By Sara Merken

Sept 24 (Reuters) - Washington is joining a small number of U.S. states that have loosened rules on who can practice law.

Officials in Washington plan to start accepting applications as soon as next month from law firms and other organizations that want to take part in a pilot initiative that will relax rules on who can practice law in the state for a test period lasting up to a decade.

Traditional law firms, nonprofits and technology-focused legal services companies have expressed interest, according to Renata de Carvalho Garcia, chief regulatory counsel at the Washington State Bar Association.

The owner of a personal injury and workers' compensation law firm and the co-founder of an AI legal technology startup told Reuters that they are planning to apply when the project opens up.

Other states, including Utah, have experimented or forged ahead with similar regulatory changes. In Arizona, a permanent change to law firm ownership rules has drawn in more than 100 participants, including a new law firm subsidiary of KPMG.

Lucian Pera, a legal ethics expert at Adams & Reese, said each jurisdiction's initiatives vary, making them more or less attractive depending on a firm's business model.

A KPMG spokesperson said it is prioritizing growth in Arizona and will continue to monitor regulatory developments in other states.

"We typically have not applied in jurisdictions where the reform is not permanent," a spokesperson for LegalZoom, whose subsidiary has been operating under Arizona's program since 2021, said in an email. If the regulators in Washington make a permanent change, "we may have a different approach."

Rocket Lawyer and Elevate similarly said they don't have plans to apply for the Washington initiative, citing their operations in Arizona. Axiom, another company participating in Arizona's program, did not respond to requests for comment.

In Washington, the project will allow firms and organizations, with court approval, to practice law using non-traditional business models and technology.

The state bar and the court's practice of law board still need to finish ironing out some details before officially launching the program, which could begin in October or later in the fall, said de Carvalho Garcia. The Washington Supreme Court approved the initiative last December, after getting mixed reactions in public comments.

Patrick Palace, owner of Palace Law, said he is preparing to apply in order to expand an existing chatbot service that provides free information to injured workers, and to share fees with business partners. The firm has already worked for several years with legal tech company LawDroid on the bot, called PatBot.

2nd Chair, which makes AI tools for small law firms and solo practitioners, also expects to apply to the Washington program, said co-founder Austin Brittenham.

Brittenham's company is exploring offering versions of its product directly to consumers, some of whom may not be able to afford a lawyer and want to represent themselves. But some features may "ride the edge" of unauthorized practice of law rules, he said.

"The change in regulatory environment gives us certainty to go pursue these features and test them," Brittenham said.

(Reporting by Sara Merken)