On the LSUC Dialogue on Licensing, Pt 1: Is There a Need for Change?

Over the summer months, the Law Society of Upper Canada has been conducting a Dialogue on Licensing to prompt information sharing, discussion, input and reflection on the future of the requirements for licensing of lawyers in Ontario. Based on materials disseminated as part of the Dialogue, a series of discussion sessions were held and summary reports released. Submissions were also invited through a broad call open into August. According to a late June update, the Professional Development and Competence Committee (PDCC) of the LSUC will spend the remainder of 2017 reviewing the input, with a view to producing recommendations in early 2018.

The premise of the entire Dialogue exercise, as evident in the words used by Peter Wardle, Chair of the PDCC, when introducing it some six months ago via a blogpost on SLAW, is that there exists a “need for change that is urgent and compelling.” As the PDCC ponders the input from the busy summer of consultation, it seems timely to draw attention to two shortcomings in the Dialogue materials and discussions: first, to what extent is there really a ‘need for change’? and, second, to the extent a need for change does exist, why isn’t the ongoing inaccessibility of justice being recognized as a more central concern? I address the first of these questions below, in Part 1 of this 2-part blogpost, taking the position that there is significant lack of clarity in the need for change. I address the second question in a forthcoming Part 2.

1. Is there a Need for Change?

A. What has been said about the need for change

In his SLAW blogpost, Wardle states:

There are many stakeholders across the legal profession in Ontario who believe that the current licensing process is unfair and unsustainable over the long term, and needs to continue to evolve.

The need for change is urgent and compelling. It is driven by three major factors: the number of applicants, financial sustainability and the transformation of the business of law.

In terms of applicant numbers, Wardle notes that there has been a 71% increase over the past decade (to almost 2400 in 2016), with an increasing proportion of foreign educated applicants (650 currently). According to Wardle, “[t]he licensing system needs to support this huge increase in volume, as well as the rapidly growing diversity in the legal experience and background among candidates.”

In terms of financial sustainability, Wardle focuses on the concern that if transitional training is mostly required to occur pre-licensing, as in the current system, “then the overall costs of certification as a lawyer can become a barrier to many applicants … [yet] … [t]ransferring costs to the membership or to the profession presents other challenges.” He goes on to note that the current funding arrangements for experiential training, whereby a universal fee is charged to all licensing candidates, regardless of pathway to licensing, “has led to dissatisfaction among candidates and from the profession.”

Finally, in terms of transformation in the business of law, Wardle refers to the ongoing impact of globalization and new technology that can be expected to spur new business practices that will not have been included in pre-licensing experiential training, with the result that licensing candidates will lack a key dimension of entry-level competence to practise law.

B. What is unclear about the need for change

i. Increasing applicant numbers

While it is clear that applicant numbers have increased significantly over recent years, there are some errors in the supporting information as to the source of this increase and, more importantly, it is unclear in what sense the current system cannot accommodate increases.

a. There has not been a “60%” increase in law school graduates; the real increase is around 25%

The supporting materials include (as part of Dialogue Topic 2) and make reference to a study of the Higher Education Quality Council of Ontario entitled Labour Market Trends and Outlooks for Regulated Professions in Ontario (‘the Labour Market Study’). Relying on the Labour Market Study, it is stated that “the number of graduates from Ontario law programs rose by 60% between 2007 and 2012 due to new programs and growth in the number of available spots in professional programs.” The Labour Market Study states that there were 1800 graduates by 2012. The bases for arriving at these numbers is unclear and other available sources of data indicate that they are wrong. For instance, in the 2011 Consultation Report prepared by the LSUC’s Articling Taskforce (available here), it was stated that graduate numbers had increased by 15.5% from 1152 in 2007 to 1330 in 2011 (see p. 10). For this to square with the Labour Market Study, there would need to have been an additional increase of 35% in 2012 – that did not occur. Similarly, the Ontario Universities Application Centre (OUAC) reports that there were 1231 registered first year students in Ontario law schools in 2004 (who would comprise the 2007 graduating class), which grew to 1350 in 2009 (who would graduate in 2012) and then to 1549 in 2016. It is inconceivable that 1350 registrants in 2009 became 1800 graduates in 2012. Moreover, the OUAC numbers indicate an increase in student numbers of 25.8% from 2004 to 2016. So, there are not, even five years on from 2012, 1800 graduates from law faculties, and total numbers have increased by nowhere near 60%.

b. The LPP/PPD program appears to have unfilled capacity

At any rate, it is not clear in what sense the current system cannot accommodate increases. In particular, with the introduction of the LPP/PPD program, there is a means for overcoming the shortage of articling positions. My understanding is that the current level of enrolment in the LPP/PPD program is below capacity. There is no information in the supporting materials that indicates any upper limit on the capacity of that combined program. Indeed, higher enrolment in that program would seemingly be of assistance in relation to the financial sustainability issue.

c. The labour market for articling positions is not necessarily the measure of the experiential training capacity of the profession

While the LSUC has undertaken numerous efforts to boost the number of available articling positions, the default logic remains primarily market-based in the sense that private lawyers who are eligible to serve as principals (and it is private lawyers who make up the vast bulk of principals) are entitled to decide for themselves, on the basis of their own private economic calculations, whether to devote any of their money, time and other practise resources to experiential training. If it is possible that these market-based decisions lead to an ‘underestimate’ of experiential training capacity, then maintaining this default logic amounts to a regulatory choice not to require that eligible lawyers contribute their experiential training capacity to the licensing system (or, as has been long proposed, that unwilling participants ‘buy-out’ any such obligation through a licensing levy).

d. The labour market for legal professionals is certainly not the measure of legal needs in Ontario

The supporting materials rely upon the Labour Market Study to note the following:

  • “[D]emand for legal services is driven largely by economic cycles and population growth.”
  • “[S]lowing demand for legal services and a rising supply of law school graduates have weakened labour market outcomes for new entrants to the profession.”
  • “[O]ver the next 10 years [2015 to 2025], there will be 1.6 new licensed lawyers for every new practising position.”

These and other portions of the Labour Market Study and the supporting materials suggest an argument that there is an oversupply of newly licensed lawyers, which is only going to get worse. However, it must be emphasized that the Labour Market Study is only examining the extent of demand for legal services that can be expressed in terms of money-paid for services-rendered. In other words, it is only concerned with the legal needs of individual or corporate persons who can afford to buy legal services to meet their legal needs (and who choose to actually purchase legal services). The Labour Market Study ignores un-monetized legal needs or, in other words, the legal needs of individuals who cannot afford to buy legal services. Even if it is accurate to argue that there is an oversupply of newly licensed lawyers in relation to current monetized legal needs, this is not the only relevant calculation. Also relevant is the fact, as acknowledged elsewhere by the LSUC, that Ontario has a serious access to justice problem (see also the recent work of the CFCJ). That is, a serious problem with a failure to establish mechanisms for enabling lawyers (and paralegals) to meet the full extent of existing legal needs. The supporting materials contain no information about the estimated extent of unmet legal needs nor has there been any apparent attempt to re-calculate the supply/demand equation taking into account the legal needs of those who cannot afford to pay (or otherwise experience barriers to obtaining legal services).

ii. Financial (un)sustainability

There is no information in the supporting materials on the question of the financial sustainability of the current licensing system nor, more specifically, on the issue of whether and to what extent the current level of the universal licensing fee poses a barrier to participation in the licensing process.

To be sure, it can be assumed that a licensing fee in the (current) vicinity of $5,000 may pose a barrier to participation for some potential licensing candidates and may impose undue financial hardship on others. But it must also be noted that many licensing candidates have their fees paid for them by their articling employer. This amounts to an individualized subsidy from the profession, on top of the general subsidy that the profession also provides, via an annual allocation from the LSUC of $1m. It is not clear though that this is as much as the profession can or should provide by way of subsidy to ensure adequate accessibility to the licensing process. Certainly, the profession appears reluctant to provide any greater subsidy, but that is not the same issue. Moreover, the individualized employer-employee subsidy creates a relative inequality in the substantive burden of the universal licensing fee, which should also be taken into account. For instance, if the total current pool of subsidization funds were distributed on the basis of need, perhaps existing financial barriers to participation in the licensing process would be eliminated.

iii. Transforming business practices and entry-level competencies

It is generally accepted that globalization and technology, among other factors, are exerting considerable pressure on the business models of many areas of professional services, including legal services. The supporting materials provide some information on the approach taken by the LSUC in generating the current list of entry-level competencies. Concerns have been raised about the extent to which licensing should be geared to competencies or, at least, to the currently identified competencies.[1] For present purposes though, I confine myself to observing that, if it is important for experiential training or the licensing process to equip new lawyers to spur or manage changes in business practices, the highest priority area of change to focus on might be business practise transformations that can improve access to justice for those who are currently most disadvantaged and most in need of legal assistance.

Which brings me to the broader issue of why the ongoing inaccessibility of justice is not a more central concern in the Dialogue … which will be addressed in the forthcoming Part 2.

In the meantime, to sum up for now, I would urge the PDCC to take a more careful look at the data and other arguments that purportedly justify the need for change.

______________________

[1] See, for instance, Arthurs, Harry W., “The Future of Legal Education: Three Visions and a Prediction” (2013). Comparative Research in Law & Political Economy. Research Paper No. 49/2013.
http://digitalcommons.osgoode.yorku.ca/clpe/291

Comments

  1. It is a false argument that there is an over-supply of lawyers. Is the groundwork being prepared for limiting the number of successful candidates to become a lawyer? That is not an ethical way to cope with the unaffordable legal services problem (“the problem”) i.e., to limit the competition among lawyers for those remaining clients who can still afford legal advice services. That is a solution that serves lawyers, but is a disservice to the population and to those candidates and to law students. However, a wider context for evaluating the worth of such a “Dialogue” is necessary.
    To limit the number of lawyers so as to reduce the competition for clients, would be another evasion by law societies of their duty in law to solve the problem. All law society responses to the problem merely help the many millions of its victims to live with the problem, but they do not try to solve the problem—“palliative care” instead of trying to cure the patient’s life-threatening disease. Law society benchers are free to give top priority to the place where they earn their own living, and a very poor second place to the duties and purpose of a law society. The nature of a law society’s major problems in this century, such as the problem, dictate that it is no longer possible to be both a good lawyer and a good bencher.
    Everything done by benchers, including such “Dialogues,” prevent change in regard to two critically important factors that perpetuate the problem: (1) law society management structure and its 19th century conception of a bencher; and, (2) the method by which the work is done to provide legal services. Therefore the problem of unaffordable legal services cannot be solved without government intervention.
    And therefore devices such as the following are used by law societies: (1) methods to control an alleged over-supply of lawyers; (2) “alternative legal services,” which are charity, simplistic services, and without the benefit of the solicitor-client relationship (pro bono services being but a very small exception, and possibly targeted legal services); and, (3) the sponsoring of “apps,” (the application of electronic technology to legal services), the effect of which upon the problem is unknown and unanalyzed, and cannot solve any such access to justice problem. That is because they can at best make the law office more cost-efficient, which isn’t enough to create affordable legal services, other than routine legal services, but not legal advice services. It is legal services that take any significant amount of a lawyer’s time that are the cause of the problem, and not routine legal services which, for the most part, remain affordable.
    The way in which “apps” are being applied to legal services cannot produce the necessary economies-of-scale essential to the affordability of all products. The infrastructure by which medical services are provided, and all of the manufacturing of goods and services over the last 100+ years, proves that to be true. For example, CanLII has made us all more cost-efficient, but it can’t produce any improvement to the unaffordable legal services problem. That is because materials and supplies no matter how very expertly and cost-efficiently delivered to an obsolescent method of producing a product (such as the way in which legal services are produced), cannot make the product affordable, and therefore, neither can “apps” within the law office. To be used they should be, yes; but a solution to the problem, no.
    In order to achieve the necessary economies-of-scale for the affordability of all products, external, highly specialized, high production volume “support services” methods of production are used everywhere in the production of goods and services, except in the legal profession. For example, legal research could be done far more competently and cost-efficiently if provided by such a support service. Because law societies have not sponsored the innovations that would provide the necessary economies-of-scale, law societies are the cause of the problem. That in turn is due to the obsolescence of law society management structure—preserved in place by its unaccountability.
    Because law societies are not accountable in fact (as distinguished from “in law”), to the political-democratic process, it is sadly true to have to say, “there are no economies-of-scale in the practice of law.” But it doesn’t have to be that way, and it is a law society’s duty to prevent it from continuing to be that way.
    And therefore law society “Dialogues” have to be judged within this wider context. Until the problem is solved, lawyers and law students best beware such obsolescent law societies, and for similar reasons, beware the proponents of “alternative business structures,” in whatever form and size proposed.
    And be brave like Professor David Wiseman—speak truth to law society power, or continue throughout your career to be its passive victim in a severely financially depressed legal profession. Therefore, no one should fail to read David Wiseman’s forthcoming Part 2 to his Part 1 above, because, as he strongly implies, there is a need for change. Big change, i.e., see my solution to the problem, in:
    (1) “Access to Justice-Unaffordable Legal Services’ Concepts and Solutions” (SSRN, pdf.), at: https://ssrn.com/abstract=2811627;
    (2) “Alternative Business Structures’ ‘Charity Step’ to Ending the General Practitioner” (SSRN, pdf), at:
    https://ssrn.com/abstract=3020489; and,
    (3) my forthcoming post on Slaw for Tuesday, October 3rd, “’Apps’ and the Waning of the Solicitor-Client Relationship.” — Ken Chasse.

  2. Ken – Forgive me but I’m having a real hard time understanding how you can credibly claim that competition between licensees = good yet competition between firms, LPOs, and ABSs = bad. According to you, there are no economies of scale in the practice of law. Except of course if this is done by the LSUC. Then somehow it has magic powers to create economies of scale. Just keep the firms, LPOs, and ABSs out of it.

    Which is it. It can be one or the other, but not both: you must decide. JS

  3. Thanks for your comment on my comment John. No, I didn’t want to be understood as saying what you suggest. The easiest way of replying to your statements is to ask that you read the articles cited in my comment, and the other relevant articles listed on my SSRN author’s page, at:
    http://ssrn.com/author=1398484;
    and listed on my Slaw author’s page, at:
    http://www.slaw.ca/author/chasse/
    However, I offer the following few comments, but each requires the fuller explanation as set out in those articles.
    (1) The issue of LSUC’s limiting the number of lawyers it calls to the bar, so as to reduce the competition for clients, has come up several times in LSUC’s history when law firms are short of clients. It has been resisted as being an improper use of a law societies’ monopoly over the provision of legal services, which includes its ability to determine the requirements to become a licensed lawyer, and the motivations allowed to be operative in the marking of law school graduates’ exam papers during a law societies’ qualification process. As a result, there are no statistics or statements of such limitations or unacceptable motivations having been imposed. But strong pressure to do so will exist in times of economic downturns, as the legal profession is now facing by reason of the problem of unaffordable legal services. Limiting the number of lawyers called to the bar for purposes of competition manipulation, is discussed in this book by Christopher Moore, “The Law Society of Upper Canada and Ontario’s Lawyers 1797-1997” (University of Toronto Press, 1997).
    (2) Any law society has power to create economies of scale by establishing support services in regard to particular parts of the work of producing legal services. That is what all of manufacturing does to reduce its costs of production, as does the medical profession. It is made up entirely of mutually-interdependent support services. There are no “generalists” in the production of medical services. Among the various specializations of staff, technical services, drugs, hospital services, and applications of technology, even the family doctor is a specialized doctor, having to know the whole of the medical services infrastructure in very great deal so as to decide which specialty if any, each patient requires. As a result, no doctor’s office provides all treatments and all remedies for all patients the way a lawyer’s office does for all of its clients.
    There are no such support services available to lawyers, but there could be, and the current problem of unaffordable legal services should be seen as demanding that there should be.
    The closest thing to a support service for lawyers is the law book companies’ books and online legal research services, which isn’t very close. Their affordability depends upon large scale production. But if they achieve monopoly control of their market, affordability is at risk.
    The production of legal services is not so different than the production of other services that do depend upon support services. The method used to produce legal services is not the only possible way in which to produce legal services. For example, LAO LAW at Legal Aid Ontario is exactly that–a centralized legal research unit providing legal opinions for those lawyers willing to do legal aid cases. By its 9th year of development (1988) it was producing legal opinions at the rate of 5,000 per year. Lawyers use the service because it helps them make money and serve their clients better. I started LAO LAW in 1979, and therefore know the purpose and power of support services methods of production, and the technology of centralized legal research. And, there are several other parts of lawyers’ work that could be more cost-efficiently produced at much lower cost by highly specialized, high volume support services. That is why support services are used to produce everything, except works of art. Lawyers would be free not to use them, but they would, so as to stay price-competitive.
    But no single manufacturer can itself create support services. They require an agency, such as a law society, that has overall regulatory power over a profession or industry to sponsor their creation.
    No single car manufacturer established the parts industry. The “special parts companies” that make up the parts industry, sell the parts they make to all of the manufacturers of motor vehicles. They will make 100,000 or more copies of each motor vehicle part they make. Thereby they achieve economies of scale that are not possible by the auto manufacturers themselves. An automobile is now made up of many thousands of parts.
    Among management principles is this one: “nothing is as effective at cutting costs as scaling-up the volume of production.” “Bigger is better.” That is because of “the fixed costs factor,” i.e., in any manufacturing situation, not all costs of production vary in proportion to the volume produced. But to produce economies of scale of sufficient size to significantly affect the cost of production and the price at which a product is sold, high volume production of each product must be achieved. In regard to each particular type of legal service, no law firm has a sufficient volume of production in regard to each legal service. But particular parts of lawyers’ work could be produced in sufficient volume to achieve affordability by using highly specialized, high production volume support services.
    ABSs and other forms of ownership and management of law firms, might increase competition, but they cannot reduce the cost of producing legal services to the extent of producing affordable legal services. That is because they do not involve or propose changing the method by which legal services are to be produced to a support services method. And, ABSs involve law firms having to be owned, which I am against because everything they offer can be achieved more economically by the legal profession itself, if law societies could provide the necessary leadership. Allowing law firms to be investment properties is not necessary nor desirable. Being owned risks the resulting “profit duty” owed to investors, over-powering the duty owed to clients, i.e., going from concern as to serving one’s clients better, to concern as to how many clients can be processed per unit time and at what cost per client, which means moving to commercial methods and attitudes. And certain types of ownership would involve risking bad conflicts of interest, such as insurance companies owning law firms engaged in “personal injury” legal services (e.g., negotiating with insurance companies in regard to the liability and compensation owed for the damage, injury, and death caused by motor vehicle accidents).
    It isn’t competition among producers that directly produces economies of scale. It is innovations in the methods of manufacturing that are the product of such competition that produce the economies of scale, if such innovations involve high volume production using a high degree of specialization applied to every major factor of production, which is what support services do and law firms don’t do. But if there isn’t sufficient pressure to do so, there will be no innovation, which is why the unaffordable legal services problem exists, i.e., the absence of such pressure on law societies has allowed law societies to carry on without evolving in their management structure, and not sponsoring the necessary support services.
    That is a good example of another important management principle: “organizations do not change until the fear of the consequences of not changing is greater than the fear of the consequences of changing, e.g., fearing the consequences of such innovations changing the personal benefits that law society benchers have, and have always had by being benchers. History repeats itself with each successive convocation of benchers.
    Unfortunately, this comment is perhaps already too long for the purpose of encouraging comments, more blog articles, and debate, in the context of blogging. It might therefor be an example of the excessive use of a support service and of defeating the purpose of employing economies of scale.

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