Alternative Business Structures and Access to Justice … for Whom?

The Canadian legal profession is currently engaged in a much-needed debate about the future of legal services in general and whether to allow the use of so-called alternative business structures (ABSs) more particularly. Thankfully, the issue of access to justice is figuring prominently in the general debate, as evidenced by the recently released CBA Legal Futures report and the ongoing work of the Action Committee on Access to Justice. Beyond that, the potential for ABSs to improve access to justice is being put forward as a key reason for allowing them, as can be seen in Slaw columns of Malcolm Mercer and in the work of the Law Society of Upper Canada’s Working Group on ABSs that he co-chairs. However, in relation to the ABS debate, it is necessary to ask: access to justice for whom? The answer is: mostly, the middle class – which, in my view, is good, but not quite good enough.

Briefly put, ABSs involve either non-lawyer ownership of entities providing legal services, or provision of non-legal services along with legal services, or both. ABSs are currently allowed in some comparable common law jurisdictions, namely, Australia and the UK, but are not (yet) allowed in the United States. The potential for ABSs to improve access to justice lies in the likelihood that the new forms of financing and management expertise that they can attract will spur efficiencies and innovations in the design and delivery of legal services (and ‘products’). ABS entities such as Slater & Gordon (in Australia) and The Cooperative Legal Services and Quality Solicitors (in the UK) are cited as the exemplars of the newly affordable, and otherwise better accessible (non-intimidating, technologically-adapted), legal services that are possible in Canada. Indeed, some new entrants into the Canadian legal services market, such as Axess Law, seem already to be learning from and applying the business techniques of ABSs.

An important point needs to be noted though about the potentially new and improved legal services that ABSs can be expected to offer – they don’t and won’t come for free. To the extent that ABSs can improve access to justice, they will only do so for those who can afford to pay for legal services. Hopefully, in an ABS-world, many people will find themselves newly able to take advantage of legal services, but still, payment will be required – and it is in this sense that ABS-led access to justice is about, mostly, the middle class. For people living on low income, ABSs may have little to offer, both because lack of money will still be a barrier and because there is more to taking advantage of legal services than just money (a point recognized by the CBA’s Envisioning Equal Justice project and report).

But does it necessarily have to be that way? Perhaps not. Perhaps it is possible to identify and apply regulatory tools or programs to ABSs in such a way as to harness any accessibility-improving changes they produce in the user-pays private market for the benefit of those who would still lack the means to pay. Unfortunately, however, this possibility is not presently part of the ABS debate. The LSUC ABS Working Group itself has recognized [at para. 118 of its February report] that “it would be wrong to suggest that ABSs are a panacea” for access to justice, but does not yet seem inclined to go further. More promisingly, the CBA has suggested [at p. 36 of its report] that governments might consider financially partnering with it, and private industry, in a legal services innovation incubator fund and that governments could then put their share of resulting innovations to use in publicly provided legal services programs. But there is much more territory that could be explored, for instance: redistributive licensing fees for ABS (and other) legal services entities; vouchers for ABS legal services ‘products’; and, compulsory licensing of ABS technological innovations. Numerous other regulatory tools and programs might be mentioned – some already available to provincial self-regulators, others probably requiring legislative collaboration or empowerment – and all would come with advantages and disadvantages that would need to be identified and assessed. Exploring this added territory should, in my view, be part of the debate on allowing ABSs. To conclude, I offer three reasons for that view.

First, as a matter of normative priority, where regulatory change is sought to be justified by potential for improvements in access to justice, it is arguable that it is the needs of the more disadvantaged and impoverished (people living on low income) that ought to be given priority consideration. More moderately, it might at least be argued that their needs ought to be given no less consideration. Second, and now as a matter of practical policy-making reality, at a time when governments seem unwilling to devote more attention or expenditure to public provision of legal services for people living on low income, exploring ways to harness private sector innovations may be the most realistic avenue for improving access to justice for that segment of the population. Relatedly, the reality may also be that it will be too late to try to harness private sector innovations after the ABS horse has been allowed to leave the regulatory barn. Third, and bringing together normative and pragmatic angles, not only has the Canadian legal profession in general, and many of the provincial self-regulatory organizations more particularly, opened up a policy-making space for considering how to reformulate the future of legal services to improve access to justice, but also, the provincial self-regulators all have an implicit and, sometimes, as in the case of Ontario, an explicit duty to facilitate access to justice in their regulatory activities. In my view, that duty ought to be understood to at least require that the debate on ABSs and access to justice include consideration of possible means for ensuring that the new and improved services ABSs are expected to develop will benefit not just the middle class, but people living on low income as well.

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Comments

  1. Isn’t the middle class shrinking? See, Garry Marr, “Canada leading ranks of shrinking middle class”, Financial Post (April 22, 2014) . Unless the advocates of ABS are optimistically arguing that the shrinking middle class is a result of an increase in high-paying jobs which I believe are actually far fewer in number than the middle-income jobs that they are replacing. So essentially the ABS will be catering to a fewer number of clients meaning a shrinking market for the ABS.

  2. Lee Akazaki, C.S.

    ABS is a demand-driven market force in which institutional clients are requiring suppliers (lawyers) to commoditize their services. There is a niche specialty developing for retail law such as simple wills, powers of attorney, prenuptial agreements, to be offered out of in supermarkets. It is questionable whether Tesco-Law, as it is called in the U.K., will actually deliver access to justice in Canada. Most high street solicitors in Canada already deliver these services at or below cost, as a public benefit.

    Otherwise, the emergence of lawyers employed in the professional equivalent of battery egg farms will simply mean that law will cease to be the career of choice for brainy, well-rounded people prepared to incur six-figure student debt loads (even though Canadian law schools remain publicly subsidized).

    For the poor, and the underbelly of the middle class, the real unmet need is in the family courts and the criminal justice system. These are the same folks who wait for hours at an Emergency Ward for flu and stomach upset, because they don’t have a family doctor. For them, the law is not something they can plot on a demand-supply graph, because the two curves never intersect. When these citizens require legal services, they need a highly-trained lawyer at the court house – the legal equivalent of a hospital. It will be irrelevant that they will soon be able to shop for an bargain will or prenup at their local mall.

    ABS is therefore likely to add to supply shrinkage in an already inefficient market in quality legal services, and unlikely to increase access.

  3. “These are the same folks who wait for hours at an Emergency Ward for flu and stomach upset, because they don’t have a family doctor.” Apparently they’re not the only ones waiting at the ER, Theresa Boyle, “Family doctor availability: Only 41% of Canadians get quick appointments, report finds” in The Toronto Star, January 20, 2014

  4. Addison Cameron-Huff

    What would “compulsory licensing of technological innovations” look like? Compulsory licensing of patents? That system was abolished a couple decades ago (to comply with NAFTA). Compulsory licensing of software? I think that would cause some startup companies to take a one-way flight down to San Francisco.

    It’s probably not necessary to add more rules to these hypothetically less regulated legal services providers. Without a doubt they’ll be targetting people who are not well served by the current system because that’s a giant untapped market.

    With respect to your mention of the CBA’s suggestion that they should run an incubator (or some kind of law tech investment fund): doesn’t that seem a bit outside their area of expertise? There are already many Canadian incubators for tech companies. Legal services tech companies would fit in well. Wevorce (low-cost, efficient divorces) was accelerated by YCombinator in 2013.

  5. Less red tape/limited time/rules the better if you want to actually encourage companies to invest in innovative new rules and technology. And as Addison says, they will try to address the largely untapped markets. This may be predominantly middle class individuals looking for legal assistance rather than lower class individuals who still may not be able to afford services. But that isn’t a bad thing in and of itself. Making life easier on the middle class might help keep more people in the middle class.

    (As an aside, while NAFTA did change the compulsory licensing regime with respect to pharmaceutical patents, S.66(1)(a) of the patent act still allows for compulsory licensing in some situations (in theory at least, I don’t know of any examples in practice).

  6. Good article, raises some good points. As part of the Law Society of Alberta task force looking into the introduction of ABS’s into Alberta, I appreciate the expanded discussion, and as Malcolm Mercer knows I come at it with a slightly more cynical viewpoint not coming from a large firm in a large metropolitan area.

    Couple comments however…

    First, the suggestion that Cooperative Legal Services provides any real benefit to A2J particularly in Family or Criminal areas where the problem is most acute is overstated if you look closely at their pricing model.

    Secondly, I have some great concern over the suggestion over “redistributive licensing fees” – i.e.) taxing lawyers – to assist more with A2J. The significant problems of a whole population cannot be placed on the shoulders of lawyers. Already, lawyers practicing family and criminal law are amongst the poorest paid in the profession. For those with a family law skill set who consider an ABS to improve efficiencies – imposing taxes on the establishment will reduce the likelihood of those efficiencies being explored and further reduce – not enhance – A2J.

    The A2J problem is real and complex, but fundamentally, the needs of the poor and disenfranchised are and should be a broad public (read: “government”) responsibility where all of us (not just lawyers) share the burden.

  7. There does not appear to be any reliable study showing that ABS have increased access to Justice in Australia or the UK nor any that it will in Ontario. It is counter-intuitive to think that large retail shops accountable to non-lawyer profit seeking investors will take on risky cases, refugee rights, poverty law, unpopular test cases, criminal defence work or family law cases where the access problem exists here. While there may be many reasons to introduce ABS, access to Justice is not one of them. What would help A2J is proper funding of the legal aid system, simplification of court procedures, assistance to self represented litigants among many other things.

  8. There are no reasons to introduce ABS. There is nothing it offers that cannot be achieved within and by the profession. Indeed, we as a profession can let the silly Australians and English suffer from the inevitable anti-competitive corporate concentration and loss of independence of the legal profession, and then cherry-pick whatever crumbs of usefulness may emerge from their overall foolishness. The American Bar Association roundly rejected ABS. The Americans have made quite a mess of their legal system ((1) far too many lawyers per capita, (2) far too much useless and immeasurably costly and roiling litigation, and (3) allowing the “dysfunctional” and “invidious” title insurance industry to rip away, through grossly unfair business practices, most of the conveyancing work from the real estate bar to the great cost of the public and great harm to the title system), but on the issue of rejecting ABS, they have got it right.

    There is zero need to sell ownership of the legal profession to the giant companies that will be answerable to their shareholders. Those giant companies are the clients of the big law firms. Those big clients of the big law firm will be the real winners of ABS, certainly not the public. They probably cannot believe their luck that the Law Society would even be contemplating selling out to them. And make no mistake. Any supposed safeguards will be swiftly eroded or circumvented in the interests of those giant companies, not the interests of the public or the profession.

    Many pushers of ABS have spent a mindboggling amount of time fussing about how to bring down the cost of wills as if that is a major barrier to access to justice. Wills???? In any event, along has come Xcess doing wills for the harm-enhancing price of $99 (though I suspect there is a ton of up-selling going on there, either that or awfully short and poor wills are being produced. Consider that one of the lawyers at Xcess was quoted as saying he had done 20 wills that day. Assuming he works a 10 hour day, does not eat and does not go the bathroom, that means 30 minutes per will – a recipe for future litigation.). In any event, Xcess is not ABS. It is owned by lawyers. ABS had nothing to do with it.

    Comparatively little time has been spent on dealing with the one real barrier to A2J – the inordinate length and horrendous cost of litigation. In my view, this is a disgrace and proof, from where I sit, that this whole ABS/A2J push is little more than an attack on the low cost, ubiquitous practices of small firm solicitors so that certain people can claim to have “done something” about a mostly misdirected A2J problem and so that the real problem does not have to be addressed.

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