Imposing Quotas on the Legal Profession

Perhaps it didn’t make as many waves in the rest of the country, but the Quebec legal community has been buzzing about a report on the employment situation among young lawyers in Quebec published by the Young Bar Association of Montreal (YBAM) earlier this year. This organization, which represents close to 5,000 members, compiled impressive amounts of data to establish trends about young lawyers’ job prospects.

Essentially, things are bad for young lawyers in Montreal and they are getting worse. The issue has now made its way into mainstream media, with La Presse running a few articles last week about high unemployment rates in the legal profession. The Barreau du Québec even addressed the issue last week when it published a note on its website to position itself on a few hot topics addressed in the YBAM report. Among those topics, the following two merit a closer look: the idea of imposing quotas on the number of lawyers in a province and innovation in the legal industry.

First, even very established lawyers have to admit that the equilibrium between supply and demand for legal services is a moving target these days. Some would claim that the changes are coming from shifts in the demand side, but seeing as the legal market is not perfect competition, we would like to suggest otherwise. Indeed, by imposing barriers to entry on potential suppliers, universities and bar associations have historically restricted the supply of legal services with obligatory law school degrees and licences to practice. These hurdles for potential service providers have contributed to establish the value perceived by clients. However, the very foundations of these barriers are currently being shaken by new technology, among other things.

Nowadays, access to information is such that a reasonably curious person with a solid base can find answers to a number of legal questions online. Online databases like Canlii are free and hundreds of law firms publish online content in various formats. Therefore, if you know the right keywords, odds are you can find at least a portion of an answer to most of your questions. While it is true that this information is less nuanced and complete as your local law school curriculum, it can more often than not “get the job done” for someone looking for a quick fix. Ultimately, the perception of value attributable to the knowledge gained during years in university is diminished by this access to information.

The licence to practice, on the other hand, is still as pertinent and valuable. However, while various provisions throughout the country forbid non-lawyers from rendering legal opinions and things of the sort, it doesn’t restrict non-lawyers from performing dozens of tasks currently performed by legal experts, but that aren’t exclusive to them. These different operations represent a colossal volume of billable hours for the legal community. Factor in the fact that the number of licence holders in a province like Quebec has grown by 98% in the last 20 years, to match a 15% population growth in that timespan, and that outsourcing and legal tech can now replicate some of the work done by legal professionals for less money and it isn’t difficult to see that the price equilibrium of yore is no longer relevant. Supply and demand have shifted dramatically, in a manner similar (and yet so different) to what we are seeing in the taxi industry.

Quotas

As a solution, the YBAM suggests that quotas could help balance the supply, especially when considering that the Quebec Bar exams passing rate hovers around 80%, much higher than in some other places in North America.

Quotas would cause huge headaches for law school, bar associations as well their members, which is enough of a reason for that specific item in the report to never see the light of day, no matter how well reasoned it is. However, as a nerdy observer, I wanted to dig deeper and see how these quotas could materialize in real life:

  1. the market is currently looking for a new equilibrium, as a result of a shift in the effectiveness of the barriers to entry;
  2. a lot of members are asking for an adjustment to the barriers in order to adapt to the reality we know today;
  3. tomorrow’s reality will surely be different and those barriers will be shifting constantly in the next few years;
  4. quotas will have an impact in a few years, not in the short term;
  5. these quotas could be way off the mark in 5 years if, for example, progress in artificial intelligence is such that complex multivariable legal problems can be solved by applications.

While the YBAM is most likely on the right track, it’s not a simple decision.

Innovation

Let it be said: innovating in the legal profession is not easy, particularly in Quebec, where a different legal system makes scaling any software product that much more difficult. Great innovation, therefore, takes a lot of time to develop, especially in a context where incentives to innovate seem quite remote for successful lawyers who actually have the capital to try their hand in such a venture.

Academic institutions must now pick up the baton and take every possible measure to foster an innovation-friendly climate in a low-risk environment. The YBAM suggests that law schools incorporate practical management skills into their curriculum, which in turn could help create a more innovative environment. It’s a great thought, but competitions, conferences and workshops must also be put to contribution at the same time in order for young lawyers to feel the drive to create something new. Initiatives like the Legal Innovation Zone at Ryerson are perfect examples of that, but we are still light years away from where we should be in this extremely fragmented market.

As a final thought, it is also imperative that incentives be put in place by innovative firms to recruit high-end legal talent and mix it with their tech expertise and processes. Advisory boards are nice, but hands-on involvement from top-flight talent is probably necessary to build the Next Big Thing. There’s still a lot of work to be done, but seeing a group with 5,000 members like the YBAM create such a stir is a sign that things are going in the right direction.

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Alex Thibault is both an M&A lawyer and Vice-President at Edilex, a legal business finding ways to deliver legal services more efficiently using technology. He supervises marketing and business development for the company and sits on the board of directors. He regularly gives conferences on business development, technology and the future of legal services. Alex can be found on Twitter at @alex_thibault

Comments

  1. Lawyer quotas & abolition of law societies.
    1. If legal services are too expensive, controlling the number of lawyers won’t make them affordable for that majority of the population that currently cannot afford them. The profession will continue to shrink until there is a solution.
    2. It is improper to use the law societies’ monopoly over the provision of legal services as protection against having to suffer the economy’s ups and downs as the population does. Such use is illegal and possibly violates Charter of Rights s. 15 (equality of opportunity to obtain legal services by an immutable middle income level of society).
    3. Such protectionism removes all incentive to innovation that will solve the problem.
    4. The cause of the problem is the method of doing the work to produce legal services. It is obsolete–a handcraftsman’s cottage industry method, instead of a support services method; e.g. all parts of the medical services infrastructure are mutually interdependent support services. No part is a “generalist” producer. All parts produce volumes of services that maximize economies of scale. No law firm has either the necessary degree of specialization or volume of production. Therefore, the problem is inevitable.
    5. No doctor’s office provides all treatments and remedies for all patients the way a law firm does for all clients.
    6. As to technology, that will not solve the problem. If it could, automobile manufacturers wouldn’t need the parts industry–a massive supports services method of production. If technology could, no producer would need specialized support services. Competition makes support services methods of production mandatory, as does public pressure on the medical profession to make doctors and hospitals always available, using the best of medical science. There is no such pressure on the legal profession. Therefore there is no such innovation. Therefor the problem is inevitable.
    7. Law societies’ management structures are the cause of the problem. They haven’t changed since their creation early in the 19th century.
    8 But it is law societies who have the power and the duty in law to sponsor the innovations that will solve the problem.
    9. Therefore, law societies must either be abolished and their regulatory powers transferred to an agency that is more responsive to the democratic process, or change their management structures.
    10. A bencher’s main concern has to be practice or employer, not bencher duties. So, to avoid being too short of time and stress-endurance, benchers don’t tackle difficult problems like unaffordable legal services. So, there is no program to solve the problem; just easy-to-advocate programs for living with the problem. And there is no law society public declaration that states, “this problem is our problem, and it is our duty in law to solve this problem.”
    11. For such duty in law–see for example, s. 4.2 of Ontario’s Law Society Act.
    12. Access to justice (A2J) committees have had no effect. The problem’s victims continue to grow. A2J committees fail because: (1) they are composed of lawyers, but the problem is not a legal problem; lawyers don’t have the necessary expertise; (2) they assume without analysis, that the solution is to provide the right improvements to the method of delivering legal services, but in fact the cause is the method itself. It is a cottage industry method whereby law firms rely only on their own internal resources. They have to, because law societies have not sponsored the creation of the specialized support services, the use of which will make legal services affordable; (3) the recommendations of A2J committees are never submitted to trial-and-error learning.
    13. No learning; no sponsorship of innovation; and no benchers serving the function of law societies to make legal services adequately available. So, the problem is inevitable as is the abolition of law societies.
    14. The only such support service in Canada is LAO LAW at Legal Aid Ontario. It is a highly specialized centralized legal research unit. By its 9th year of development, 1988, it was producing 5,000 legal opinions per year for lawyers in private practice for their legal aid cases. That volume and popularity because it helped lawyers make money.
    See: Ken Chasse, “Access to Justice-Unaffordable Legal Services’ Concepts and Solutions” (SSRN pdf download) at:
    http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2533233 .