applicant can modify their application to address any deficiencies and resubmit their application.
If the applicant’s proposed model is allowed by the Rules and the Code, the proposed model does not require access to the Innovation Sandbox and is permitted.
An Innovation Sandbox is an opportunity to develop, implement, test and evaluate new models for delivering legal services in a pilot, for a specified period of time. The duration of a pilot within the Sandbox program should be of a period sufficient to obtain relevant and pertinent testing information to gauge the efficacy of the delivery model that is being tested. The Law Society and the applicant will determine the duration of the pilot.
Approved applicants will operate their delivery model in a pilot generally for a period of two years, but this time frame may vary depending on the requirements of both parties. Upon the conclusion of each pilot, the applicant may continue to operate the delivery model unless the Law Society determines otherwise.
Application approval decisions will be made with reference to a detailed set of approval criteria, one of which is whether the applicant carries appropriate insurance commensurate to the risks involved in the delivery of its services. This may include errors and omissions insurance, product liability insurance, general commercial liability insurance, and/or cyber insurance.
If Alberta lawyers are practicing in the Innovation Sandbox, they still require indemnity insurance from ALIA.
The Law Society may determine that an application can be approved provided that conditions are imposed and complied with. Conditions that may be imposed on an approved application include:
- Disclosure and Acknowledgment Requirements
Applicants may be required to disclose to prospective clients, subject to other disclosure requirements, that they are providing legal services in a pilot through an Innovation Sandbox.
Applicants may be required to provide clients with information about their delivery model, including:
- that the delivery model is a test, of limited duration, operating through the Innovation Sandbox
- that the delivery model has not been proven
- there is no guarantee of longevity or completion of their matter using the delivery model
- if the delivery model is provided by a non-Alberta lawyer, that specific regulatory requirements may not apply
- other pertinent information, as determined by the Law Society.
If required, clients of approved delivery models must sign an acknowledgment that the information above has been disclosed.
- Insurance or Indemnity Requirements
Applicants who are not insured Alberta lawyers must have insurance or indemnification in place that is appropriate for the delivery model piloted in the Innovation Sandbox.
What are some of the elements that may be included in the agreement between the participant and the Law Society?
Applicants who are approved to operate a delivery model in the Innovation Sandbox are required to sign an agreement with the Law Society for the delivery of legal services. The agreement will set out the requirements with which the applicant must comply during the pilot, including:
- duration of the pilot;
- maintaining eligibility requirements;
- conditions imposed;
- complaint handling.
- monitoring; and,
What are some of the reporting requirements that might be expected of Innovation Sandbox participants?
Participants will be required to provide periodic reports to their contact person at the Law Society consistent with the objectives and nature of the delivery model. These reports will consist of broad, general information such as issues that have arisen, consumer feedback, general observations about the operation of the delivery model, and so on.
At the end of the pilot, participants are required to provide a final, formal report to the Law Society. The final report will provide specific information, including:
- issues that affected the operation of the delivery model;
- measures of success, including consumer interest and participation;
- consumer feedback, including complaints and positive outcomes;
- additional support required from the Law Society;
- whether the delivery model achieved the objectives of the delivery model;
- whether the delivery model met the objectives of innovation and access to justice;
- performance and efficiency outcomes;
- the cost of legal services delivered; and,
- next steps.
Our entity has been authorized to offer legal services in the Sandbox. Does this mean I am immune from investigation or regulation?
Absolutely not. The Innovation Sandbox authorizes you to provide legal services through a nontraditional service model without being subject to regulatory discipline for your specific exemption. If your entity violates provincial or federal law (consumer protection, disclosure, securities, etc.), you can absolutely be investigated and be subject to discipline for those violations. Lawyers working with your entity can be also disciplined if they violate the Rules or Code of Conduct. Any other licensed professionals in your entity (accountants, medical providers, social workers, etc.) can be subject to professional discipline by their regulators if they violate their rules.
A complaint regarding Alberta lawyers will follow the Law Society’s complaint process.
The Law Society will assess a complaint to determine the nature of the complaint, the issues raised and whether a complaint may be resolved through additional support. If the complaint is resolved to the satisfaction of the contact person, then no further steps are required. Complaints are handled through a process that is fair for both the complainant and the lawyer or application involved.
I’m an Alberta lawyer and I’ve been approached by an entity that has been authorized in the Innovation Sandbox. Can I work for them?
Yes. Alberta lawyers can deliver legal services in these new entities. However, the Rules of the Law Society of Alberta and the Code of Conduct still apply. For more clarity regarding the exemptions to the Rules or Code, contact the entity’s Law Society contact.
At the conclusion of the pilot, the provider will prepare a comprehensive report for the Law Society’s review. We will evaluate the results of the testing and implementation to determine whether the provider will be allowed to continue to deliver legal services through their delivery model or whether the delivery model will cease. Providers that have completed their agreed term and have successfully exited the Sandbox have authorization to continue to provide legal services (contingent upon continuing to abide by the terms of their agreement with the Law Society).
A provider’s approval to participate in the sandbox means that they can operate for a limited period of time in the sandbox with strict monitoring and reporting requirements. To gain approval, the participant must meet certain eligibility requirements and in compliance with their agreement with the Law Society, acknowledging the requirements with which the applicant is required to comply, potential risks and proposed conditions to mitigate identified risks. It is likely that both consumers and participants will see sandbox participation as an indication that the participant provides competent and ethical service.
The sandbox concept is widely used in the financial services sector and has more recently been introduced in the legal sector. Current sandbox environments are operated by the Law Society of British Columbia, the State Bar of Utah and the United Kingdom. The Law Society of Ontario and State Bar of California have both announced plans to operate sandboxes as well.
Our goal with the Innovation Sandbox is to help the profession meet the unmet legal needs of Albertans and not to disrupt the good work already being done. We anticipate that many Innovation Sandbox participants will serve consumers who traditionally do not seek out a lawyer to assist with their issue.
Technology is changing how lawyers practice, just as it is changing how other professions practice, and innovations developed in the sandbox may create new opportunities for lawyers as well.