LSUC’s Professional Regulation Committee Reports on Alternative Business Structures
The Professional Regulation Committee, in the form of the Alternative Business Structures Working Group, of the Law Society of Upper Canada has just submitted a Report to Convocation on the subject of alternative business structures. In all, though I’ve not had time to fully review the report, it’s quite positive about new business structures and recommends that Convocation explore various models and the rules necessary to implement and control them. This from the executive summary:
Conclusion and Recommendation: The Working Group concluded that there are negative consequences inherent in current regulatory limitations on the delivery of legal services in Ontario that could be addressed with the thoughtful liberalization of business structures and the related liberalization of what non-legal services can be provided by entities providing legal services. The Working Group identified four structural and services models as options for consideration as permissible regulatory structures, and for consultation:

- entities that provide legal services only, and in which non-licensee owners are permitted an ownership share of up to 49 percent;
- entities that provide legal services only, and in which there are no restrictions on non- licensee ownership;
- entities which may provide both legal services and non-legal services (except those identified by the Law Society as posing a regulatory risk), and in which non-licensee owners are permitted an ownership share of up to 49 percent; and
- entities which may provide legal services as well as non-legal services (except those identified by the Law Society as posing a regulatory risk), and in which there are no restrictions on non-licensee ownership.
The Working Group recommends that these four models be the subject of consultation with interested groups and individuals prior to a decision as to which is the preferred option for recommendation to Convocation. The four models are described in greater detail at paragraphs 162 to 179 of the report.
This is a report that all lawyers will want to read, initiating, as it does, the likelihood of widespread and fundamental reform of the economics of legal practice.
This superb report puts Ontario in the vanguard of North American jurisdictions on legal services regulatory reform. A key quote:
“The existing tight regulatory restrictions on business structures are not justifiable given the lack of evidence that regulatory liberalization will cause harm. This is coupled with substantial evidence that business structure liberalization combined with entity regulation is likely to provide greater flexibility and more options for both licensees and the public.” (p. 44)