It would be really easy to read last week’s report from the Law Society of Upper Canada’s Working Group on Alternative Business Structures as thoughtful and considered.
Afterall, it has all the hallmarks of a judicial decision – using all the right words and heck, even using numbered paragraphs; no surprise given that Convocation is over-weighted with litigators, many of whom aspire to be judges themselves.
But if you scratch beneath the surface of the report, one quickly finds that all the judicial language in the world cannot hide what really happened in the LSUC Star Chamber amid the fine dining and clinking of sturdy goblets of Port.
The Working Group determined that in order for it to recommend ABS to Convocation, ABS had to pass the following seven tests:
- Access to justice;
- Responsive to the public;
- Protection of Solicitor-Client Privilege;
- Promote Innovation;
- Orderly Transition; and
- Efficient and Proportionate
No weighting is assigned to any of these criteria, so we don’t know if the Working Group considered each of these criteria to be equally important or whether some are more important than others.
There are also no metrics within any of these criteria to indicate what a “pass” would look like.
However, it becomes clear from reading the report that ABS had to show itself to be demonstrably better than traditional law firm structures.
In other words, the Working Group granted – without explanation – a presumption in favour of traditional law firms.
Is that fair, logical or even reasonable?
I have written before that an objective and fair review of ABS would only ask one simple question:
Does ABS demonstrably create more mischief than the current structures?
But, let’s take a look at the criteria used by the Working Group.
Access to Justice – ABS passes yet still fails
The Working Group determined that “…based on the experience to date in other jurisdictions, the likely access to justice impact does not appear to be sufficient to justify majority non-licensee ownership or effective control, for practices generally.”
In other words, the Working Group acknowledges that ABS firms have increased access to justice – just not by a sufficient amount.
What is the definition of “sufficient”?
In order for the Working Group to state that A2J is not sufficient, the Working Group must have a benchmark of what would be sufficient.
What is that benchmark?
In order to achieve consistency of decision-making, how can a future Working Group determine that overseas experience has now achieved that benchmark?
Responsive to the Public – ABS Passes
The Working Group determined – again without any criteria or benchmarks – that ABS passes the vague and undefined, “responsive to the public test.”
Professionalism – ABS Fails
The Working Group has heard concerns from some individuals that external ownership would necessarily emphasize profits over professionalism .… and the Working Group agrees that there is not yet sufficient evidence from other jurisdictions from which to make proper judgments about the effect of public ownership on professionalism. The Working Group is of the same view with respect to the effect of substantial market consolidation.
What is interesting about this decision is that the Working Group has weighed “concerns” raised by Ontario lawyers who have no experience with ABS and very little understanding of ABS, over actual experience in Australia and the UK.
Is it fair, reasonable and logical to weigh the opinions of those with no experience more highly than the actual experience and evidence of other jurisdictions?
The Working Group has no evidence that the “concerns” raised by inexperienced and unknowledgeable Ontario lawyers will actually come to fruition – so how could it reasonably give any weight to those concerns?
How is it that the Working Group demands ABS to provide evidence, while allowing naysayers to merely “issue spot”?
Is this good decision-making?
And what would constitute sufficient evidence?
Surely the Working Group must have a benchmark in order to come to its conclusion. Again, we don’t know.
The Working Group considers that the better course is to wait for further experience to develop in other jurisdictions before attempting to reach conclusions as to the effect of public ownership and consolidation on professionalism.
Again the Working Group does not state how long we should wait and what experience it is looking for in order to change its mind.
Protection of Solicitor-Client Privilege – ABS Passes
In a most bizarre turn of events, the Working Group has come up with a criteria that Solicitor-Client Privilege might be compromised by ABS. I’ve been studying ABS for some time and I must confess that this attack on ABS came out of left field for me.
In any event the Working Group confirms that it has no concerns over this.
Promote Innovation – ABS Passes, yet still Fails
Although ABSs appear to be innovating more than their non-ABS counterparts, [emphasis added] the Working Group is of the view that it is too early to determine whether the levels of innovation taking place in England and Wales support a shift to majority or controlling non-licensee ownership of traditional law firms in Ontario.
Why must ABS firms be proven to be more innovative than traditional firms?
Isn’t the better criteria: ABS firms should be shown to be at least as innovative as traditional firms?
But never mind those points, why doesn’t the Working Group follow its own test?
How can the Working Group acknowledge that ABS firms are more innovative and therefore clearly pass the test – but then state that ABS firms still fail the test because they are not innovative enough?
What on earth does “not innovative enough” mean?
What benchmarking was used?
What would enough innovation look like?
And if it’s too early to tell, then when is the proper time?
Again, in order to ensure consistency of decision-making, how does a future Working Group determine the correct timing and the “enoughness” of the innovation?
Orderly Transition – ABS Fails
The Working Group agrees that preferred ABS models would need to be introduced in a manner that is mindful of any disruption that a new scheme may cause. Permitting majority non-licensee ownership would represent a major change, requiring significant resources to implement, including legislative reform. The Working Group considers that this criterion militates against implementation of majority or controlling non-licensee ownership levels.
To whom would this be disruptive and costly? Lawyers? The Public?
We don’t know.
How costly? How disruptive? By what measure?
Again, we don’t know.
But shouldn’t we know whose pocket books and delicate psyches are being protected by the Working Group?
Shouldn’t we know how the disruption and costs were measured?
There is a better question however: is this even a valid consideration?
Is the, “Gosh, it’s just gonna be too hard to do” response something that we should tolerate from a disciplined, thoughtful body that claims to be a pillar of society?
Efficient and Proportionate Regulation – ABS Fails.
As described above, the Working Group is concerned that a shift to generally permitting non-licensee majority ownership or control likely creates disproportionate regulatory complexity and risk when weighed against the likely benefits as currently observed through the ABS experiences in Australia and England and Wales to date.
Splitting this criteria from the Orderly Transition criteria above is clearly disingenuous. The two are identical and there is no logical reason to split them into two separate and distinct criteria.
Again the, “Gosh this will create complexity” argument is trotted out without any metrics or explanation. The Working Group also throws in a thin and unsubstantiated cost/benefit analysis to further explain why ABS fails this criteria.
If one adds up the “yeas” and “nays” (as there is no weighting system), we see that, using the Working Group’s math, ABS only passes two out of seven criteria; hence its decision to not move forward.
However, we also see that that math is disingenuous.
ABS actually passes four out of seven criteria, which in an equally weighted framework means that the Working Group should have recommended ABS to Convocation. By its own words, the Working Group acknowledged that ABS passes the A2J test and the Innovation test – just not by an enough.
In all, the Working Group receives a failing grade for methodical, objective and transparent decision-making.
And one can now fully understand why it was democratically-elected governments – not lawyers – that brought ABS to Australia way back in 2001, and to the UK in 2011.
It wasn’t fair and objective decision-making that killed ABS in Ontario – it was the foul stench of protectionism.