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See No Evil? Could “Innovation Waivers” Help Break Roadblocks to Reforming Legal Service Delivery?

We need to be more creative and bold when it comes to legal service delivery. To use a well-worn, if ambiguous, phrase: we need to innovate! Among legal circles, this refrain has so thickly hung in the air for so long that it is almost baked into the wall-paper like its cousin refrain: there is an access to justice crisis!

The fact that we repeatedly hear about the need for legal service innovation and for improved access to justice does not, of course, mean that these are not important, pressing goals. To the contrary, there is compelling evidence to suggest that reforming the way we deliver legal services is one promising (if only partial) path to generating more meaningful access to justice. Indeed, significant studies on the future of legal services conducted by both the Canadian Bar Association and the American Bar Association have pointed to innovation as key to improving justice system outcomes.

One reason that innovation talk has been part of the access to justice conversation for so long is that there are tight constraints on how legal services can be delivered and these constraints have been largely impervious to regulatory reforms to date. There are a variety of reasons for this, including the influence of powerful players that have vested interests in the status quo. One other important factor is that Canadian law societies are notoriously risk-adverse. There is significant fear of change and the uncertain consequences that it might bring. Relatedly, there also seems to be a tendency for policy debates about legal service reforms to get bogged down in battles of competing presumptions about benefits and harms which are asserted with very little to no evidentiary support. The result of this is often calls for more study rather than calls for tangible actions.

It is for these reasons that I was very interested to hear about a new regulatory innovation in England and Wales: the Solicitors Regulation Authority’s (SRA) use of innovation waivers and “safe spaces.” This regime first came to my attention through the Twitter feed of one of the most interesting and influential thinkers about legal service regulation in Canada, Darrel Pink, former Executive Director of the Nova Scotia Barristers’ Society:

I agree with Darrel that this sort of initiative holds promise for the Canadian legal services environment. What is the SRA doing? In short, as part of a broader innovation program, the regulator is “allowing specific rules to be waived…to allow firms to introduce more streamlined legal service arrangements.” In other words, there is “a process to guarantee a firm that the SRA will take no enforcement action if innovation bring[s] the firm into technical breach of its rules.”

From the information that I reviewed, it is not entirely clear to me what particular types of innovation, if any, the SRA is courting through this initiative or which types of rules and regulations it believes are particularly amenable to be waived. Surely, certain types of “innovation” will be clearly off-side: take, for example, a scenario whereby a firm proposes a model that would allow it to afford to take on more pro bono cases by breaching the confidentiality rule and selling confidential client information to third parties.

An obvious use of such waivers would be in relation to permitted business structures and arrangements. For example, a firm might apply to waive fee-splitting rules in relation to non-lawyers in order to try out more creative financing arrangements than are currently permitted. Indeed, the examples of waivers granted under the English initiative that I was able to locate relate to business structures and arrangements. For example, Rocket Lawyer, an online legal services company which is not itself regulated as an entity by the SRA, received a waiver to allow it to employ solicitors to provide legal advice to clients on more complex files (as opposed to being restricted to hiring paralegals or referring the files out to independent lawyers).

For its part, the SRA has articulated several broad-based factors to be considered in relation to applications: (1) Is the application consistent with the regulator’s policy reforms, regulatory objectives and in the public interest? (2) Does it appear that “the proposal will result in a significantly different way of delivering legal services?” (3) Is the regulator’s intervention needed? (4) Will consumers be adequately protected? and (5) Is the proposal sufficiently well-developed?

The apparent flexibility of the above considerations is promising for facilitating more creative ways of doing law differently. At the same time, if one of the consequences of this flexibility is significant regulator discretion regarding who gets waivers and for what, it strikes me that there is a risk that larger and more established firms will be favoured as opposed to new entrants. To be sure, one potential safeguard for this would be for the regulator to publish which waivers are granted and which are not. Indeed, under the English initiative, “[t]he general principle will be that waivers are published, unless it is ‘inappropriate or unnecessary’, such as if doing so would divulge commercial sensitive information.”

It is too early to pronounce on the success of this recent English initiative. It strikes me, though, that attempting something like this in Canada is worth a try. Assuming that our law societies could fairly and efficiently grant such waivers to applicants and put appropriate monitoring programs in place, this type of initiative would seem to be a good way to allow the market to try on new ways of delivering legal services while minimizing risk. This type of initiative could also potentially generate useful data on which future policy decisions could be based.

Administering innovation waivers would admittedly be small a step towards more transformative regulation, but why not take this step? Surely if done right there is more to gain than lose?

Comments

  1. John Eric Pöllabauer

    I am all for innovation and better ways for the public to access Justice.

    In my way of thinking, it has to start from the top down and that means bringing the Courts and the Judges in the mix in order to rework and re-engineer the entire administration of justice.

    I swear that many of the present day Court Rules, Procedures and Processes involving The Courts and Judges , and the Court Houses remain very much the same as how they were utilized and appeared over one hundred years ago.

    On the other hand, If today you were to visit Ford Motor Company’s car manufacturing and assembly plant it would have no resemblance whatsoever to The Ford Motor plant of just 70 years ago.

    Some of the rules and court processes had come about to reflect the realities of the day, namely the great distances the parties and their witnesses had to travel in order to attend court, when the means of travel were horse and buggy and ocean travel by sailing and/or steamships.

    Today, with the internet, automobiles and airplane travel, surely to goodness the justice system can be sped up and simplified. But the Judges and the Courts have to be willing to participate and be part, and a major part at that, of the solution along with the lawyer’s and paralegals

  2. The Brits often seem to be 10-20 years ahead of us when it comes to legal services regulation. Here’s my nomination for a rule to be waived:

    “3.6-7 A lawyer shall not
    (a) directly or indirectly share, split, or divide their fees with any person who is not a licensee, or
    (b) give any financial or other reward to any person who is not a licensee for the referral of clients or client matters.”

    Waive this rule for people trying to set up multi-disciplinary practices. See whether even a small portion of the sky falls. If it hasn’t fallen after a few years, kill the rule.

  3. Robert G. Harvie, Q.C.

    I might question whether or not the U.K. has accomplished much in terms of improving regulation, however, I do agree with Darrel and Noel that conceptually, Law Societies need to be open to relaxing their position regarding innovation.

    However, I believe that splitting fees or allowing for multi-disciplinary practice is not likely to be of significant benefit – at least nothing in the U.K. or Australia suggests such as far as I have seen. I find it particularly concerning that, IMHO, “big law” seems to be using the discussion of A2J as an pretense to push for alternate business structures – which are of great benefit to “big law” in competing internationally, but have marginal benefit to real A2J improvement.

    The larger issue is whether or not clients should be free to buy “less” service, at their own discretion, unencumbered by Law Societies and Courts saying, effectively, “Your lawyer is going to be at risk if they deliver anything less than everything that, upon hindsight, we suggest they should have.” Which translates into marginal usage of non-lawyer delivery of service in a litigation context, and continued over-delivery by lawyers of legal services “to be safe.”

  4. Martine Boucher

    Thanks Amy for this. I fully share Noel’s opinion. We need the find a way to foster innovation and creating sandbox where one can innovating with the regulator’s oversight – which seems far better than doing nothing (or taking so long that it is basically like doing nothing…) and realizinf later that innovation was happening anyway and you were just not made aware if it or being consulted.

    Changes are happening quickly. It’s time to act.

    And to develop a tolerance to things not being perfect (I know, it’s a tough one for lawyers…) Or risk becoming irrelevant.

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