The Bencher from Amazon?

[Published first on slaw.ca]

 

For generations, Canadian lawyers have been regulated themselves. Law Societies, with elected lawyer benchers and, more recently, with appointed lay benchers, have governed the legal profession. We refer to this as professional self-regulation.

It is increasingly recognized that legal needs are not fully satisfied by lawyers. Some legal needs are satisfied by others. Some legal needs are not satisfied at all. It is now understood that access to justice is an important and difficult policy challenge. In Ontario, section 4.2(2) of the Law Society Act now expressly states that the Law Society has “a duty to act so as to facilitate access to justice for the people of Ontario”.

As legal needs can be satisfied by new types of professionals or in new ways (technology for example), the question of the role of the Law Society arises. If a Law Society becomes the self-regulator of more than one professions, the nature of the Law Society changes. If a Law Society becomes the regulator of legal services generally, the nature of the Law Society further changes.

The point of this column is to suggest that thinking about new ways of providing legal services should include thinking about the implications on the existing regulation. This is not to suggest that nothing should change but rather that there may be more than one way to change and that the implications should be considered.

The Law Society of Ontario regulates two professions

Ten years ago, the Law Society of Ontario[1] became the regulator of Ontario paralegals. This was accomplished by significant amendments to the Ontario Law Society Act.

Previously, the Law Society only regulated lawyers. It was the self-regulator of one profession. Lawyers elected 40 benchers to Convocation[2]. The provincial government appointed eight non-lawyer benchers to Convocation. Only lawyers were permitted to “practice law”. The Court of Appeal for Ontario had concluded many years earlier that paralegal agents were not engaged in the unauthorized practice of law[3].

How paralegal regulation was introduced in Ontario

The 2006 amendments to the Law Society Act don’t actually mention paralegals. Rather a new concept was introduced into the Act: “providing legal services”. The “providing legal services” concept is very broadly defined in section 1(5) of the Act such that a person provides “legal services” if “the person engages in conduct that involves the application of legal principles and legal judgment with regard to the circumstances or objectives of a person”.

Having very broadly defined the provision of “legal services”, the Act prohibits the provision of legal services without a license, subject to certain exclusions. Two types of licenses are contemplated namely licenses to practice law and licenses to provide legal services.

The result (at least so far) is two types of licensees, lawyer licensees and paralegal licensees. Lawyer licensees can practice law. Paralegal licensees can provide legal services within the scope of their licenses – and their licenses only permit them to act as advocates in tribunals and in some courts in certain circumstances.

The 2006 amendments also provided for the election of benchers who provide legal services. Currently, five paralegal benchers are elected to Convocation.

The changing nature of the Law Society

There are two main points to be drawn from this legislative history. The first is that the consequence of having the Law Society become the regulator of paralegals was that the Law Society became the self-regulator of two professions. Lawyers and paralegals are now elected to regulate lawyers and paralegals. Lawyers and paralegals sit on hearing panels to assess the professional conduct of lawyers and paralegals.

This approach was not inevitable. A separate self-regulator could have been established to regulate paralegals. Some contended for this. England and Wales provides an example of separate regulators. There are separate regulators for solicitors, barristers, legal executives, licensed conveyancers, patent and trademark attorneys, costs lawyers and notaries. These “front-line” regulators are supervised by the Legal Services Board[4]. In Canada, the regulation of doctors, nurses and other health care professionals provides another example. There are separate regulators for different health care professions rather than a regulator of different types of health care professionals.

That the nature of the Law Society of Ontario was changed by the addition of a new profession to its regulatory ambit is significant and may not be obvious to many. If new legal professions become regulated by the Law Society, the nature of the Law Society will further evolve.

The changing scope of the monopoly

In order to regulate paralegals, it was necessary to determine what activities required regulation. While the permitted scope of practice of Ontario paralegals is advocacy, the definition of legal services (and hence the regulated space) was much broader as described above.

In other words, amendments to the Law Society Act carved out a very broad regulatory space while the Law Society authorized licensed paralegal activity only in a portion of that space.

The legislative decision to carve out a broad regulatory space was presumably designed to sweep all unregulated paralegals into regulation without quibbles about what was and what was not regulated. However, the result appears to be to have prohibited unregulated service provision in areas where neither lawyers nor regulated paralegals provide services.

Again, this was not the only possible choice. Again, we see a different approach in England (and Wales). The English approach is to define certain legal activities as being “reserved” (subject to exemptions) with the remaining legal activities being “unreserved”. The reserved legal activities are the exercise of a right of audience, the conduct of litigation, reserved instrument activities, probate activities, notarial activities and the administration of oaths[5].

The English approach allows licensed and unlicensed persons and entities to provide unreserved legal activities but, subject to exemptions, only licensed persons and entities to provide reserved legal activities.

The policy choice underlying the amendments to the Law Society Act in 2006 substantially extended the Ontario “reserved” space in order to ensure that paralegal agents were brought into regulation. The effect was to extend the regulatory space beyond where lawyers and paralegal agents provide legal services.

So what?

There has been increasing discussion about the ability of technology to provide legal services where legal services are not now being provided. The economic models of professional services and of technological services are quite different. Professionals have limited time to service clients and the cost of their time does not decrease. On the other hand, technology can service many people once built and the cost of serving one further person commonly drops as more people are served.

There are lots of issues to work through around technological provision of legal services. This column is not intended to do that work. The point of this column is a narrower one, namely that the decision to allow technology to deliver legal services has important implications for legal services regulation.

Potential effects of and approaches to allowing technological provision of legal services

Let’s assume that it is the correct policy choice to allow technology to deliver legal services directly where lawyers and paralegals do not now provide cost-effective services.

One way to do this would be to license technology providers by creating a new class of licensees. The Law Society Act allows this. But would it make sense to have a Society with elected lawyers and elected paralegals be the regulator of these new providers? Paralegals would rightly have objected to regulation only by elected lawyers and nurses would not accept regulation only by elected doctors. Neither would make sense in the public interest.

If self-regulation is to be maintained, wouldn’t the logical consequence of regulating technological providers be to have their elected representatives on the board. Said more plainly, if Amazon provided technologically based legal services, should there be a bencher from, or elected by, Amazon? This would of course change the nature of the Law Society by adding new types providers to the Convocation table, benchers who are not professionals in the traditional sense of the word.

But this is not the only possible approach. Another is to take the English approach (or the Canadian approach for health professions such as doctors and nurses) and to have different regulators for different types of providers. There could be a separate regulator of technological providers.

An a third approach would be to adopt the English approach to reserved and unreserved activities and to reduce the scope of the regulatory sphere so as to allow technology to deliver legal services outside of the reserved space subject only to general consumer regulation.

To be clear, I do not contend for any conclusion in this column but rather seek to highlight that the decision to move beyond legal service delivery by one established profession has its complexities. Those complexities can be managed in different ways and that complexity exists is not a sufficient reason to avoid change in the public interest. But there are things to think about.

The options

In February 2018 LawPro Magazine addressed the Top Legal Disruptions asking “How the profession should respond to major disruptions”. As the article said:

At the most basic level, there are just three options for dealing with alternative legal service providers. They are:

  1. prosecute them for the unauthorized practice of law;
  2. ignore them; or
  3. bring them into the legal services tent.

The point of this column is that the “bring them into the legal services tent” option requires some serious thought about the nature and the design of the tent.

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[1] Then called the Law Society of Upper Canada

[2] Elected lawyer benchers could become life benchers and thereby continue to participate as benchers. Treasurers could continue to participate as benchers.

[3] Regina v. Lawrie and Pointts Ltd.(1987), 59 OR (2d) 161 (OCA)

[4] These regulators are not self-regulators. Their boards are not elected by the professions that they regulate but rather are appointed by government..

[5] Section 12 and Schedule 2 of the Legal Services Act 2007.

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Preliminary thoughts on Green, Groia and Trinity Western

(First published on slaw.ca)

In the last thirty years, Law Societies have been parties before the Supreme Court of Canada in thirteen cases according to CanLII[i] [ii]. Four of these cases have been decided in the last fifteen months[iii]. While others will delve more deeply into this recent jurisprudence, it is interesting to take a preliminary look at the way that the Court has understood the role, responsibility and jurisdiction of the Law Societies. It is noteworthy that the court has been divided in each of these four cases.

In Green v. LSM [iv], the Court upheld mandatory suspension for failure to comply with the CPD requirements of the Law Society of Manitoba. In Groia v. LSUC[v], the Court set aside a finding of professional misconduct for alleged in-court incivility in the context of criminal law defence. In TWU v. LSUC and in LSBC v. TWU[vi], the Court upheld decisions not to accredit Trinity Western University as a law school.

Green v. Law Society of Manitoba

The issue in Green v. LSM was the imposition of mandatory CPD together with mandatory administrative suspension for non-compliance. As a matter of administrative law, the Court addressed the standard of review of Law Society rule making. Justice Wagner, as he then was, wrote for the majority. He said that Dunsmuir[vii] applied because it applies to “all exercises of public authority” and to “those who exercise statutory powers”. In concluding that deference was required in considering Law Society rules, Justice Wagner stated that “In the case at bar, the legislature specifically gave the Law Society a broad discretion to regulate the legal profession on the basis of a number of policy considerations related to the public interest. The Act empowers the benchers of the Law Society to make rules of general application to the profession, and in doing so, the benchers act in a legislative capacity.”[viii]

In his reasonableness analysis, Justice Wagner looked to the Law Society’s statutory mandate. He said at para. 29 that “the Act contains an expansive purpose clause that obligates the Law Society to act in the public interest” and that “[t]he meaning of ‘public interest’ in the context of the Act is for the Law Society to determine”. On the CPD requirement itself, Justice Wagner observed at para. 59 that “The educational standards in respect of CPD, as defined by the Rules, do not relate solely to the competence of lawyers. … these standards also protect the public interest by enhancing the integrity and professional responsibility of lawyers, and by promoting public confidence in the profession”.

Justices Abella and Côté dissented but not on standard of review. They would not have upheld the rule because it provided for mandatory administrative suspension for non-compliance irrespective of the circumstances and without discretionary authority to relieve against unfair application. Justice Abella’s analysis of the role of the law societies is of interest. As she put it at para. 80:

Law Societies therefore represent — and are dedicated to protecting — the core values of the profession. They also represent — and are dedicated to protecting — the public’s confidence that those values will guide the lawyers who serve them. While the primary goal of the Law Society is the protection of the public interest, it cannot do so without also protecting the ability of its members to practise law professionally. …

In Justice Abella’s opinion, mandatory suspension for non-compliance irrespective of the circumstances compromised public confidence in the lawyer’s professionalism. Justice Wagner, for the majority, was not prepared to accept the premise of Justice Abella’s conclusion as Mr. Green had generally attacked the rule itself and that “In framing his challenge to the Rules in this way, Mr. Green wrongly assumes that the Law Society will not take its duty of procedural fairness seriously and provide for an appropriate procedure that is responsive to the particular facts and the reasonable expectations of the parties.”[ix] [cite]

What is of interest generally is that the Court in Green concluded that the Law Society is a public authority exercising a broad legislative discretion to regulate the legal profession in the public interest. The majority and the minority agreed that the role of the Law Society requires focus on public confidence in the legal profession as well as on the competence and conduct of individual lawyers.

Groia v. Law Society of Upper Canada

In Groia v. LSUC, the Court considered an adjudicative decision rather than a conduct rule. The Court again addressed standard of review with both the majority and the dissenters concluding that deference was required. In their concurring reasons Justices Côté and Brown would have applied correctness review, but agreed with the majority that the Law Society’s decision could not stand. The live issue between the majority and concurring judges was whether deference was appropriate in respect of in-court conduct given the fundamental principle of judicial independence.

For the majority, Justice Moldaver wrote at para. 54 that “Crucial to the principle of judicial independence is the presiding judge’s power to control his or her courtroom. However, I do not see a deferential standard of review as threatening that power.” At para. 55, he wrote that “Courts and law societies enjoy concurrent jurisdiction to regulate and enforce standards of courtroom behaviour. A trial judge is free to control the conduct in his or her courtroom irrespective of the degree of deference accorded to a law society’s disciplinary decision by a different court.” Justice Côté, with whom Justice Brown agreed, concluded that para. 169 that “correctness review is required to ensure proper respect for the judiciary’s constitutionally guaranteed place in our democracy”.

As to the reasonableness of the finding of professional misconduct, Justice Moldaver for the majority held at para. 88 that “it is not professional misconduct to challenge opposing counsel’s integrity based on a sincerely held but incorrect legal position so long as the challenge has a sufficient factual foundation, such that if the legal position were correct, the challenge would be warranted”. Justice Moldaver observed at para. 89 that “Many legal principles we now consider foundational were once controversial ideas that were fearlessly raised by lawyers. Such innovative advocacy ought to be encouraged — not stymied by the threat of being labelled, after the fact, as “unreasonable”.

Justice Moldaver advanced two reasons why legal error should not be the basis for of a finding unreasonable allegation of prosecutorial misconduct. The first at para. 90, which is resonant with Justice Abella’s dissent in Green v. LSM, is that “a finding of professional misconduct against a lawyer can itself be damaging to that lawyer’s reputation. Branding a lawyer as uncivil for nothing more than advancing good faith allegations of impropriety that stem from a sincerely held legal mistake is a highly excessive and unwarranted response.”[x]

The second reason at para. 91 is that:

… Prosecutorial abuse of process is extraordinarily serious. It impairs trial fairness and compromises the integrity of the justice system: Defence lawyers play an integral role in preventing these dire consequences and holding other justice system participants accountable by raising reasonable allegations. Finding a lawyer guilty of professional misconduct on the basis of incivility for making an abuse of process argument that is based on a sincerely held but mistaken legal position discourages lawyers from raising these allegations, frustrating the duty of resolute advocacy and the client’s right to make full answer and defence.

The second reason is also resonant with Justice Abella’s dissent in Green where she wrote that the Law Society must “[protect] the ability of its members to practise law professionally”. Justice Moldaver’s second reason emphasizes the importance of the duty of resolute advocacy and the right of an accused client to make full answer and defence which are of course essential to professional legal practice.

For present purposes, the significance of Groia v. LSUC appears to be that the law societies and the courts do have concurrent jurisdiction to regulate and enforce in-court conduct but that it is necessary that law society decisions not unreasonably stigmatize lawyer conduct and fully take into account the lawyer’s role in the administration of justice.

Trinity Western

The LSBC v. TWU and TWU v. LSUC decisions both address the decision not to accredit Trinity Western University for lawyer licensing purposes. The decision is unlike Green v. LSM in that law society rule-making was not in issue. The decision is unlike Groia v. LSUC in that a disciplinary adjudicative decision was not in issue.

The TWU cases are significant because they address the proper purposes of law society regulation and because the cases are different than Green and Groia in that the accreditation decision affected the Charter-protected freedom of religion of evangelical Christians rather than the legal system, accused persons and lawyers.

It is helpful to start with the dissenting reasons of Justices Côté[xi] and Brown in LSBC v. TWU which conclude at para. 273 that:

A careful reading of the LPA leads us to conclude that the only proper purpose of an approval decision by the LSBC is to ensure that individual licensing applicants are fit for licensing. Given the absence of any concerns relating to the fitness of prospective TWU graduates, the only defensible exercise of the LSBC’s statutory discretion for a proper purpose in this case would have been for it to approve TWU’s proposed law school.

In para. 66 of their minority reasons in TWU v. LSUC, Justices Côté and Brown conclude that “In light of the LSUC’s mandate, it is crystal clear that the provisions in By-Law 4 relating to the accreditation of law schools are meant only to ensure that individual applicants are fit for licensing” (emphasis in the original).

There being no claim that graduates of TWU would not be fit for licensing, this conclusion would have been dispositive if accepted by the majority.

Before considering the majority reasons, it is useful to set out some of the relevant legislative provisions. In the Legal Profession Act[xii] (the “BC LPA”)of British Columbia, section 3 provides that:

It is the object and duty of the society to uphold and protect the public interest in the administration of justice by

(a) preserving and protecting the rights and freedoms of all persons,

(b) ensuring the independence, integrity, honour and competence of lawyers,

(c) establishing standards and programs for the education, professional responsibility and competence of lawyers and of applicants for call and admission,

(d) regulating the practice of law, and

(e) supporting and assisting lawyers, articled students and lawyers of other jurisdictions who are permitted to practise law in British Columbia in fulfilling their duties in the practice of law.

In the Law Society Act[xiii] (the “ON LSA”) of Ontario, section 4.2 provide that:

4.2 In carrying out its functions, duties and powers under this Act, the Society shall have regard to the following principles:

1. The Society has a duty to maintain and advance the cause of justice and the rule of law.
2. The Society has a duty to act so as to facilitate access to justice for the people of Ontario.
3. The Society has a duty to protect the public interest.
4. The Society has a duty to act in a timely, open and efficient manner.
5. Standards of learning, professional competence and professional conduct for licensees and restrictions on who may provide particular legal services should be proportionate to the significance of the regulatory objectives sought to be realized.

Statutory objectives

In their majority decision, Justices Abella, Moldaver, Karakatsanis, Wagner, Gascon took a broad view of the proper purposes in accreditation.

In paras. 31 and 32 of LSBC v. TWU, the majority expressed their view that “the LPA requires the Benchers to consider the overarching objective of protecting the public interest in determining the requirements for admission to the profession, including whether to approve a particular law school” and that “The legal profession in British Columbia, as in other Canadian jurisdictions, has been granted the privilege of self-regulation. In exchange, the profession must exercise this privilege in the public interest”. Their reasons in paras. 14 et seq in TWU v. LSUC are to the same effect.

Notably, the majority in LSBC v. TWU commenced, at paras. 36, with the proposition from Green v. LSM at para. 24 that the law societies should be afforded “considerable latitude” in their “interpretation of the ‘public interest’ in the context of [their] enabling statute”. The majority then noted in para. 37 the delegation by the legislature of aspects of professional regulation to the Law Society which has “primary responsibility for the development of structures, processes, and policies for regulation”. According to the majority “[t]his delegation recognizes the body’s particular expertise and sensitivity to the conditions of practice. This delegation also maintains the independence of the bar; a hallmark of a free and democratic society.”[xiv] This recognition by the majority of delegated self-regulation as maintaining the independence of the bar is of interest in light of Canada (Attorney General) v. Federation of Law Societies of Canada, [2015] 1 SCR 401, 2015 SCC 7 at para. 86 in which Justice Cromwell concluded that he did not “find it necessary or desirable in this appeal to address the extent, if at all, to which self-regulation of the legal profession is a principle of fundamental justice”.

The majority summarized their conclusion on proper purpose at para. 40 of LSBC v. TWU as follows:

In our view, it was reasonable for the LSBC to conclude that promoting equality by ensuring equal access to the legal profession, supporting diversity within the bar, and preventing harm to LGBTQ law students were valid means by which the LSBC could pursue its overarching statutory duty: upholding and maintaining the public interest in the administration of justice, which necessarily includes upholding a positive public perception of the legal profession. …

In TWU v. LSUC, the majority said at para. 20 that:

In our view, the LSUC was entitled to conclude that equal access to the legal profession, diversity within the bar, and preventing harm to LGBTQ law students were all within the scope of its duty to uphold the public interest in the accreditation context, which necessarily includes upholding a positive public perception of the legal profession.

There are several purposes found to be proper by the majority. The first is ensuring equal access to the profession. The second is supporting diversity within the profession. The third is preventing harm to LGBTQ law students. The fourth is upholding a positive public perception of the legal profession.

The majority found support for the appropriateness of these purposes in the respective statutes in both the BC and the Ontario cases. In BC, the support was found in the statutory object and duty under the BC LPA to uphold and protect the public interest in the administration of justice by preserving and protecting the rights and freedoms of all persons and ensuring the competence of lawyers. In Ontario, support was found in the statutory duties to maintain and advance the cause of justice and the rule of law, to act so as to facilitate access to justice for the people of Ontario and to protect the public interest, all in carrying out its functions, duties and powers under the ON LSA.

The Chief Justice, in her concurring reasons, agreed that (i) maintaining equal access and diversity in the legal profession and (ii) preventing significant harm to LGBTQ people who might attend TWU’s proposed law school were statutory objectives. In his concurring reasons, Justice Rowe agreed with the majority and with the Chief Justice that “it was within the statutory mandate of the [law society] to consider the effect of the Covenant on prospective law students as part of its accreditation decision” as the Law Society “has a broad mandate to regulate the legal profession in the public interest”. His view was that the Law Society was “justified in considering the impact of the Covenant on prospective applicants to the proposed law school and, more generally, in considering the role of law schools as the first point of entry to the legal profession.”

In summary, I think it notable that the majority considered that s. 3 of the BC LPA and s. 4.1 of the ON LSA contained broad statutory purposes which could properly be considered in the accreditation decision. The majority applied these provisions in an expansive way considering the public interest, equality rights of law students, the effect of non-merit based admission policies on competence in the profession and the importance of diversity in access to and administration of justice.

Charter Values

A significant difference between the majority and the dissenters was the use of Charter values in the determination of proper regulatory objectives. As the dissenters put it in para. 270 of their reasons in LSBC v TWU, “[e]ven accepting, for the sake of argument, that it is beyond dispute that administrative bodies other than human rights tribunals may consider fundamental shared values, such as equality, when making decisions within their sphere of authority” (Majority Reasons, at para. 46), it is the LSBC’s enabling statute, and not “shared values”, which delimits the LSBC’s sphere of authority.” (Emphasis added)

In contrast, the majority held at para. 41 that:

Indeed, the LSBC, as a public actor, has an overarching interest in protecting the values of equality and human rights in carrying out its functions. As Abella J. wrote in Loyola, at para. 47, “shared values — equality, human rights and democracy — are values the state always has a legitimate interest in promoting and protecting”.

The Chief Justice accepted at para. 140 that “As the collective face of a profession bound to respect the law and the values that underpin it, [the Law Society] is entitled to refuse to condone practices that treat certain groups as less worthy than others”.

Doré and Loyola

Unlike more typical administrative law cases, the TWU cases are not just about whether the law societies acted for improper purposes. For the dissenters, the analysis could of ended there but did not.

For the majority, the Chief Justice, and Justice Rowe, it was necessary to consider whether Charter rights and freedoms were infringed by the refusal to accredit TWU and, if so, to consider whether such infringement was permissible.

The analysis of these issues in the four separate reasons in the two appeals is beyond the scope of this column because the intent of this review is to reflect on law society regulation generally rather than where Charter rights and freedoms are infringed by law society regulation.

So what do we learn from these four cases?

Green, Groia and the TWU cases conclude that a deferential standard applies in judicial review of law society rule-making (Green and Groia) and in judicial review of application of the rules in disciplinary (Groia) and non-disciplinary contexts (TWU).

While not new, Green and the TWU cases make it clear that the law societies have the delegated responsibility to regulate in the public interest. The law societies have significant scope in their determination of the public interest. The legislation which delegates responsibility to the law societies significantly informs the determination of the public interest. While the language is different from province to province, the effect of the legislative language is much the same.[xv]

Green and the TWU cases show that the law societies are entitled to consider specific competence, competence generally, diversity in the profession, non-discrimination in access to the profession, the administration of justice, public confidence in the legal profession and in the administration of justice and must consider the Charter and other rights and freedoms of persons affected by law society decisions.

The TWU cases show that the law societies are generally entitled to consider public interest implications in broader policy decisions and in narrower fact-specific decisions such as law school accreditation.

Groia shows, and Green suggests, that the courts will not defer to administrative or disciplinary rules that are seen as stigmatizes conduct that is not seen as worthy of sanction. The law society must be concerned about public confidence in the professional as well as in in the profession. The dissent in Green was on the basis that the mandatory suspension applied irrespective of the context. The majority did not accept that the rule was to this effect but did not challenge the idea that a rule providing for suspension in any and all circumstances would be unreasonable. The majority in Groia held that it was unreasonable to apply a disciplinary sanction to a good faith, but legally mistaken, position taken on behalf of an accused person.

Green, Groia and the TWU cases show that care must be taken by law societies to reflect on the impacts of their decisions on the professionals that they regulate, the clients served by those professionals, the public, the administration of and access to justice, and the Charter rights and freedoms of all persons.

 

The Chief Justice’s concurring reasons in LSBC v. TWU are her final contribution as a judge of the Supreme Court of Canada. I recommend her reasons to readers as a fitting final contribution.

While the Chief Justice accepted that general competence and diversity within the profession are proper objectives, she did not find them weighty in the particular case. Presumably, her view was affected by the fact that accrediting TWU would allow for additional candidates for licensing, especially from a religious minority, rather than excluding existing candidates.

At the same time, the Chief Justice noted the importance of religious freedom in this case as follows at paras. 129 and 130:

With respect, I cannot agree that the impact of the decision on the freedom of religion of members of the TWU community is “of minor significance”. The decision places a burden on the TWU community’s freedom of religion: (1) by interfering with a religious practice (a learning environment that conforms to its members’ beliefs); (2) by restricting their right to express their beliefs through that practice; and (3) by restricting their ability to associate as required by their beliefs.

These are not minor matters. Canada has a tradition dating back at least four centuries of religious schools which are established to allow people to study at institutions that reflect their faith and their practices. To say, as the majority does at para. 87, that the infringement is of minor significance because it “only prevents prospective students from studying law in their optimal religious learning environment” (emphasis in original), is to deny this lengthy and passionately held tradition. The majority seems to characterize the religious practice at issue in this case narrowly as “studying in a religious environment” (para. 67). In my view, the religious right at issue in this case is broader than that. It is not about merely studying in a religious environment — it is about studying in a religious environment where all members of the community have agreed, through the Covenant, to live in a certain way.

While honouring the freedom of religion, the Chief Justice nevertheless concluded at para. 146 that:

On the other hand, there is great force in the LSBC’s contention that it cannot condone a practice that discriminates by imposing burdens on LGBTQ people on the basis of sexual orientation, with negative consequences for the LGBTQ community, diversity and the enhancement of equality in the profession. It was faced with an either-or decision on which compromise was impossible — either allow the mandatory Covenant in TWU’s proposal to stand, and thereby condone unequal treatment of LGBTQ people, or deny accreditation and limit TWU’s religious practices. In the end, after much struggle, the LSBC concluded that the imperative of refusing to condone discrimination and unequal treatment on the basis of sexual orientation outweighed TWU’s claims to freedom of religion.

In a case like Multani, the claimant was vindicated because the school board could not show that it would be unable to ensure its mandate of public safety. In Loyola, we found that the limitation at issue did nothing to advance the ministerial objectives of instilling understanding and respect for other religions. This case is very different. The LSBC cannot abide by its duty to combat discrimination and accredit TWU at the same time.

I think it fitting that the last contribution of the Chief Justice as a judge of the Supreme Court of Canada was a full-throated affirmation of the constitutional rights and freedoms of all those affected by her decision and a willingness to make a difficult choice that recognized and affirmed their autonomy and dignity.

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[i] Andrews v. Law Society of British Columbia, [1989] 1 SCR 143, Black v. Law Society of Alberta, [1989] 1 SCR 591, Pearlman v. Manitoba Law Society Judicial Committee, [1991] 2 SCR 869. Law Society of British Columbia v. Mangat, [2001] 3 SCR 113, 2001 SCC 67, Edwards v. Law Society of Upper Canada, [2001] 3 SCR 562, 2001 SCC 80, Krieger v. Law Society of Alberta, [2002] 3 SCR 372, 2002 SCC 65, Law Society of New Brunswick v. Ryan, [2003] 1 SCR 247, 2003 SCC 20, Finney v. Barreau du Québec, [2004] 2 SCR 17, 2004 SCC 36, Doré v. Barreau du Québec, [2012] 1 SCR 395, 2012 SCC 12 , Green v. Law Society of Manitoba, [2017] 1 SCR 360, 2017 SCC 20, Groia v. Law Society of Upper Canada, 2018 SCC 27, Law Society of British Columbia v. Trinity Western University, 2018 SCC 32, Trinity Western University v. Law Society of Upper Canada, 2018 SCC 33

CCH Canadian Ltd. v. Law Society of Upper Canada, [2004] 1 SCR 339, 2004 SCC 13 is excluded from the count as it is about copyright rather than regulation of the legal profession.

[ii] As an articling student and as an associate, I worked on Black v. Law Society of Alberta. Decades later, I have been a Law Society bencher during the recent cases. Time passes amazingly quickly.

[iii] Green v. Law Society of Manitoba, supra., Groia v. Law Society of Upper Canada, supra., Law Society of British Columbia v. Trinity Western University, supra., Trinity Western University v. Law Society of Upper Canada, supra.

[iv] Green v. Law Society of Manitoba, supra.

[v] Groia v. Law Society of Upper Canada, supra. Full disclosure, I was a member of the Appeal Panel whose decision was set aside on appeal. I am advised by my friend and colleague Alice Woolley not to comment on this case. Out of respect, fear and affection, I having taken Alice’s advice and have attempted merely to describe relevant aspects of it.

[vi] Law Society of British Columbia v. Trinity Western University, supra. Trinity Western University v. Law Society of Upper Canada, supra.

[vii] Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190

[viii] Green, paras. 19 and 22

[ix] Green, para. 55

[x] Justice Moldaver notable also observed at para. 93 that “When a lawyer alleges prosecutorial misconduct based on a legal mistake, law societies are perfectly entitled to look to the reasonableness of the mistake when assessing whether it is sincerely held, and hence, whether the allegations were made in good faith. Looking to the reasonableness of a mistake is a well-established tool to help assess its sincerity. … The more egregious the legal mistake, the less likely it will have been sincerely held, making it less likely the allegation will have been made in good faith. And if the law society concludes that the allegation was not made in good faith, the second question — whether there was a reasonable basis for the allegation — falls away.

[xi] Justice Côté’s positions in Green, Groia and TWU and Justice Brown’s position in Groia and TWU appear to suggest that they may take a more narrow, perhaps sceptical, view of law society regulation than do other members of the Court. Justice Abella’s position in Green and Groia suggests that she is particularly concerned about stigmatization of individual legal reputations.

[xii] Legal Profession Act, SBC 1998, c 9 as amended

[xiii] Law Society Act, RSO 1990, c L.8 as amended

[xiv] LSBC v. TWU, para 37

[xv] Section 3 of the BC LPA provides that “It is the object and duty of the society to uphold and protect the public interest in the administration of justice by (a) preserving and protecting the rights and freedoms of all persons, (b) ensuring the independence, integrity, honour and competence of lawyers, (c) establishing standards and programs for the education, professional responsibility and competence of lawyers and of applicants for call and admission, (d) regulating the practice of law, and (e) supporting and assisting lawyers, articled students and lawyers of other jurisdictions who are permitted to practise law in British Columbia in fulfilling their duties in the practice of law.”

Section 3(1) of the Manitoba Legal Profession Act provides that the purpose of the Law Society is uphold and protect the public interest in the delivery of legal services with competence, integrity and independence.

Section 4.2 of the ON LSA, requires the Law Society to have regard to the following principles in carrying out its functions, duties and powers: a duty to maintain and advance the cause of justice and the rule of law, a duty to act so as to facilitate access to justice for the people of Ontario and a duty to protect the public interest.

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The Never-Ending Debate: What should be required in order to become a lawyer?

(First published on slaw.ca)

The qualifications required of new Ontario lawyers has been the subject of virtually continuous debate for generations. Starting in the late 1950s, being called to the bar required (i) a law school degree, (ii) practical training through the bar admissions course and (iii) an articling apprenticeship. The bar admissions course came to an end in the 2000s. A law practice program (the LLP) has recently been added as an alternative to articling. The qualifications debate continues with the focus now being whether articling and/or the LLP should continue and, if so, in what form. The central question today is what, other than licensing examinations and graduation from law school, should be required before the call to the bar.

The intent of this column is to provide context for current debate by focusing on the competence mandate of the Law Society and by laying out some of the relevant history and principles that may be useful in thinking about all of this.

My ultimate point is that this is a debate that will never end – because there are no perfect choices and the proponents of one option can always demonstrate frailties in the other options being considered. While it is tempting to press for radical change, it is very difficult to have confidence that the change will actually be an improvement. Keeping focused on the competence mandate, it seems to me the best approach is practical incremental change primarily designed to ensure that new lawyers are competent to serve the people of Ontario and taking care to see that candidates for licensing are treated properly.

A brief history of a relatively long time

Until 1957, the Law Society ran legal education and training in Ontario. After much controversy, an agreement was reached in 1957 whereby university law school education became a requirement. The articling apprenticeship continued. A bar admission course was established. According to the historian Christopher Moore, the establishment of the bar admission course “satisfied the benchers’ continuing requirement for practical training. It also pleased the universities by allowing them to narrow their focus to the purely academic teaching they preferred”[1].

For the next four decades, being called to the bar in Ontario required an academic LLB/JD, practical bar admission course training and exposure to the realities of practice through articling.

In the never-ending debate, the future of articling arose soon after the late 1950s reforms. In 1972, a recommendation was made to Convocation for the abolition of articling[2]. This recommendation was rejected and has again been rejected again on several occasions over the years.

By the late 2000s, the bar admission course had been entirely discontinued and two licensing examinations had been established, but articling continued.

With the substantial increase of candidates and insufficient growth in articling positions over the last 15 years, the LPP was added as an alternative to articling several years ago.

Whether the LPP and/or articling will continue and in what form continues to be debated.

The Mandate of the Law Society – why do we care about qualification to practice?

People who are served by professionals ordinarily need professional assistance because they do not have the expertise to serve themselves. They cannot assess whether someone else is professionally competent to serve them nor whether they have been properly served. This is the central reason that professional regulation exists.

Like all professional regulators, the Law Society has two central mandates; ensuring that members of the legal professions are competent and ensuring that members conduct themselves properly. These mandates are made clear in section 4.1 of the Law Society Act which provides that it is a function of the Law Society to ensure that:

all persons who practise law in Ontario or provide legal services in Ontario meet standards of learning, professional competence and professional conduct that are appropriate for the legal services they provide

The professional conduct mandate is pursued by establishing Rules of Professional Conduct, by dealing with professional misconduct by investigation and discipline and by promoting proper professional conduct by practice audits and reviews. Much attention has been spent in recent years on the conduct mandate recognizing that proper conduct is better attained by proactive measures rather than just by reactive disciplinary measures and by the recognition that the law firm policies, procedures and practices ae very important in achieving proper individual conduct.

The professional competence mandate may be thought of as having two aspects. The first is licensing, ensuring that entry-level competence is attained. The second is competence in practice, ensuring that competence is maintained and that specific competence is achieved for specific areas of professional work. Like the conduct mandate, there are a number of ways that the Law Society fulfils and can fulfil the competence mandate.

The Competence Mandate

The Law Society of Ontario has spent much time and effort reflecting on its competence mandate. Its 1994 Role Statement recognized the obligation to govern the profession in the public interest to ensure that the people of Ontario are served by lawyers who meet high standards of learning and competence.

In the late 1990s, the Law Society established two Competence Task Forces. The First Competence Task Force established a working definition of the competent lawyer[3] which is now reflected in the definition of a “competent lawyer” in Rule 3.1 of the Model Code of Professional Conduct and across Canada. As defined in the Model Code, a “competent lawyer” is “a lawyer who has and applies relevant knowledge, skills and attributes in a manner appropriate to each matter undertaken on behalf of a client and the nature and terms of the lawyer’s engagement”. The Model Code provides further particulars in its definition.

The Report of the Second Competence Task Force[4] proposed implementation of what it described as the “competence blueprint” which included focus on both pre-call and post-call learning. As the report said:

The post-call efforts of the profession to maintain and enhance its competence span a broad range of approaches, but virtually all of them engage education, whether it be through experiential learning, continuing legal education, self-study, or the pursuit of advice and mentoring. Pre-call learning is the foundation upon which a career long commitment to learning is constructed.

The bar admission course

Between the reports of the First and Second Competence Task Force, Convocation received and considered the Bar Admission Reform Report[5] which was expressly grounded in the Competence Mandate and the work of the Competence Task Force.

The Bar Admission Reform Report noted that the Bar Admission Course began in 1959 and that its then current form was mandated by Convocation in 1988 approving the “Spence Report”. Following graduation from law school, prospective lawyers undertook a three phase pre-call training program. The first phase was a one-month workshop-based practice skills program addressing professional responsibility and practice management, interviewing, legal research, legal writing and drafting, alternative dispute resolution and advocacy. The second phase was the articling year. The third phase was a three and one-half month seminar program focused on substantive and procedural law, lawyering skills, and how to complete transactions with written examinations. Attendance was originally mandatory but was merely “strongly encouraged” by 1998.

On delivery of the Bar Admission Reform Report, Convocation reaffirmed that there should continue to be “an effective and comprehensive bar admission education and training program” and that articling should be maintained.

To summarize, lawyers called to the bar in Ontario in the 1990s had three years of law school, twelve months of articling and four and one-half months of substantive, procedural and skills training for a total of over 16 months of post-law school legal training.

In late 2003, Convocation received the Report of the Task Force on the Continuum of Legal Education[6] which recommended continuation of articling for ten months but major changes to the bar admission program. Rather than substantive, procedural and skills training and assessment, a five week skills and professional responsibility program and assessment and two licencing examinations were approved. These licensing examinations continue as the Barrister and the Solicitor Examinations. In effect, the choice was made to test for substantive and procedural competence rather that to teach in those areas presumably on the basis either than law schools provided sufficient practical education and/or that students could learn enough on their own.

In 2007, Convocation established a Licensing and Accreditation Task Force which reported in January of 2008. In its consultation report[7], it was noted that the five week Skills and Professional Responsibility Program was reduced to a four week program in 2007 as a result of perceived repetitiveness within the learning modules. Ultimately, Convocation accepted the Task Force recommendation[8] that the Skills and Professional Responsibility Program be replaced with a pre-call five day pre-call professional responsibility and practice requirement integrated with articling and 24 hour of continuing professional development in the first two years after being called to the bar.

Since 2008, the five day professional responsibility and practice requirement has fallen away. Candidates are now required to pass the two licensing examinations and either to article or attend the LPP. The pre-call training in Ontario has been reduced from four and one-half months to five weeks to four weeks to five days and is now eliminated. The Barristers and the Solicitors Examinations remain.

To summarize, lawyers now called to the bar in Ontario have three years of law school, ten months of articling or the LPP and must pass the Barristers and the Solicitors Examinations.

The articling debate

There have long been debates “on the value of articling as a component of professional legal education and recommendations for change”[9]. As long ago as 1972, abolishing articling was proposed[10]. In 2008, the Licensing and Accreditation Task Force consulted the profession on this and other topics. As the Task Force reported in its Final Report:

Respondents overwhelmingly rejected the abolition of articling. They emphasized that a competent profession requires practical training before call to the bar. Articling should not be characterized as a barrier, but rather as a core component of the licensing process.

The nature of the articling debate changed by the late 2000s. Previously, the debate was mostly about the utility and variability of the articling experience. What caused the change was that the number of licensing candidates in Ontario has increased significantly over the last 15 years or so while the number of articling positions has not kept pace.

The substantial increase in the number licensing candidates

In 1972, the annual capacity of the Ontario law schools was in the range of 1,000 to 1,100 students[11]. By 2000, the number of first year law students admitted to Ontario law schools was essentially unchanged at 1,103 students[12]. For more than 25 years, the capacity of the principal gateway to the legal profession in Ontario was unchanged. That this was so is somewhat surprising given the increased population of Ontario and the resulting increase in supply and demand. Something had to give and it did. At the same time, something else happened, namely increased immigration and the acceptance that qualified immigrants had to be treated fairly in professional licensing[13].

From 2000 to 2010, the annual capacity of Ontario law schools increased by over 300 to in excess of 1,400 students. By 2015, the annual law school capacity was nearly 1,550 students[14]. After decades of essentially no change, the annual capacity of the Ontario law schools has increased by 40% over the last fifteen years.

During the same fifteen year period, a new source of licensing applicants opened up. In 2000, only approximately 100 Ontario licensing applicants came through the National Committee on Accreditation (NCA) having attended law school outside of Canada. By 2010, there were nearly 400 NCA candidates. There are now some 650 NCA candidates annually of whom approximately half are Canadians who obtained their law degrees outside of Canada.

Putting this information together, the last 15 years has seen a total increase from approximately 1,000 candidates annually to approximately 2,200 annually[15]. Approximately 45% of this increase is from increased Ontario law school capacity, approximately 25% is from foreign-trained Canadians and approximately 25% is from foreign-trained immigrants. That some 70% of this significant increase is from Canadians shows a significant demand for law school education that was not previously met. This is consistent with pent-up demand after the unchanged Ontario law school capacity over the prior 25 years.

The slower increase in the number of articling positions and the LPP response

Unfortunately, the increased numbers of candidates seeking articles in the late 2000s coincided with the 2008 economic crisis and its aftermath. During this period, larger firms cut back the number of articling positions. This didn’t help.

In any event, while the number of articling positions has substantially increased (to approximately 1,950 by 2016), there has been a gap for some time between the number of licensing candidates and the number of articling positions. It is also the case that, likely given the intense competition for articling positions, some of the increased number of articling positions are less attractive and even exploitative positions, including poorly or unpaid positions.

It was this gap between the supply of and demand for articling positions that was the impetus for the 2012 Articling Task Force which recommended the establishment of the Law Practice Program (LPP) as an alternative to articling. This recommendation was one of the three available responses. The first was to do nothing and accept that the number of articling positions practically limited the number of new lawyers each year. The second was to add a new pathway to licensing, namely the LPP. The third (which was the minority position) was to abolish articling in favour of a limited version of the LPP.

How to think about all of this

It is clear that the establishment of a second licensing pathway (the LPP) didn’t end the never-ending licensing debates. The LPP was only established as a pilot project. Perhaps inevitably when there was a prospect of ending the LPP, there was substantial opposition with a resulting Law Society decision to deliberate more generally on approaches to licensing.

While, as of the writing of this column, there are no proposals on the table, it is reasonably predictable that some or all of essentially the same alternatives will yet again be considered. One option is to continue articling and the LPP with or without reform. Another option is to eliminate the LPP in favour of articling as the only pathway. A third option is to eliminate articling in favour of the LPP in current or different form. A fourth option is to eliminate both articling and the LPP.

The point of this column is to reflect on what is, or should be, in issue in considering the various alternatives.

The competence mandate and fairness to candidates

There are, broadly speaking, two proper perspectives from which to consider these issues. The first perspective is that of the clients to be served by the lawyers that we license. This is the point of the competence mandate described at the outset. Ensuring that those licensed to practice law are competent to practice law is fundamental to professional regulation. Losing track of the competence mandate is unacceptable even if tempting.

The second perspective is that of the licensing candidates[16]. There are two aspects to this perspective. The first is that of candidates generally. For example, all candidates naturally prefer not to pay for licensing requirements especially after enduring expensive law school fees. The second is that there are differences between licensing candidates i.e. the second perspective is heterogeneous. These candidates’ perspective may be thought of as being about fairness; fairness to candidates generally, fairness as between candidates and fairness to specific candidates.

Like all hard problems, proper policy decision-making here isn’t about choosing between the two perspectives. Rather, both perspectives must be considered. However, it is important to recognize generally speaking that the point of licensing is to ensure competence and that the licensing requirement inherently places burdens on prospective licensees. How much burden is properly borne and how that burden should be shared are important questions.

The competence mandate

It seems to me that thinking clearly about the competence mandate requires reflection on the evolution of the licensing process over the last two decades. This evolution is essentially from a four and one-half month bar admission course in which substantive and procedural law and lawyering skills were taught and assessed to the current Barrister and Solicitor Examinations i.e. from teaching to just testing. While it is likely true that law schools generally place greater emphasis on experiential education than they did two decades ago, I’m not aware of good evidence that law schools are now training lawyers to practice law. Indeed, law schools disclaim this responsibility and mission.

For this reason, it seems to me that those arguing for an end to, or substantial reduction of, transitional training (whether through articling or the LPP) should face a heavy burden to demonstrate that proposed changes meet the competence mandate. Said another way, I don’t think it acceptable to have perceived fairness to candidates trump the competence mandate. Indeed, allowing incompetent candidates to enter practice is itself unfair to them.

It would be a terrible irony if the focus on the competence mandate in the 1990s was the precursor to a series of “reforms” the net result of which was to end all transitional training. First ending the bar admission program and then ending articling/the LPP is surely not consistent with the competence mandate.

As between articling and the LPP, it must be acknowledged that neither is perfect. Some articles do not provide proper training. The competence mandate requires that these bad articles not be permitted. We must accept that some articles are better than other articles with the result that the gain from articling is uneven. In contrast, the LPP provides its candidates with a generally consistent experience. The LPP provides both simulated experiences as well as work placements for real life experiences. Unfortunately, we cannot say whether the LPP is generally better at ensuring competence than most articles or whether the reverse is true.

So far as the competence mandate is concerned, there does not appear to be a cogent basis to say that either most articles or the LPP do not provide candidates with sufficient transitional training.

The fairness requirement

The fairness requirement is tricky. For example, fairness underlies the decision to adopt the LPP as a second pathway. It would be unfair to qualified candidates who cannot find articles (because the market doesn’t generate sufficient articling positions) to say that they cannot be licensed. Once licensed, finding work is a different matter. Yet adopting the LPP created a perceived unfairness by creating two classes of candidates. Of course, the alternative of abolishing articling to ensure one common pathway would impose a burden on those who would have articled by taking articling salaries from them and by increasing the total cost of the LPP which is borne by all candidates.

It seems to me that the fairness requirement must be addressed by recognizing that perfect fairness is impossible and that eliminating burdens for some will often impose burdens on others and by focusing on how to practically mitigate unfair burdens. In that spirit, some of the current advantages (the loss of which would be a burden) and the current burdens appear to me to be as follows:

  • articles
    • can provide:
      • valuable real world experience
      • increased prospects for post-call employment
      • a salary, which is particularly important given current law school tuition
    • are less accessible:
      • to students who go to law school in other countries and aren’t part of the “system” during law school
      • to new Canadians who may lack language skills and social capital
      • to racialized candidates
    • can be exploitive in terms of income, experience and sexual harassment
  • the LPP
    • can provide
      • good training, including simulated training
      • work placements which are generally, but not always, paid and which provide real world experience and increased prospects for post-call employment
      • introduction to Canadian culture and society for new Canadians who are not yet fully competitive in the legal labour market
    • does not generate revenue, unlike articles, and accordingly does not pay for itself and does not provide salaries for its candidates

The bottom line

I suspect that the great articling debate that has now spanned nearly five decades has not reached resolution because there is no good answer. Articling is imperfect. There are no clearly better alternatives. Our differing perspectives lead us to different conclusions because there aren’t clear answers.

If this is so, it follows that it would be better if we stopped trying to find big answers and instead started to work toward smaller pragmatic ways of reducing burdens and unfairness.

In doing so, I suggest that we should accept two primacies. The first is our competence mandate. Any proposed change must bear the burden of showing that the clients of newly called lawyers will be competently served. The second is that unfairness must be thoughtfully and effectively addressed. In this regard, we must distinguish between dealing with unfairness that must be addressed (such as exploitative articles and Human Rights Code violations for example) and throwing babies out with bathwater in well-motivated attempts to ensure that everyone is treated in exactly the same way.

_____________________

[1] Christopher Moore, The Law Society of Upper Canada and Ontario’s Lawyers, 1791-1997, pp. 259-260. It was the vice-dean of Osgoode Hall who proposed the establishment of the bar admission course. According to Christopher Moore, “[he] suggested that a post-LLB training program could even out the inequities that plagued the articling process”.

[2] Special Committee on Legal Education Report (aka the MacKinnon Report), 1972

[3] First Competence Task Force – Final Report, November 1997

[4] Second Competence Task Force – Final Report, April 1999

[5] Bar Admission Reform Report, June 1998

[6] Task Force on the Continuum of Legal Education Report, October 2003

[7] Licensing and Accreditation Task Force Consultation Report, January 2008

[8] Licensing and Accreditation Task Force Final Report, September 2008

[9] Articling Reform Sub-Committee Report, October 1990

[10] MacKinnon Report

[11] MacKinnon Report, p. 10

[12] Ontario Universities’ Application Centre www.ouac.on.ca/statistics/law-school-application-statistics/

[13] Fair Access to Regulated Professions Act, 2006, SO 2006, c 31. Section 6 provides that “A regulated profession has a duty to provide registration practices that are transparent, objective, impartial and fair”.

[14] To 2000, most of the increase was from the University of Ottawa (216 students) and Windsor (55 students). From 200 to 2005, most of the increase was from the new law school at Lakehead (60 students), Windsor (43 students) and Queens (25 students). Ontario Universities’ Application Centre supra.

[15] This analysis excludes licensing candidates who attended law schools in other Canadian provinces.

[16] Technically, there is a third (and problematic) perspective which is that of existing lawyers whose self-interest is in the limitation of new licensees/minimizing competition. The “issue of numbers” has always been expressly or implicitly part of the licensing debates.

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What can we learn from the English ABS experience after five years?

(published first on slaw.ca)

After five years of ABS liberalization in England (and Wales), it is worth having a look at what has happened. Surprisingly and significantly, the answer is “not much”.

ABS liberalization in England

A decade ago, Legal Services Act 2007 brought about significant changes to the practice of law in England. These changes included allowing what were called alternative business structures to provide legal services where only lawyers were previously permitted to serve clients. The first alternative business structures were licensed in late 2011.

The essential idea of alternative business structures is that constraining ownership of legal practices constrains competition and innovation. This is not to say that the practice of law is not competitive without non-lawyer ownership. The fact is that there is a large number of legal practices that intensively compete with each other. But the nature of those practices is the same. Highly educated professionals spend time providing services to clients with the assistance of their staff. The practice of law is highly labour intensive and the labour is expensive labour. While these practices compete with each other, they do not have to and are limited in their ability to compete using different ways of providing legal services. From one perspective, law is highly competitive. From another perspective, competition is highly constrained where only practising professionals can provides legal services and own professional practices.

The ABS idea contemplated that allowing non-lawyer ownership would encourage competition and innovation in two ways. Liberalizing access to capital inherently facilitates the provision of services in ways that are less, or are not, labour-intensive. Liberalizing non-lawyer ownership facilitates management of legal practices by non-lawyers who have business expertise and experience. The result was expected to be the entry of new participants into the legal services market. The result was also expected to be the evolution of existing practices because existing practices could have improved access to capital and to non-legal expertise and because existing practices would have to evolve to better compete with new entrants.

The English context

There are important differences between England and Canada that should be kept in mind in considering the English ABS experience. There is a divided bar although solicitors are increasingly permitted to act as advocates. There are eight distinct legal professions[i] with separate front-line regulators, each front-line regulator being under the supervision of the Legal Services Board. There are far more solicitors than all other types of legal professionals combined.

Perhaps most significantly, licensing is not required in England to provide legal services in substantial areas where licensing is required in Canada. In England, only the exercise of a right of audience, the conduct of litigation, reserved instrument activities, probate activities, notarial activities and the administration of oaths are reserved to licensed legal professionals.

The reason that this limited reservation (or limited monopoly) is significant is that being or becoming an ABS isn’t necessary where it is not necessary to be licensed. Accordingly, ABS liberalization and consideration of its results is limited to these reserved areas. ABS liberalization was designed to address what we would see as core areas of legal service.

Bifurcation of the legal services market

Before looking at the English ABS experience, it is also important to distinguish between the consumer and the business legal services markets. It is clear that there has been substantial change in the supply of services to large businesses and other organizations over the last decade. In-house counsel have taken on increased shares of legal work. Alternative legal service providers have emerged to directly supply in-house counsel groups and to provide services through external counsel.

Significantly, it does not appear that this significant evolution requires or is dependent on ABS liberalization as is clear from the fact that much of this evolution has occurred in the United States, which is entirely hostile to non-lawyer ownership and unauthorized legal practice.

In considering the impact of ABS liberalization in England, it is worth keeping in mind that the “big business” demand for legal services is not the same as consumer demand and, more significantly, that the nature of the legal services that are consumed and the way that legal services can be supplied are quite different in these very different markets.

The 2017 Legal Service Board Report

With five years of ABS liberalization in England, it is possible to assess how these intended market impacts have played out so far. With this in mind, the Legal Services Board has released its report Evaluation: ABS and investment in legal services 2011/12-2016/17 (“2017 LSB Report”).

ABSs were first licensed in 2011. By March of last year, 892 ABS licenses had been issued by four licensing authorities[ii] and were in active practice[iii]. To put these nearly 900 ABSs in context, there were just over 10,000 solicitor firms as of the end of 2016[iv] of which 25% were sole proprietorships. It is fair to observe that a significant number of ABSs have been licensed.

According to 2017 LSB Report, the active ABSs are predominantly existing firms that have converted to ABS status. Only one in five of respondent ABSs is a new firm. This means that there are approximately 180 new entrant ABSs and approximately 720 existing practices that have converted to ABS status.

Much has been written about the new entrant ABSs. A significant number have been personal injury consolidators with Slater and Gordon being the most famous new entrant and the most famous failure. Not surprisingly, many new entrants have focused on the more lucrative areas of practice. Not surprisingly, rapid growth and consolidation has been a risky business strategy.

But what about the substantial number of existing practices that have taken on ABS licensing? This is a bit tricky to tease out from the 2017 LSB Report as information some of the reported information is not broken down between new entrants and converted existing practices. But the implications of the reported data is pretty clear.

The focus of the 2017 LSB Report is on the investments made by ABSs and the sources of capital for those investments. It is reported that two-thirds of ABSs have “either have already invested or are planning to do so, since they gained their ABS licence” and that “[t]hese investments have mainly been made to hire more staff, increase marketing activity or to purchase IT. The report sees “this as evidence of the increased scale that allowing non-lawyer ownership was designed to enable”. The report also notes that “[t]here are statistically significant links between higher levels of non-lawyer ownership and the likelihood of having made an investment. Larger organisations are also more likely to have invested in their business.”

These observations are entirely unsurprising. One would expect practices that take on an ABS license to make investments. Larger organizations are naturally more likely to make investments. It would be odd to find that practices with non-lawyer ownership were not making investments.

What is surprising is the source of capital used for investment. According to the report:

The most frequent source of funding for investments was business profits or cash reserves, which were used by 49% of those who had invested in their business. Just over a quarter of investments were solely funded using a loan from a bank, and a quarter were solely funded using the business’ overdraft facility. External sources of equity finance accounted for only a minority of investment funding sources either as the sole or joint source of investment funds, and only 12% of ABS had used any form of external finance.

We know that the usual sources of investment capital for ordinary legal practices are business profits/cash reserves and bank debt. According to the 2017 LSB Report, 88% of ABSs invested using these traditional sources of capital. Only 12% of ABSs used non-traditional sources of capital for investment purposes.

As noted above, only approximately 20% of ABSs are new entrants. As just discussed, only 12% of ABSs has used external finance for investment purposes. Putting these points together, one can only conclude that very few existing practices that have become an ABS have accessed capital that was not previously available to them. It may be that becoming an ABS has been attractive to recruit and to offer incentives to non-lawyer staff. It may be that becoming an ABS has been used to allow family members to participate in ownership. But it appears clear that, so far, access to capital has not been a significant reason to convert to ABS status. As the report puts it “Except perhaps in the personal injury sector, it would appear that bank lending is a substitute for external capital”.

The essential conclusion of the 2017 LSB Report is that there is not yet sufficient competition in the legal services market to require existing practices to innovate:

The low level of external investment seen to date may be a symptom of weak competition in the market overall, as found by the Competition and Markets Authority market study, LSB’s Market Evaluation and the joint SRA LSB research revealing that levels of innovation are not increasing. The dynamics of competition create incentives for suppliers to increase productivity through innovation, which lowers costs and hence prices through time. This is likely to involve taking a different approach to delivering a service, or developing new services completely. In the absence of strong competition, there is insufficient impetus for law firms to take the greater risks (and rewards) involved with using external capital. Until these incentives change we may not see significant growth in the use of external capital by ABS firms.

So what are the implications for Canadians?

What appears to be clear is that not much has happened in England as a result of ABS liberalization. The conclusion of the 2017 LSB Report is essentially that existing practices have not had to innovate because they have not faced strong competition particularly from new entrants. But the report does not address why relatively easy entry into the legal services market and the fact of unreserved areas of practice have not led to increased competition.

It may be that the emergence of new entrants simply takes time. It may also be that existing legal practices are reasonably well suited to the work that they do and that there isn’t substantial profit to be made serving existing reserved legal markets though new forms of practice.

So the implication of the first five years of ABS liberalization in England is that it has not led to much accessing of external capital nor to much innovation. At the same time, it does not appear that ABS liberalization has led to significant problems either. That said, spending substantial regulatory time and effort to enable a significant regulatory change of rather limited impact does not seem like a great use of resources.

Of course, things don’t necessarily stay the same. It is clear that technology continues to advance significantly. There is ample evidence that unlicensed direct-to-consumer legal services are being provided in Canada and that the volumes are likely to increase especially as technology evolves. It seems logically to follow that this will lead to competitive pressure on existing legal practitioners who will require access to external capital to respond effectively. There is a credible argument that limiting access to external capital will handicap existing practices against new entrants.

But it must be admitted that these credible arguments are not yet supported by market evidence in the very significant and competitive English market. The dilemma is that there isn’t cogent current evidence for regulatory reform while our ability to respond nimbly if and when required is doubtful. In resolving this dilemma, my inclination is to watch and wait given the advantage of having the English “experiment” to guide our thinking.

_________________________________

[i] Solicitors, Barristers, Legal Executives, Licensed Conveyancers, Patent Attorneys, Trademark Attorneys, Costs Lawyers and Notaries

[ii] Most of these were issued by the Solicitors Regulation Authority.

[iii] Nearly sixty ABS licensees are not in active practice.

[iv] 84% of English and Welsh lawyers are regulated by the Solicitors Regulation Authority based on data from the 2017/2018 Legal Services Board Business Plan

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The Statement of Principles and Inter-Bubble Communication About Racism

First published on slaw.ca

There has been significant controversy in Ontario over the new Law Society requirement that every licensee “adopt and to abide by a statement of principles acknowledging their obligation to promote equality, diversity and inclusion generally, and in their behaviour towards colleagues, employees, clients and the public”.

The nature of the Statement of Principles controversy

Much of the controversy has focused on concern that the requirement compelled expressions of belief and accordingly raised the issue of freedom of speech. This was not an unreasonable concern for at least two reasons. As Alice Woolley pointed out in her op-ed column published in the National Post, explanatory materials published by the Law Society said that the requirement was for a “personal valuing” of equality, diversity and inclusion. As well, the requirement contained an ambiguity as the word “promote” could be seen to require more than conduct.

Most of those who raised concern about the requirement sought to make clear that they did not take any issue with the policy goals of the requirement and that they accepted that it was fully appropriate that the Law Society advance equality, diversity and inclusion in the professions. Some of those who raised concern did so in terms and with language which suggested that more than free speech was in issue for them. But it is clear that there was a legitimate free speech issue in play and that, not surprisingly for lawyers, freedom of speech mattered.

There was a less common concern also raised which was that the requirement had the effect, or could be seen to have the effect, of adversely affecting proper client representation in matters involving human rights or harassment issues. Fully accepting that adverse effect on proper client representation would be inappropriate, the validity of this concern was much less obvious to me.

Law Society clarification, debate and decision

These concerns were addressed by the release of a Guide which clarified that the statement “need not include any statement of thought, belief or opinion” and that “reference to the obligation to promote equality, diversity and inclusion generally refers to existing legal and professional obligations”. Curiously to me, there continued to be demands for a “conscientious objector” exception to the requirement. While I could understand concern as to whether the Guide was clear enough or authoritative, I continue to be baffled by the concept of conscientious objection to the requirement as clarified. That doesn’t mean that the continued demands were not genuinely made, but I don’t understand them.

Listening to the debate in Convocation, it was clear that the “free speech” issue was not the sole motivation for those supporting the motion seeking a “conscientious objector” exception. For some, the concern seemed to be that the requirement was little more than an irritant for practitioners being a mere “check the box” requirement. Indeed, there was an attempt to amend the motion by those who agreed with this perspective and wanted more to be done rather than less. My view was that the requirement may not be effective for some but that the requirement may be of some help addressing an important problem – and that surely requiring reflection on human rights obligations is no great burden.

A letter to the Middlesex Law Association

After Convocation decided not to adopt a “conscientious objector” exception, there was an interesting series of tweets on Twitter about an six page letter from a London Ontario lawyer published by the Middlesex Law Association. Most were tweets from those appalled by the letter. The letter was taken off the association’s website for a time and then replaced with a limited version of it (although the original is still accessible)[1].

It is not surprising that publication of this letter resulted in strong responses. The writer argues in his letter that (i) the evidence does not support the conclusion that there is systemic racism in the legal professions, (ii) the claim of systemic racism vilifies lawyers and paralegals by labelling them as racist, (iii) the 13 recommendations are a form of unauthorized social engineering, (iv) racism and bullying are just part of life and should be simply be endured and overcome by racialized licensees as others have done before them, (v) the true problem is economic class not race, (vi) white privilege is a ridiculous concept as it relates to white and racialized lawyers and (vii) racialized lawyers who join legal associations based on race or ethnic origin cannot complain that they are not treated equally. In conclusion, the author says that his response to “Diversity, in a Nutshell” is “Who cares about skin colour?” and that he will not draft a Statement of Principles because that is compelled thought and speech and because systemic racism in the legal professions has not been demonstrated.

Alice Woolley has written that she “actually welcome(s) the letter because it reveals the deeper debate, and allows the conversation to be about the real issue”. Proceeding from Alice’s observation, I think that it is worth exploring the perspective and the language used in the letter.

It is useful to recognize that express racism is socially unacceptable in Canada. The social norms of the legal professions do not permit arguments based on claims of racial superiority or inferiority even though some presumably hold those views. These social norms are valuable because they limit offensive behaviour and because social norms can influence cultural values over time. But one of the realities of social norms is that arguments and claims that are inconsistent with established norms are often expressed ways that disguise what is really being said.

The difficulty is in distinguishing between what is sometimes described as “impression management” and genuine attitudes. Examples of “impression management” are obvious. Anti-Semites try to obscure their true views with “evidentiary” denials of the Holocaust. The tropes “I’m not racist but …” and “Some of my best friends are X” are well worn. That racist wolves can dress as liberal sheep is clear.

The “free speech” aspect of the debate over the Statement of Principles illustrated the difficulty in sorting out what is “impression management” and what is true principled disagreement and debate. There was a genuine “free speech” issue to be addressed. Yet it also seemed that some opponents[2] of the Statement of Principles used the free speech argument to avoid saying what they really meant. It is challenging to have genuine good faith debate when one side of a debate legitimately suspects illicit motives on the part of some of the other side and those who are genuinely expressing their views on the other side of the debate fairly consider their views to be disrespected as a result.

The letter to the Middlesex Law Association clearly raises the problem of “impression management”. The core implicit claim is that racialized lawyers and paralegals do not in fact suffer disadvantage in the legal professions and that, if they do, they should suck it up and stop being crybabies. This implicit claim is obscured by a “lawyer-like” analysis of the “evidence” and the claim that the evidence is not persuasive. The writer appears seek to demonstrate “liberal” credentials by asserting that the true problem is economic class rather than racism and by claiming personal “colour-blindness”. As always, it is difficult to know the genuine attitude of the writer. But the letter certainly reads as an exercise in “impression management” in support of a denial that racism exists in the legal professions and, in any event, a denial that racism is worthy of being addressed.

It should not be necessary to have to explicitly say that racism exists, including in the legal professions. It should not be necessary to explicitly say that genuinely addressing racism in the legal professions is necessary. It should not be necessary to explicitly say that white lawyers and paralegals have relative advantages over racialized lawyers and paralegals because racism exists. But it is necessary to do so because “impression management” is a fact of life in discussions about race. The time has come for lawyers and paralegals to clearly acknowledge these truths. The Statement of Principles provides an opportunity to do so and is valuable if only for that reason.

All of this said and meant, I think that there are lessons to be learned from the letter whether one considers the letter to be an illicit exercise in “impression management” or a genuine but misguided attempt to wrestle with difficult issues. The point of the balance of this column is that the Statement of Principles and the other recommendations proceeded on the basis that achieving progress against racism requires cultural change and that achieving cultural change is not possible if one speaks only to those who don’t need to change.

Communication between bubbles

Starting with perspective, the website of the author discloses that he is an older white man in sole practice in London who was called to the bar in 1976. Our society is much changed in the forty plus years that the author has been in practice. The social changes over the decades have not been equally distributed. Toronto, for example, has become particularly diverse as compared to, well, London. Also, it is simply not possible for older white men to truly know the experiences of those who have experienced discrimination or disadvantage on the basis of race, ethnicity or gender. This is not to castigate older white men (of which I am one) but simply to observe that most discrimination is not obvious and is likely not appreciable by those who do not experience it. One of the lessons that I learned as a member of the Law Society working group is that it is important to hear those who are not part of the majority. This is not to say that it is necessary to take everything that is said at face value but it is necessary to listen with an open and sympathetic mind. For those who are prepared to listen, the qualitative evidence of discrimination and disadvantage developed in the working group should be compelling. It should no longer be controversial that we human beings tend to treat those who we consider different than ourselves differently, whether intentionally or unintentionally.[3]

Turning to the language used in the letter, I think that there are important lessons to be learned from the letter if equality, diversity and inclusion are to be better advanced. The author of the letter expresses anger at some of the language used by the Law Society working group. He writes “It is extraordinary to allege that racism is ‘systemic’ in the legal professions in Ontario and an insult to the nonracialized lawyers and paralegals practising in Ontario” and “it is difficult to understand how the Law Society can justify vilifying most of the 58,000 lawyers and paralegals in Ontario by labelling them as racist”. The author also writes “The spectre of “white privilege” is referred to by one of the persons consulted by the Working Group. The concept is ridiculous.”

The author apparently understands that the assertion that there is “systemic racism” in the legal professions to mean that most lawyers and paralegals intentionally discriminate on the basis of race. Similarly, the author apparently understands the claim of “white privilege” is a claim of intentional subjugation of racialized people by white people. Assuming that the author is genuine in these understandings and that he is well intentioned, his reaction is understandable.

But the concept of systemic discrimination (or systemic racism where race is the particular focus) is not about individual intentional discrimination. As the Ontario Human Rights Commission puts it “Racial discrimination can result from individual behaviour as well as because of the unintended and often unconscious consequences of a discriminatory system. This is known as systemic discrimination.”

The phrase “white privilege” is not a legal phrase like “systemic discrimination”. There are no doubt different meanings given to the phrase by different writers and over time. But (as I understand it) the phrase does not necessarily connote intentional impropriety. Rather, “white privilege” is logically the equivalent of “non-white disadvantage”. In a sense, “systemic racism” and “white privilege” address the same thing from different perspectives. Still, it seems easier to accept that others are unfairly disadvantaged than to accept that one is unfairly advantaged.

So one interpretation of the author’s response to assertion of “white privilege” and “systemic racism” is that he is ignorant of what is actually being said – and that it is presumptuous to for him to castigate as he does without spending time to actually understand what is being said. Another interpretation is that the author actually denies that there is disadvantage as a result of race in society rather than just being offended by a wrongly perceived claim of wide spread intentional racism. And of course, these parts of the letter may simply be an exercise in “impression management”.

But it may not be wrong to perceive that there is intended to be some sting in the language of “white privilege” and perhaps even in the language of “systemic racism”. Naturally, those who spend time and thought addressing unfair disadvantage are more likely to have suffered disadvantage themselves or, at least, to be sympathetic to those who have. It would be too much to always expect the language of a Mandela or of a Martin Luther King, or clinical academic language. The unfairness and wrongness of racial discrimination will out in the language used. And no doubt some racism is intentional and the failure to address unintentional racism is itself an ethical failure. Language choices fairly reflect these things. Those like me who are in a position of advantage are not well placed to criticize or to complain.

But the problem is that we are mostly in bubbles. Our perspectives and our language are different in our respective bubbles. This matters because culture change requires that communication between the bubbles. Those who have suffered unfair discrimination need no persuasion nor reminder of that reality. It is those who have advantage from whom assistance is sought. And those who are actually racist will not change. The goal must be to better enlist those who already want to help and to engage with those who have not thought much about these things but are people of good will.

It is not possible to know which category our author is in fact. While it is tempting and may be right to assume the worst, recognizing differing perspective and use of language opens the possibility that we can be too quick to dismiss the possibility that someone prepared to spend time and thought writing about this issue may want to do the right thing but be angered by what feels to be unfair castigation. In any event, it actually doesn’t matter what the right answer is for any specific person. What matters is failing to enlist the support of those whose support is possible.

On that note, I recently attended an educational session that addressed diversity and inclusion. A presentation entitled How microaggressions are like mosquito bites • Same Difference[4] was shown. The presentation is masterful and is well worth listening to. With grace and good humour, it allows the perspective of the disadvantaged to be better appreciated by the advantaged.

Going forward

To return to the Statement of Principles controversy, there seems to be broad consensus that the equality, diversity and inclusion ought to be advanced by the legal professions. No one who I have heard argues that there should be any compelled speech. My view is that the ambiguity has been removed about that. What is now needed is to return to the beginning which was to enlist the help of those who already share the goal and to encourage those who might be persuaded to share the goal to help as well.

_________________________

[1] See the December/January Middlesex Law Association newsletter at page 30. Presumably in an attempt to somewhat distance the Association from contents of the letter, the index to the revised newsletter now lists the letter under “Opinion and Letters to the Editor”.

[2] Particularly the more hyperbolic ones.

[3] Robert Sapolsky has recently published Behave: The Biology of Humans at our Best and Worst. Chapter Eleven entitled “Us versus Them” which is a compelling discussion of “The Strength of Us/Them” and the reality that we humans are programmed to react differently to those with whom we identify and those who we see as “others”.

[4] The term “microaggression” is another term that seems to me to risk loss in inter-bubble translation highlighting as it does malignant intentionality rather than adverse impact. I say this at risk of being thought to demonstrate “white fragility” which is another phrase that bears similar risks.

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Cost disease, the practice of law and access to justice

(First published on slaw.ca)

How is it that we are such a wealthy society yet services that were once available are no longer available (at least at affordable prices)? Many people, but certainly not all, had help in their homes and farms, even full-time help. Doctors used to make house calls. When I was a child, the milkman[1] made deliveries each day. There used to be people who actually answered telephones in businesses.

What we call the “access to justice” problem seems to be similar in nature. We know that the number of self-represented litigants has dramatically increased over the last four decades. Ordinary people can’t afford lawyers. Even lawyers can’t afford lawyers. Yet, it seems that there was a time that people had a family lawyer just like they had a family doctor.

Some of this is pastoral myth. The idea that doctors were once available to all isn’t true as Tommy Douglas addressed in Saskatchewan in the 1950s. The poor didn’t have servants even though domestic help seems to have been more common than it is now. The image of the small town lawyer serving the whole town fails to recognize that there were income differences that must have affected who could afford to pay for a lawyer.

And while the price of legal services is a significant issue, it isn’t the only issue in the “access to justice” problem. There is also much to the idea that our legal system has become more and unnecessarily complex with attendant costs. A system of justice that is too expensive for most to access is a denial of access to justice even if the perfect justice can be obtained by those who can afford it.

While the problem of access to justice has more than one cause (and so must be addressed in more than one way), the cost of lawyers seems increasingly to be part of the problem. But why is that?

Cost Disease

A few weeks ago, I listened to a podcast on economics[2]. There was an interview with Larry Summers[3] who is a highly regarded economist[4]. Stephen Dubner, the interviewer, asked Summers about the cost of government and why it is that the cost of government doesn’t shrink. As Dubner asked:

You talk about us having conquered inflation, but lately you’ve been writing about the reasons why federal government can’t shrink. One of those reasons that I found really interesting — you talked about how changes in structural pricing that disproportionately affect government are huge. You talk about the Consumer Price Index from 1983 versus today and the things that have gotten relatively cheaper and the things that have gotten relatively much more expensive. Can you talk about that for a moment? I assume where that leads to is a conversation about what you economists call cost disease, yes?

Summers responded saying:

This is the phenomenon that was first noticed by the late Princeton economist William Baumol, that’s sometimes referred to Baumol’s Disease or cost disease. It refers to the fact that if workers become much more productive doing some things — and their wage has to be the same in all sectors, then there’s going to be a tendency for the price of the areas in which labor is not becoming productive to rise. That’s why it costs more to go to the theater relative to other things that it did when I was a child. That’s why tuition in colleges has risen. That’s why the cost of mental-health counseling has risen. All kinds of activities where it takes inherently a person one hour to provide a given service and where productivity growth is defeating the point. Productivity growth in education, after all, is a higher ratio of students to teachers — which is exactly the opposite of what we all want for our kids. Those structural changes are going to define our economy.

The cost disease thesis says that relatively unproductive sectors become more costly with productivity increases in other sectors because incomes increase in both productive and unproductive sectors as a result of increased productivity.

A core idea of cost disease is that there is labour mobility over time. In the long run, a sector will not be able to continue to pay people lower incomes if work is available to them elsewhere for higher incomes. Just because one sector is less productive than another sector doesn’t mean the less productive sector will be able to get away with paying its workers lower incomes. The cost disease thesis also reflects the economic view that incomes over time generally rise as productivity generally rises. Of course, there are questions about some of the underpinning of the cost disease thesis.[5]

But even if one does not accept the idea that productivity increases positively affect incomes generally[6], it must be true that sectors that do not become more productive will become relatively more costly unless these relatively unproductive sectors decrease incomes in their sectors.

Cost disease and the practice of law

I was struck by the application of the idea of cost disease to the practice of law. The last four decades have seen amazing productivity increases in other sectors of the economy. Computing capacity and networks have fundamentally changed the productivity of significant sectors of the economy. Before that, mechanization, electrification and industrialization radically changed the productivity of other sectors of the economy.

On the other hand, it also seems pretty clear that lawyer productivity has little changed over the long term. While there have been some productivity changes arising from modern technology, most of that has simply been to reduce overhead as lawyers do their own document processing.

This is particularly true in litigation. The approach to analyzing documentary evidence, interviewing clients and witnesses, discovering adverse parties and trying cases for ordinary people is highly lawyer-intensive without there having been material changes in productivity over the decades[7]. This may be less true in some of the solicitor’s practices where technology has made document production more efficient and where process efficiencies can be adopted in routine aspects of legal work where there is sufficient volume.

Of course, economic theories do not always hold in practice. There can be other factors at work. Market efficiency assumptions may not hold. But actual labour market information seems to show that lawyer incomes have followed incomes generally. A few years ago, I looked at census information over the last forty years or so and found that lawyer incomes generally tracked family incomes over that period. I also understand that research has indicated that lawyer, engineer and doctor incomes track a similar path[8].

Let’s assume for the sake of argument that lawyer incomes do rise and fall with incomes generally for whatever reason. That means that if other sectors have become more productive then the cost of what is produced in those sectors will have declined. Costs in sectors like law where productivity has not improved, or improved as much, will relatively increase.

I was excited by the new (to me) thought that apparent increases in legal costs and resulting diminution in access to justice could be explained in part by increased productivity in other sectors and the limited productivity increases in law. I went looking for further discussion of cost disease and, particularly, its application to the practice of law.

Not surprisingly, I found that this was not a new thought. For those interested in reading more, Professor Gregory W. Bowman posted two blogs on exactly this point over a decade ago in his Law Career Blog[9]. More recently, Emery Lee[10] published a journal article in the University of Miami Law Review entitled “Law Without Lawyers: Access to Civil Justice and the Cost of Legal Services”[11]

In his article, Lee looked at the cost of legal services for the “Big Guy” and the cost for the “Little Guy” i.e. the ordinary person. Lee said at pp. 514 to 515 that “In relation to the Little Guy, the cost disease is his problem. As discussed above, in general, it is not the levels, or amount, of discovery that keep the Little Guy out of court. Most of the Little Guy’s cases are not going to be discovery-heavy, and reforms designed to reduce discovery levels are unlikely to help the Little Guy.” and “The Little Guy has simply been priced out of the market for legal services. Reducing discovery levels is unlikely to solve this problem.”

So what?

As a profession, we have had difficult discussions about innovating our existing business structures. Some argue that we should simply focus on procedural and substantive simplification of the litigation process, that it is only litigation that is a problem and that solicitors’ practices are just fine. Accepting that simplification in litigation is important, my view has long been that the significant areas where people do not use legal services at all (sometimes called the 85%) must be addressed and that the cost of providing services is a major part of the reason for the lack of service in the 85%. Increases in costs arising from increased productivity in other sectors may be part of the reason that the 85% cannot be effectively served without significant productivity changes. This supports the idea that it is important to bring capital and technology to bear because increasingly expensive professional labour is simply too expensive for the task[12].

What is a significant implication for me is that decreased access to justice in the 15% served by lawyers, and particularly in litigation, may be the result of cost disease and the lack of productivity increases in law. Where access to capital is constrained as is true in the practice of law, labour is overwhelmingly the means of production. Where productivity in other sectors improves, the cost of legal work certainly relatively increases. And if labour costs actually rise generally with increased productivity, the absolute cost of legal work will increase as lawyer incomes rise with productivity in other sectors[13].

If “cost disease” is a material reason for the increasing cost of legal services and diminishing access to legal services, it follows that legal costs will continue to relatively increase unless productivity in the legal sector improves. Even without this analytic framework, it is obvious that new ways of providing legal services are already here and that they are less expensive and more easily accessible. This will only increase.

The implication is significant. If the traditional practice of law becomes relatively more and more expensive over time then fewer legal services will be consumed and the threat from new and less expensive forms of legal service will increase. Legal services regulation will not ultimately hold back this tide, nor should it in my view.

So the question is whether we should continue to restrict the practice of law to traditional practices or should we encourage real innovation in the way that law is practiced so that productivities are achieved.

I used to think that the answer was obviously that increased productivity should be encouraged because of the moral and policy obligation to promote access to justice. While still thinking that is so, I also think that existing legal practices are imperilled by our unwillingness to allow the conditions required for innovation. Cost disease is not just a disease suffered by consumers of legal services. Cost disease is suffered by lawyer and paralegal producers too and the consequences may be more severe if not addressed. Attempting to hold back the tide can work for a while but when the dike fails much can be lost that could have been saved.

Something to think about.

_____________________________

[1] Herb was our milkman and he had a very cool truck. He let me ride with him in his truck on our street when I was a little boy

[2] http://freakonomics.com/

[3] http://freakonomics.com/podcast/larry-summers-economist-everyone-hates-love/

[4] Even if not so much on other topics

[5] It is not so clear that the benefits of productivity increases are generally distributed. Labour market mobility is suspect with income disparities having increased over the last generation. Increases in productivity over the last generation have not resulted in increased real incomes for many people. Some increases in income have been enjoyed in distant economies with local labour markets facing downward pressures.

[6] i.e. that the wealthy disproportionately enjoy the profitability arising from increased profitability

[7] Significant e-discovery advances exist but are mostly irrelevant outside of “big business” disputes and mostly address the significant increase in e-documents in business over the last couple of decades. Litigation for ordinary people has not seen material productivity gains other than legal research, especially CanLii.

[8] Alice Woolley kindly reviewed a draft of this column. She advised that this observation was made in the research underlying Woolley, Alice and Farrow, Trevor C. W., “Addressing Access to Justice Through New Legal Service Providers: Opportunities and Challenges” (2015), 3 Texas A & M Law Review 549

[9] http://law-career.blogspot.ca/2006/07/baumols-cost-disease-and-practice-of.html and http://law-career.blogspot.ca/2006/08/baumols-cost-disease-and-lawyers-part.html

[10] Senior Researcher in the US Federal Judicial Centre

[11] Emery G. Lee III, Law Without Lawyers: Access to Civil Justice and the Cost of Legal Services, 69 U. Miami L. Rev. 499 (2015)

[12] If legal services are only relatively more expensive but not absolutely more expensive, it would still follow that consumption of legal services would decline.

[13] Whether because of increased productivity in other sectors or not, lawyer incomes have followed other incomes.

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Conflicted regulation in the public interest

(first published on slaw.ca)

Fiduciary law deals strictly with conflicts of interest. A fiduciary is not permitted to have an interest that conflicts with the duties owed to their beneficiary unless the conflict and all material facts have been disclosed and consent is obtained Sharbern Holding Inc. v. Vancouver Airport Centre Ltd., 2011 SCC 23. Where a fiduciary benefits without consent, the fiduciary is ordinarily required to disgorge the benefit whether or not the beneficiary’s interests have been compromised. Strother v. 3464920 Canada Inc., 2007 SCC 24

The Rules of Professional Conduct are no less strict. It is professional misconduct for a lawyer or paralegal to act where their self-interest conflicts with their duties to their client without proper consent. Some conflicts are not waivable. Transactions with clients are strictly regulated even where the lawyer or paralegal does not act on the transaction[1].

It is ironic that client conflicts are treated so seriously while the inherent conflict in self-regulation is mostly ignored. Commonly, this conflict is not really recognized or understood. Some think that the public interest is virtually invariably the same as the interest of the legal professions. Pressures from stakeholders and the realities of elections affect how elected benchers perceive issues and their roles.

Examples of conflicting self-interest in regulation

There are many examples which illustrate this inherent conflict. Describing a few helps make the point. In June, a proposal was made to Convocation in Ontario to allow charities and not-for-profits to hire lawyers and paralegals to provide legal services to the public. The idea was to attempt to address unmet legal needs by permitting those who currently serve people with other social, health and economic needs to add legal services to their offerings. Unlike the many proposals put to Convocation, this proposal provoked an immediate demand from legal stakeholders for time to consider and address the proposal, no doubt reflecting recent ABS debates. The proposal was deferred.

While I’m quite hopeful that lawyers will see the merits of this “civil society” proposal with fuller information and time to reflect, there is a long history of the private bar reacting defensively to other ways of providing legal services. In his book The Law Society of Upper Canada and Ontario’s Lawyers, 1797-1997, Christopher Moore details the early days of legal clinics in the 1970s. As Moore describes, the intent of these “storefront clinics” reflected the belief that legal assistance had to be delivered to poor communities through community networks and agencies which integrated legal advice with other kinds of assistance offered from accessible storefront ‘clinics.’ In 1971, Osgoode Hall Law School, with support from the Ford Foundation and the Canadian government, opened the Parkdale legal clinic. The following quotation from Moore’s book describes the reaction:

‘We were against this, we were violently opposed to this,’ recalled Gibson Gray, a future treasurer then on the legal aid committee. `They were … taking work on at the clinic … rather than having the work done by lawyers, traditional lawyers.’ That summer, there were rumours that the Law Society might seek an injunction against the law school’s storefront clinic, and benchers urged the professional conduct and unauthorized practice committees to investigate. …

… The Law Society’s irritation moved it to consider reclaiming the name `Osgoode Hall’ from the law school, but clinical legal aid (the phrase which soon replaced ‘poverty law’) proved irresistible. The Law Society, able neither to prevent nor to control their emergence, soon acknowledged that clinics were no real threat to private law practice, for they usually served a different clientele and often did counselling and community organizing work that extended well beyond legal practice. …

The reaction by the private bar to student legal clinics in the 1970s and to new practice structures in the 2010s[2] illustrates that self-interest has material effected consideration of new forms of legal service delivery. This is not to say that legitimate issues were not raised. In the 1970s, the way that student legal aid was brought forward was a challenge to the Law Society’s regulatory authority. Accordingly to Moore, “Arguing that supervising law students working in a storefront legal clinic was part of the law school’s educational mandate, Dean Gerald LeDain took the position that seeking permission from (or even informing) the Law Society was unnecessary”. Similarly, there are reasons to think carefully about allowing new forms of for-profit legal services[3]. But just as it is no answer to a disgorgement claim to say that no harm was suffered, it is no answer to concerns about the integrity of self-regulation to say that protectionism often leads to examination of legitimate issues.

Recent revisions to the advertising and referral fee rules provide another example. Over recent years, the traditional personal injury bar has faced significant new competition for clients. Significant investments were made in brand advertising. Referral fee-based business models capitalized on and fueled the advertising. Traditional ways of attracting clients were disrupted. The reaction of the traditional personal injury bar was to seek regulatory intervention. This is not at all to say that public and consumer interests were not engaged by these changed advertising and referral fee practices. They clearly were. And the traditional personal injury bar was no doubt motivated in part by concerns about the interests of injured people. But the fact is that these issues are, in part, reflective of competitive pressures between different parts of the private bar. The Law Society is currently considering contingent fee arrangements which are commonly acknowledged to require reform. The personal injury bar has a significant self-interest in contingent fee regulation. It is fundamentally important that the Law Society deal with these issues in the public interest and in the interest of injured people recognizing that access to justice, procedural and substantive, is what must drive deliberations about contingent fee arrangements.[4]

The recent Family Legal Services Review report by Justice Annemarie E. Bonkalo raises another cogent example. Lawyers and paralegals have been regulated together by the Law Society since 2007. Lawyer benchers and paralegal benchers are elected by their respective professions. While there are tensions within Convocation, I think that it is generally thought that this regulatory approach has worked well. Common perspectives on and approaches to appropriate professional conduct makes practical sense as does integrated professional conduct investigation and discipline. There are obvious synergies in licensing and ongoing professional competence. However, lawyers and paralegals compete for clients in some areas of practice. The extent of the permitted paralegal scope of practice engages the self-interest of both paralegals and lawyers.

These self-interests are obviously engaged by the Bonkalo Report. Lawyer benchers have been the target of organized communications from the family law bar, all framed in the public interest. Lawyer stakeholder groups are making forceful submissions against expansion of the paralegal scope of practice. I would be surprised if paralegal benchers are not receiving similar communications from paralegals. Paralegal stakeholder groups are naturally advocating for expanded scope of practice. To be clear, most benchers seek to rise above self-interest and to genuinely address the public interest in effective and fair resolution of family breakups. But my observation is that it is hard both for paralegals and lawyers to do this without their judgments being affected by self-interest. This is not surprising. Fiduciary law and professional conduct rules exist because we understand human nature and the cognitive biases that of us have.

These are but three examples of conflicting self-interest in self-regulation. Other examples are not difficult to find.

The need to act in the public interest and to reform governance

The point of this column is two-fold. The first is that each of these examples is live. It is important that the Law Society, the legal professions and stakeholder groups recognize how these issues need to be addressed. Just because self-interest is engaged doesn’t mean that legitimate issues are not raised. But professionalism and the integrity of self-regulation requires disciplined focus on the public interest and the interest of those we serve. If we do not regulate ourselves properly, we can expect that someone else will.

The second is that we should think hard whether our approach to governance effectively addresses conflicting self-interest and assures proper self-regulation. In Ontario, a Governance Task Force is currently charged to review of and make recommendations respecting the Law Society of Upper Canada’s governance structure. This question of how to address regulatory self-interest should be addressed by the task force,

A modest regulatory innovation might be to use public benchers as a formal check on self-interest. There are eight public benchers appointed to Convocation in Ontario. In meetings with over fifty voting members, these public members have an important role but a limited voice. Even without increasing the number of appointed members, these “lay” benchers could be formally responsible as a committee to consider and publicly report to Convocation on matters where regulatory self-interest is significantly engaged. Simply requiring that the public interest be addressed by public members should have a salutary effect.

Manitoba provides a recent example of significant governance change[5]. Manitoba has 23 benchers. There are 12 elected benchers, a bare majority. Six lay benchers are independently appointed. Four lawyer benchers are appointed by the other benchers applying criteria required to be established “such as the need for representation by region, demographics, type of law practice, or professional, leadership or management skill”. The Dean of the law school and an articling student are benchers as well.

In 2014, the Canadian Bar Association Futures Report recommended at pp. 50-51 that:

The governing bodies of law societies should be made up of elected lawyers, as well as a significant number of appointed lawyers and non-lawyers. The appointed governors should be selected by an independent appointment process designed to fill gaps in experience, skills and diversity.

There are no doubt other ways that governance reform could usefully address the problems of self-interest in self-regulation. Thoughts and suggestions by way of comment to this column would be helpful.

To every action (and sometimes even to an inaction), there is a reaction

It is easy and lazy to be apocalyptic including about the prospect of losing self-regulation in Canada. There is an ongoing risk of that but, at least for now, no real pressure for change. But failing to properly undertake responsibility in the public interest can result in loss of authority.

In his book, Moore provides an example. The resistance to the legal clinic model by the practising bar and the Law Society in the 1970s was followed by the appointment by the Ontario government of Justice John Osler “to investigate the delivery of legal services to disadvantaged groups, including aboriginal communities and isolated regions. Osler’s report laid the groundwork for a permanent network of Ontario legal clinics”. As Moore further notes “Osler also recommended that legal aid be transferred entirely from the Law Society to a publicly appointed board which might be more open than the lawyers to other innovations in delivery of legal services”.

Moore ends his discussion of this history noting that Law Society leaders subsequently acknowledged “in their way, that the Law Society alone no longer set the agenda on legal aid and much else affecting the profession. The principle of self-government endured, but authority over the legal was becoming permanently subdivided”.

I have previously written that unmet legal needs are a significant challenge to self-regulation.[6] This is not new as Moore describes. Failing to address legal needs not effectively addressed by the private bar resulted in loss of Law Society responsibility in the 1970s. Failing to do the same 40 years later risks similar loss. Given the extent and significance of unmet legal needs in family law, a protectionist response to the Bonkalo Report likely results in loss of authority over who may provide legal services in family law matters. This is not to say that Justice Bonkalo’s recommendations should necessarily be accepted. The point is that the self-interest of lawyers or paralegals is the wrong perspective from which to address the question.

The same can be said about contingent fee arrangements. The personal injury bar is vitally concerned with contingent fee arrangements. Ontario benchers will no doubt want to reflect carefully on what is said by personal injury lawyers in the current consultation. Their expertise and experience requires that benchers listen carefully. But their understandable self-interest requires independent consideration of recommendations for reform in the public interest. Again, failure to do by the Law Society so will likely result in loss of responsibility and authority.

Doing the smart thing and the right thing

It is clear that self-regulation can be lost all at once or bit by bit. For those who consider self-regulation to be essential to independence of the bar, the need for governance mechanisms and policy decisions to ensure that the public interest is advanced should be powerful. The same should be true for those who merely see value in self-regulation[7]. On an issue by issue basis, members of the private bar and their representatives should recognize that protectionist instincts that result in self-interested regulatory decisions can be counter-productive in the longer run. And in any event, those who have accepted responsibility in the public interest rather than the interest of their profession should of course act accordingly.

 

[1] Rules of Professional Conduct, Section 3.4, Paralegal Rules of Conduct, Rule 3.04

[2] See Alice Woolley’s slaw.ca column Bencher Elections – the Challenge to Self-Regulation’s Legitimacy

[3] Principle, not Politics

[4] Contingent Fees, Portfolio Risk and Competition – Calls for Reform

[5] Sections 6 and 7 of The Legal Profession Act, C.C.S.M. c. L107

[6] Unmet Legal Needs – The-challenge to legal practice and to self-regulation

[7] Independence and Self-Regulation

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