Interesting Things Happening in a Small Country – Self-Regulation and Principled Pragmatism

It is easy to be sceptical, perhaps even cynical, about professional self-regulation whether for lawyers, doctors, accountants or other professions. A clear-eyed reading of history shows that protectionism, usually cloaked as high principle, has played a significant part of the history of professional self-regulation. 

One example was the early resistance to inter-provincial law firms. As an articling student in 1982/83, I had the pleasure of helping to develop arguments under the then new Charter of Rights and Freedoms to attack the Alberta professional conduct rule that prohibited inter-provincial law firms[1]. I particularly recall that the report to the benchers proposing the rule helpfully referred to the “interlopers” from other provinces who should not be partners with Alberta lawyers.

Other examples of “ethical” rules that protected lawyers’ practices come easily to mind. Professor Stephen Gillers highlights several in his article How to make Rules for Lawyers, the Professional Responsibility of the Legal Profession[2]. By the 1960s, a number of American unions had established legal plans for their members either by negotiating preferred rates with selected lawyers or by directly offering legal services through union-employed lawyers. Over the opposition of the American Bar Association and 48 state and local bar associations, the U.S. Supreme Court ultimately rejected claims of unauthorized practice of law and unethical conduct. Similarly, minimum fee schedules and prohibition of advertising were once justified on the basis of legal ethics. As Professor Bradley Wendel has observed[3] that “[I]t is not hard to convince oneself that one’s primary motivation is not to make money and so to imagine that one is acting professionally …”.

Professor Gillers’ article is focused on ABA Ethics 20/20[4]. Professor Gillers (like other commentators[5]) is critical of the earlier rejection in 2000 by the ABA House of Delegates of proposals from the Multi-Disciplinary Practice Commission and the failure of Ethics 20/20 to seriously consider alternative business structures in 2012. In his soft-spoken but powerful critique, Professor Gillers argues that mere assertions of imperilled “professionalism” unsupported by actual evidence and sound reasoning are no proper basis for continued regulation protective of existing practices.

The experience in the United States with respect to Multi-Disciplinary Practices (“MDPs”) and Alternative Business Structures (“ABSs”) is in sharp contrast to the experience in Australia and England. In both of those jurisdictions, there has been very substantial liberalization. But this liberalization was not the choice of the profession. In both jurisdictions, liberalization was imposed by government together with an end to self-regulation. In England, the Law Society was stripped of its regulatory authority which was assigned to the Solicitors Regulatory Authority, supervised by the Legal Services Board. Similarly, the Legal Services Commissioner in New South Wales was assigned substantial (but not all) authority previously exercised by the Law Society.

The essential point of this column is to observe that the Canadian experience is different than the US experience on hand and the Australian/English experience on the other and to muse why that might be.

Since the late 1990s, MDPs have been permitted in Ontario and, more recently, in British Columbia. By the late 2000s, the Law Society of Upper Canada became the regulator of licensed paralegals. To address the reality of hundreds of applicants who could not find articling positions, a new pathway to licensing has been adopted in Ontario. Change has not always been easy nor to the extent sought by some but change has occurred.[6]

In Nova Scotia and British Columbia, the law societies now have the jurisdiction to directly regulate law firms as well as lawyers. In Nova Scotia, fundamental regulatory issues are being addressed such as outcomes-focused regulation, a risk management framework for regulation and whether regulated legal services can properly be delivered by non-lawyers and alternative business structures[7].

In British Columbia, the benchers have just unanimously adopted the recommendations[8] of the Legal Service Providers Task Force. The Task Force recommended that (i) the Law Society merge with the Society of Notaries Public[9] and become the regulator of both lawyers and notaries, (ii) standards for and certification of paralegals practising though regulated legal service providers and (iii) the development of a regulatory framework whereby individuals or groups other than lawyers and notaries may provide regulated legal services.

Why is so much happening in Canada and so little in the United States? Why was government intervention in Australia and England required for change but not in Canada? Of course, answers to these questions are necessarily speculative. I can only offer an educated guess.

Part of the answer, I think, is simply timing. The Canadian law societies saw the loss of self-regulation in Australia and England and, believing that self-regulation is in the public interest, sought to protect self-regulation by learning lessons from those jurisdictions. As a small country, we are better positioned to learn from other experiences than are the Americans who are, by nature, exceptionalists.

Another part of the answer is constitutional structure. In England, competition law and policy as well as legal services regulation are both dealt at the same level of government. The same is true in Australia where the government of New South Wales legislated change to legal services regulation as a matter of competition policy. In contrast, Canadian and American competition law/policy is dealt with at the national level while regulation of lawyers is at the provincial and state level. And significantly, I think, regulation of lawyers in the United States is constitutionally under the authority of the judicial branch of government rather than the legislative branch. In the United States, attacks on regulation of advertising, permitting minimum fee schedules and the like have been through litigation not legislation[10].

The last part of the answer (as I see it) is serendipity. In Canada[11], the self-regulatory role of the law societies and the representative role of the Canadian Bar Association have been separated[12]. The fact that the MDP and ABS issues have been addressed within the American Bar Association means that very different dynamics are in play. The fact that the Law Society in England combined the separate roles undertaken by our law societies and the CBA clearly was a factor in government intervention.

My ultimate point is that, while there is cause to be sceptical about self-regulation in theory, there is cause for us to be optimistic in practice. Look at what Law Societies are considering and doing in Canada. This is a time of thoughtful consideration and innovation. Perhaps things don’t happen as quickly or to the extent that some would want. No doubt some risk of protectionism still exists. But independence of the profession in support of a democratic society is also valuable. It is not obvious that government appointed regulators will do a better job. And I think that professional pride is enhanced by self-regulation and helps protect clients, the administration of justice and the rule of law.

The purists, the sceptics and the cynics can easily be critical. But there is much in the Canadian reality that is attractive for the principled pragmatist.