What Would Happen to the Profession of Law if It Became a Business?

We’re obviously talking about the high-minded ideals of the profession, and not the day-to-day reality of a sole practitioner trying to balance the books, but lawyers historically don’t like to think of themselves as being part of the rough and tumble of the business world.

The fear is that lawyers who are worried about the business end of the business will be distracted from their higher purpose – how do you preserve justice when at the same time you need to promote shareholders’ interests?

This sort of philosophical rhetoric is really the purview of big firms with separate accounting departments. For others, the argument is already moot. Small and solo practitioners have always had to have a hand in the business end of their firms, and scrappy startups are remodelling the foundations of legal business strategy.

In the aftermath of the global economic downturn, legal professionals have by necessity adopted more business-type strategies, paid more attention to their bottom lines and found internal efficiencies to meet new targets. They’re following the business model by shedding less- or non-productive staff, freezing hiring, adopting project management techniques and automating and outsourcing routine functions to less expensive jurisdictions.

Those less expensive jurisdictions include legal professionals with an entrepreneurial bent who are finding new ways to perform old tasks, cutting through the inefficiencies of traditional legal practice to reveal a streamlined core. They tend to see the current regulatory structure as stifling to innovators such as themselves – it hinders their ability, among other things, to raise the venture capital that will allow them to translate their thoughts into action.

The CBA’s Legal Futures Initiative has found the idea of alternative business structures to be “a point of significant contention within the consultation,” according to an interim report on the consultation. “Most participants understood that they notionally provided opportunities for better business practices, but there was no agreement on the impact that ABS would have on lawyers’ professionalism,” the report says.

The Law Society of Upper Canada recently launched its own inquiry into the question – one of the first North American regulators to do so.

Alternative business structures have been a fact of life for some time in Australia and the U.K., and some point out that lawyers there haven’t abandoned their ethical principles to pad shareholders’ pockets.

There seems to be no doubt that change of some sort is called for. The question is whether the rules can be rewritten in such a way as to allow for innovation while at the same time preserving the legal profession’s higher principles.

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Comments

  1. Some may say that lawyers in ABS environments have not yet abandoned their ethical principles to pad shareholders’ pockets, but give it time. When a profession sells its soul to venturers, the first generation of lawyers may, by habit, continue with high ethical standards, and the venturers may be unsure as to how to proceed. But, over time, it is a certainty that the profit expectations of the nonlawyer owners, who will rarely even meet the lawyers, will eventually change the culture to their advantage. Money is too powerful. I mentioned to my dentist that the law society was thinking about allowing large companies own law firms. He immediately replied, “Oh don’t do that. They force their profit motive on you.” It seems that this obvious wisdom is lost on the pushers of ABS.

  2. We refuse to admit it, but the practice of law has become increasingly a business. Our larger society has for years been trading law and order in favour of affluence, preferably of the speculative type, speed and time of the essence. Lawyers love the image of being “leaders” in our society, what more natural and convenient than to compete and excel in the affluence race? What better to lend credibility to our claim as “moral leaders” than to stay ahead of the race? Less we have lost our ability to self reflect, just watch how the media portray lawyers with glamour influence and wealth.

    Permitting ABS will give certainly empower well organised and well funded ABS to further entrench and exploit the existing culture.

    We claim always to work for our clients’ best interest, while working tirelessly to ensure it is framed to coincide with ours, whether it be for gain and/or avoidance of a liability claim.

    Significant talks go on about how to construct new & more efficient models of delivering legal services (our way, of course), largely because lawyers can no longer demand fee just for knowing the rules: certainly not in this age of information & technology. The same old tunes sung of how to serve clients better, and remaining leader of our society pervades the discussion.

    Lawyers must earn a living, and retain a fair degree of social and self respect. Genuine ability and willingness to put aside self interest to work for a client’s goal is rare, and rarely pay well, certainly not in the short run. Moral leadership can only be earned over time. I would love to see us stop the double talk, engage in some honest self reflection, and help one another understand, accept and work better with the broader reality we live in. In my view, this is the only way to save our soul and continue to earn our living as lawyers, ABS or not.

  3. The standard to be applied is: will ABS’s (alternative business structures) solve the current problem that the majority of the population cannot obtain legal services at reasonable cost? The ABS studies and their recommendations concentrate on coping with the resulting conflict between the fiduciary duty and the increased “profit duty” that such ABS’s will bring. They admit that ABS’s will have very little, if any impact upon the “unaffordable legal services” problem. That is the problem that should be dominating law society thinking, instead of whether law firms should be investment properties (a variety of ABS’s). Our law societies will have no credibility in regard to any of their most serious problems until legal services are again affordable for the majority of the residents of Canada. Those problems are:
    (1) the many thousands of people whose lives have been severely damaged for lack of legal services, but law societies can show no progress or efforts made toward a solution–a situation that has been developing and obvious for decades;
    (2) the power of the social and news media, and of pressure groups, to make that problem a major political issue demanding government intervention that will reduce law society power;
    (3) the loss of power to regulate the legal profession by law societies, as has happened in several countries, and has been on-going for more than ten years;
    (4) the legal services market is now a vacuum, which commercial organizations will want to fill by employing lawyers from all of the collapsed law firms as the legal profession continues to shrink because it has priced itself beyond the financial means of the population;
    (5) law societies not being appointed the regulators of the many thousands of non-lawyer providers of legal services in Canada’s 14 jurisdictions; the LSBC issued its final report on these issues last December 2013: should their be a regulator and who should it be; (6) governments can’t improve the very poor funding that legal aid organizations suffer, until law societies innovate to make legal services affordable again–we can’t ask taxpayers who can’t afford legal services for themselves, to give more of their taxes to legal aid to provide poor people with free legal services, i.e., such poor funding is the fault of law societies, not governments nor unwilling taxpayers; and,
    (7) so it would appear that the ABS issue is a diversion from these very serious law society problems. That provides a 7th reason requiring government intervention–diversion when inaction cannot be justified, nor tolerated. Together, these 7 reasons create 2 more reasons for government intervention, which are the most powerful in a democracy:
    (8) without legal services available to the majority, the rule of law cannot be enforced, therefore Canada is no longer a constitutional democracy, and the Canadian Charter of Rights and freedoms is but a “paper tiger.” And therefore,
    (9) obviously, the public has very inadequate means of influencing the policies and practices of Canada’s law societies. That means a very different management structure is required for our law societies, so as to make them sufficiently accountable for the way in which they exercise their powers given by law.
    This must be done, or the unaffordable legal services problem will never be solved, nor will the other problems listed above. — Ken Chasse member, LSUC (1966) & LSBC (1978).

  4. Gary Luftspring

    Brad the “pushers of ABS” in the UK were the government on behalf of the public. Moreover you and others seem to be looking at one aspect ie outside investment, how about the possiblitiy of lawyers franchising innovative priactice ideas, how about being able to share fees with staff in your office, how about being able to incorporate in a similar manner to all other professions so that you can invest in R&D. In my simplistic view there should be a rationale for regulation. I am at a loss to explain to a staff member why I can pay a referral fee to Brad Wright for referring a matter to me but not to her. Innovation in the legal profession is at the fringes. New ideas have to come from somewhere. With few exceptions they don’t seem to come from practicing lawyers anymore.

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