The fact that legal advice services cannot be automated is of critical importance in determining whether the legal profession should accept proposals for “alternative business structures” (ABS’s). They are being promoted by a Committee of the Law Society of Upper Canada (LSUC) as a means of lowering the cost of legal services.[i] The “unaffordable legal services problem” afflicts both kinds of legal services: (1) legal advice services; and, (2) routine legal services that don’t require legal advice. ABS proposals have three parts: (1) law firms can be invested in (owned—up to 49% or 100%) by non-lawyer people and entities; (2) legal services be enabled to be provided with related non-legal services; and, (3) routine legal services be automated by software applications. The theme of these ABS proposals is that in order to have (2) and (3), the legal profession must accept (1). “It ain’t necessarily so.” And, what is not dealt with in these proposals is how they are going to make legal advice services affordable.
With good law society leadership, the automating of routine legal services with software “apps” can be done by Canada’s legal profession itself. We don’t have to surrender our professional integrity to investors providing ABS’s. Anything that they might make available to the practice of law can be done by the legal profession itself. Authorize our law practice management divisions to do it. We can bring in the necessary experts to help us, rather than having ABS investors tell us what is best for us. Canada’s law societies created CanLII—a national success story the legal profession can be very proud of. And LAO LAW at Legal Aid Ontario (LAO), was created (beginning July 3, 1979) when the LSUC was the manager of LAO. LAO LAW is the best legal research unit in Canada. These great successes prove that the “unaffordable legal services problem” can be solved with the power of a collectively as represented by a law society, rather than attempting to do so by way of the very limited powers and resources of individual law firms negotiating with high-powered investors. And, the efficacy of law society powers to regulate the legal profession will not be at risk. The legal profession is in bad economic shape right now; investors are going to want a lot of control to compensate for that risk.
The method of making legal advice services affordable exists within Canada’s legal profession itself. Moving the legal profession to a “support-services method” of delivering legal services from its “handcraftsman’s method,” will solve the “unaffordable legal advice services problem.” Handcraftsmen don’t use support services; they do all the work themselves. Therefore the legal profession doesn’t have the ability to solve the “unaffordable legal services problem,” because the economic forces that enable a support service to improve its goods or services without having to increase their price, are not available using a handcraftsman’s method. That is why the handcraftsman’s method has been abandoned in all forms of competitive production except in the legal profession.
CanLII can be enabled to provide the legal opinion and related support services that LAO LAW provides. Its 35 years of innovation as a sophisticated support service has saved LAO millions of dollars. CanLII can make LAO LAW’s support services available to all lawyers in Canada at cost. When I was LAO LAW’s first Director of Research (1979-1988), my staff was producing close to 5,000 legal opinions per year for lawyers in private practice.[ii] Because of the economics of greatly scaled-up specialization and volume of production of a sophisticated support service, we were far more cost-efficient than any law firm can be. No investor in a law firm can do that, nor will it create anything comparable to CanLII or LAO LAW. Therefore they will not be bringing the economic advantages of support services to bear upon the cost of legal advice services. Using that same LAO LAW technology, a wide range of support services can be created in whatever areas of the law that lawyers want them. No law firm need change its methods of practising law, nor incur ownership by investors. Such support services will help lawyers make money and service their clients better. That is why they used LAO LAW when I was there, and do so now in even greater numbers because of its long history of quality services and because several more support services have been spun-off from that original legal opinion service. See my Slaw blog article, “CanLII as the Solution to the Unaffordable Legal Services Problem” (October 24, 2013).
The legal profession is very right to be cautious and suspicious about inviting in non-lawyer investors to own law firms. The increased “profits duty” they will impose will conflict with a lawyers’ fiduciary duty to every client. The great danger is that such increased profits pressures will not make a distinction between routine legal services and legal advice services. Both will be subjected to “volume practice strategies”—maximizing the number of clients advised per unit time. And that pressure will be there whether the investor owns one law firm or a string of law firms controlled as franchises. The owner of a franchised outlet must follow the procedures laid down by the franchisor—“fast food legal services.” In the daily lives of the lawyers in those owned law firms, law society powers to regulate and discipline the legal profession will be effectively diminished by that added “profit duty.”
There are no definite statements or proof in the analytical literature concerning ABS’s that show that they can solve the unaffordable legal services problem concerning legal advice. But, by combining legal services with non-related legal services they should be able to make legal services more attractive to clients who can still afford legal advice services. The majority of the population cannot. And changing law and practice to make such combinations “legal” and affordable doesn’t require ABS’s.
All of the new developments are based upon improving the handcraftsman’s method of law firms delivering routine legal services. They do not take advantage of the economics of support services technology that can greatly aid lawyers providing legal advice services as does LAO LAW. None of them can provide 5,000 legal opinion services per year, and none shows any understanding of such support services providing legal opinion services. With the development of such support services, law societies can themselves make legal services affordable. They have two critically important advantages over ABS’s: (1) no law firm or lawyer need change—just decide whether or not to use support services (my experience at LAO LAW proves that they will, enthusiastically); and, (2) you don’t have to cope with an investor living in your law firm as “another mouth to feed.” If a number of support services were developed and used, the legal profession and law schools would be expanding instead of contracting.
The best solution to the unaffordable legal services problem is a law society solution, not corporate money owning law firms. Lawyers’ professional duties to, social justice, the rule of law, and their fiduciary duties to their clients, should never be sacrificed to the profit duties imposed by the investment market. The practice of law is a profession, not a business, and business is not the only agency that can make the practice of law as cost-efficient and affordable as necessary.
As to financing such development by Canada’s lawyers (instead of by commercial investors) of software for automating the delivery of routine legal services: more than $11 million could be raised if every lawyer in Canada paid an addition one-time $100 increase in annual law society fees. Any additional costs or annual usage fees could be negotiated by the Federation of Law Societies of Canada (FLSC) for the benefit of all lawyers and their law societies. (CanLII was thus sponsored and developed by the FLSC.) The negotiating power of the legal profession as a single group is much greater than that of any single law firm negotiating with an investor for an ownership share of that law firm or of a string of law firms to be made franchises of the investor. Such financing would be far more economical and controllable than the resulting costs imposed by such investors in the form of an increased “profit duty” to pay for such investments.
As to potential self-interest in the outcome of the ABS debate: the members of the Working Group that wrote the Report to Convocation of Feb. 27th, and LSUC’s ABS Discussion Paper, released on Sept. 24th, should declare any interest that they or their law firms will have in enabling investors to own law firms. For example, will they, or any clients of their law firms be such investors? Similar declarations should be forthcoming from the members of LSUC’s Professional Regulation Committee from whose members the Working Group was composed. Such declarations or denials of self-interest should be immediately forthcoming. They are necessary to dispel any appearance or suspicion that Benchers are using their position for self-interest and not solely in the public interest.
Note that the Discussion Paper is not a neutral text, providing a balanced review of the issues. It reads like a promotional text for its proposals.
Ken Chasse (“Chase”), member LSUC (1966); LSBC (1978). The “access to justice” articles that I have posted on the SSRN (Social Science Research Network) provide the footnoted authorities and in-depth analysis that support these statements. SSRN author’s page
[i] Alternative Business Structures Working Group Report to Convocation (at Tab 4) of the Professional Regulation Committee Report, February 27, 2014 (Co-Chairs, Malcolm Mercer & Susan McGrath). And see also this statement on LSUC’s website: “The Law Society released Alternative Business Structures and the Legal Profession in Ontario: A Discussion Paper on September 24, 2014, to seek input from lawyers, paralegals, stakeholders and the public about Alternative Business Structures (ABS).” Comments and requests to attend meetings may be sent to, firstname.lastname@example.org by December 31, 2014. (This discussion paper reads more like a promotional text than a neutral text providing a balanced presentation.)
[ii] However since then, LAO has suffered a number of funding cuts. Therefore LAO LAW’s staff is now smaller, and works by a different strategy of emphasizing its very large catalogue of memoranda and draft pleadings and other support services, all available for free download by lawyers who service legal aid cases. But it still provides legal opinion services and works by way of the same centralized legal research technology developed during its initial years to provide a large cost-saving to LAO.