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Conduct Becoming: A bias for action

Embracing the opportunity of ABS.

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There were many reasons why the United Kingdom ended lawyer independence from government regulation under the Legal Services Act, 2007. As both a representative and a regulatory body for lawyers, the Law Society invited criticism that it protected lawyers’ interests rather than clients’. Response to public complaints was too often untimely and ineffective. Different regulators were responsible for solicitors, barristers, legal executives, and conveyancers, leading to public confusion and inconsistencies in regulatory standards and enforcement.

But the most important reason for the loss was the profession’s resistance to change — specifically, to allowing law firms to adopt mainstream business structures. Proposed innovations such as multidisciplinary practice structures were vilified. The profession’s resistance was considered protectionist, and the government intervened.

In Canada, we have been careful to separate representative and regulatory roles: the Canadian Bar Association and other bodies advance lawyers’ interests, while law societies govern in the public interest. The same regulator governs barristers and solicitors.

We have also been open to at least one form of alternative business structure: law societies in Quebec, Ontario and British Columbia have permitted lawyers to form multidisciplinary practices. Lawyers may be partners with, for instance, patent agents, registered planners, and human resources professionals, provided that lawyers retain control of the firm and non-lawyer practitioners abide by lawyers’ rules of conduct as well as rules applicable to their own professions.

In light of our history of successfully positioning ourselves to maintain our independence from government regulation, the fierce opposition in some quarters to further modernization of the business structures in which lawyers may practise is surprising.

The most probable explanation is simply that lawyers are risk averse by nature. We tend to resist change. We fear the unknown.

Opponents argue that evidence of greater innovation and access to justice from jurisdictions that permit alternative business structures is inconclusive. This argument is questionable, but more importantly it reverses the onus. As Sir David Clementi pointed out in his groundbreaking 2004 report in the United Kingdom, the burden of proof must rest with those who seek to justify a restrictive practice, not on those who seek to remove it. 

We need to have a bias for action, not a bias for standing still.

So, we must ask ourselves: Would expanding the types of business structures that provide legal services benefit the public?

Last year, Salvos Law won the Australian Law Firm of the Year award. Owned by the Salvation Army, Salvos Law has two divisions: Salvos Legal, a commercial legal practice, and Salvos Humanitarian. The profits from Salvos Legal fund the pro bono work of Salvos Humanitarian – 11,000 cases since 2010.  In Canada, the Salvation Army could not own a law firm, or even an interest in a law firm.

Slater & Gordon, the first law firm in the world to be publicly listed, is seen by some ABS opponents as the bogeyman. It taps outside investment to introduce technological advances that help make legal services more affordable. It has acquired a number of other firms and realized economies of scale. 

However, a small solicitor practice with a good reputation and loyal following need not fear losing clients. Sole practitioners and small firm lawyers undoubtedly can provide individualized service to clients that a more aloof Slater & Gordon cannot. They will have a market advantage that a larger entity cannot match.

But one size does not fit all. If the measures adopted by Slater & Gordon can result in some consumers paying less that is not an outcome to be avoided.

Expanding the types of business structures in which lawyers may practise would present regulatory challenges. Entity regulation would be a must. A law firm in which non-lawyers share in profits would have to owe the same fiduciary and ethical duties to clients and the courts as traditional law firms, and similarly prioritize those duties over any duties to shareholders. Such firms would have to develop and maintain special procedures for protecting clients’ confidential information from non-lawyer stakeholders. Law societies would have to be empowered to sanction firms that fail to observe their professional responsibilities. We have no reason to suspect that law societies are not up to this challenge.

The consequences of perpetuating the status quo could be serious. We must not allow the public to believe we are protecting our own at the expense of the public interest. We must embrace change as an opportunity, not a threat.