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The Coming End of Lawyer Control Over Legal Regulation

At the end of last year, as John-Paul Boyd ably chronicled on this website, members of the Law Society of BC voted on three resolutions regarding access to justice. The second of these resolutions — directing the law society to bar paralegals from providing family law services under new provincial legislation and to postpone any other enlargement of paralegals’ scope of practice — received overwhelming approval.

While this was a disappointing outcome from an access standpoint, as John-Paul explains, it was hardly a surprising one, given lawyers’ entrenched opposition to expanding the scope of “law practice” beyond the legal profession. What was surprising, to me at least, was the response from the law society’s leadership, as reported in Canadian Lawyer:

LSBC president Miriam Kresivo, who chaired the AGM and headed the LSBC’s Alternate Legal Service Provider Working Group, which advocated for the use of non-lawyers, says benchers would have to give the membership decision “serious consideration.” “It will have to be considered as part of the consultation process,” she says…

Now, I’m old enough to remember when the overwhelmingly expressed will of a province’s lawyers was complete and sufficient cause to dictate the next steps of a law society. Here, however, a law society president says it will take the opinions of lawyers into account, along with the opinions of other parties — including, presumably, a government that passed a newly revised statute now called the “Legal Professions Act” (note the plural).

It seems to me that the duly elected members of the BC legislature and the duly elected leaders of the province’s lawyers are trying to send a message to the profession’s rank and file: You’re not in control of legal market regulation anymore. John-Paul puts the point bluntly:

The amending statute clearly signals government’s intention to allow non-lawyers to practice law, and my fundamental concern on this point is that if we fail to embrace the inevitable and regulate the extent to which non-lawyers practice law, government will do it for us. (Italics in original)

Now, let’s move several hundreds kilometres down the coast — past Washington State, which pioneered the groundbreaking limited-license legal technician (LLLT) program back in 2015 — all the way to California. The State Bar of California was recently sundered, with its lawyer advocacy function hived off into the new California Lawyers Association and the regulatory side finally set free to focus solely on regulating legal services.

One of the new Bar’s first acts was to commission a report on the state of the legal market landscape by Professor William Henderson of the University of Indiana School of Law. You need only be glancingly familiar with Bill Henderson’s accomplishments and convictions to know that this report delivered a thorough and unflinching view of the current legal market’s failure to provide accessible justice to Californians. From the executive summary:

The legal profession is at an inflection point. Solving the problem of lagging legal productivity requires lawyers to work closely with professionals from other disciplines. Unfortunately, the ethics rules hinder this type of collaboration. To the extent these rules promote consumer protection, they do so only for the minority of citizens who can afford legal services.

 Modifying the ethics rules to facilitate greater collaboration across law and other disciplines will (1) drive down costs; (2) improve access; (3) increase predictability and transparency of legal services; (4) aid the growth of new businesses; and (5) elevate the reputation of the legal profession.

This report accompanied the Bar’s decision to create the Task Force on Access Through Innovation of Legal Services. (Much as in BC, the title is revealing of the framer’s purpose.) Read the charter of the task force, and you’ll see that the following issues are squarely within its mandate to consider and evaluate:

  • the consumer protection purposes of UPL prohibitions;
  • the impact of the definition of “the practice of law” on AI-driven legal systems, online consumer self-help services, matching services, document production, and dispute resolution;
  • lawyer advertising and solicitation;
  • partnerships with non-lawyers;
  • fee-splitting (including compensation for client referrals);
  • entity regulation;
  • non-lawyer ownership or investment in businesses engaged in the practice of law;
  • multidisciplinary practice models; and
  • alternative business structures.

That is to say: The task force’s remit is everything related to the traditional regulation of legal services.

Combine this with the membership of the task force (split fairly equally between people who are lawyers and people who are not), the bold nature of its founding document, and the fact that the newly focused State Bar has chosen this subject as its first order of business … well, I don’t have much doubt that when the task force reports at the end of this year, it could very well recommend a sea change in legal market regulation in California.

California is home to more than 250,000 lawyers. It has long been a harbinger of regulatory shifts in the United States. The likelihood that legal market liberalization in the US will stop at its borders seems remote.

What’s especially noteworthy for me, though, is the fact that a task force of this type was never convened — in fact, I believe could never have been convened — when California’s State Bar had conflicting mandates to serve both the interests of lawyers and the interests of the public. Take lawyers out of the regulatory equation — as California has done, and as BC evidently is doing right now — and everything changes.

Regulatory revolution is not confined to the west coast of North America, by any means. Nova Scotia, Illinois, Utah, Tennessee, and of course, England & Wales and Australia, are either talking openly about radical regulatory change or already far down the road towards making it a reality. But the two Pacific coast jurisdictions described above could very well represent the true tipping point in this process — the point at which our understanding of legal services regulation changes, fundamentally and permanently.

You’re free to decide, of course, whether you think this development is good or bad. But I’m here to say two things. One, legal market regulation is now moving beyond the control of the legal profession, and I don’t think we’re going to get it back.

Two, it matters very much what the legal profession, individually and collectively, decides to do in response. How hard we fight the battle to retain legal market control will determine how much good will or opposition we’ll engender when the fight turns, as it likely soon will, to lawyer self-regulation. The last word here goes to Matthew Peters of McCarthy Tétrault, quoted by John-Paul Boyd:

“If we are preventing innovation, we are going to lose our social licence, because, quite frankly, if I was an elected official, I would actually pass legislation soon if the profession didn’t wake up and say: ‘We need to solve this in a different way, because you’re too self-interested.’”

Comments

  1. Leaving reform to an elected official can also be “too self-interested”. As it is, many politicians and their political advisors are from the legal profession, i.e., lawyers. Political parties are known to be indebted to their party donor entities whether they be corporate or law firm. Are governments separate from their partisan affiliations – hardly, at least the media doesn’t think so. It’s often the headlines: “The Partisan Government” and not “The Government of Canada” or their provincial counter-part “The Government of [Name of Province]” – I would say this is highly telling. There are far too many “self-interested” parties in this scenario who would or could put forth a truly innovative “public interest” system of reform. Perhaps, the whole system of reform needs to be reformed in itself.

  2. These moves can lead only to the following obvious and inevitable outcomes: (1) increasing loss of independence of the one profession responsible for standing up, and able to stand up, to governments, (2) battered ethical standards as lawyers beholden to non-lawyer investors alter their practice standards to please the non-lawyer investors and to hell with the clients’ interests, (3) increasing consolidation in the marketplace resulting in decreasing competition, and (4) increased costs to the public as return to investors is added to the costs of overhead and lawyers’ incomes but, as the investors siphon off the additional cream, no benefits to the vast majority of lawyers (or public). It is naive to believe that we can put in place rules that will stand up to the immense power of the money invested by people who will not want to respect those rules where doing so would cost them their desired returns.

    Falsely sold as an access to justice panacea, these proposals will have only the following results: (1) great pots of money for the few, (2) perpetual harm to the many, (3) weakening of the standing and ability of the legal profession to act as the heretofore indispensable buffer between the government and the citizenry, and (4) weakening of the legal profession’s ethos of public service.

    In the UK, acquisitions are proceeding at unprecedented rates as investment money is used to gobble up competitors, stock market listings are occurring with greater frequency with existing partners making killings though nothing happens therefrom to reduce legal costs to the public, the string-pulling and tune-setting in the firms now owned by non-lawyers is increasingly in the hands of the non-lawyers, and the Big Four accounting firms (the smallest of which is vastly larger than the largest UK and Canadian law firms) are eating the lunch of Big Law.

    As the retiring Lord Chief Justice said in surveying the landscape across the more than ten years since ABS was allowed there, “Where are the promised benefits?”

    It is amazing that the Worst Idea to Hit the Profession in 1,000 Years hasn’t died. There are far better solutions to the problems wrongly claimed to be addressable only by selling out our independence, but not enough people, including benchers and their Treasurers, have demonstrated the wisdom or willingness to work toward them in sensible and effective ways. Unless we take effective steps to deal with this Worst Idea and the real problems of access to justice, we will look back on this era with bottomless shame. Well, a few won’t. They will be the ones who either made a killing at the expense of a better society or who are too stubborn to admit that they were terribly, terribly wrong.

    When non-lawyers and bureaucrats take over the regulation and or ownership of the legal profession, harm ensues. To cite one example, British bureaucrats with no or little experience in actually practicing law, let alone real estate law, are now forcing all real estate lawyers in England and Wales to publish their prices and stick to them, on pain of regulatory penalties, regardless of the complexity of the file, this despite the presence of tens of thousands of already ferocious competitors in the conveyancing market. As real estate lawyers race to the bottom on publicized fixed prices and struggle to make their modest livings leading to shaky retirements, what do you think will happen to the quality of the service provided? How thinly will the lawyers spread themselves over their hoped-for volume of files such that they no longer pay much, if any, attention to each file? How many more botched files will there be? How much more pressure will there be to turn the whole thing over to the US-style title insurance industry, an industry known for over-charging the public and delivering a poor return to the premium payers?

    Well-run societies require calibration among competing factors. That requires bureaucratic/governmental wisdom. That is hard to obtain because their number one focus is More Money for Government and More Jobs For Bureaucrats (two sides of the same coin). It also requires applying rigorous analysis that does not overemphasize the impact of money on the analysis. That is hard to do because of the natural human state of insecurity, an insecurity too often believed as addressable only by access to more money.

    That is not to say these things cannot be done, only that they face high hurdles.

  3. It’s our law societies’ collective fault that we are heading to a situation wherein there will be lawyers for the rich and for institutions only, and paralegals and the commercial producers of legal services (LegalZoom et al.) for the rest of society. Thus the general practitioner will disappear.
    Because they haven’t even tried to solve the access to justice problem (the A2J problem), Canada’s law societies deserve to be replaced, or lose their regulatory function to make legal services adequately available, and thus be left with only a representative function for the interests of lawyers.
    But that was inevitable because the bencher’s conflict of interest between being a good lawyer and being a good bencher is no longer manageable, i.e., it’s no longer possible to be both because the major problems of law societies are no longer within the expertise of a lawyer as they were in the 19th century. Law societies can no longer be managed competently by part-time amateurs. The A2J problem proves that.

  4. So, for a solution to the A2J problem, add these article references to my comment above:
    (1) “Canada’s Law Societies Need a Civil Service” (SSRN, Jan. 9, 2019, pdf.),
    At: https://ssrn.com/abstract=3311712 ; and,
    (2) “Law Society Accountability for the Access to Justice Problem” (SSRN, Dec. 27, 2018, pdf.),
    At; https://ssrn.com/abstract=3291699 .

  5. I spoke on this topic to a number of international regulators last year.

    Protecting the “Public” is so ill-defined as to be completely meaningless and provides cover for carte blanche protectionism of the guild.

    Technology and computational law solutions should not be regulated by Law Societies in instances where “lawyer trained discretion” in the protection of uniquely vulnerable clients are not at play.

    A copy of the deck is available here –> adobe.ly/2omNE7H

  6. As one of the British bureaucrats i might beg to agree with Jordan rather than partizan and vested lawyer commentators. Competition is more complex than number of regulated firms which nonetheless remains steady since regorm rather than any concentration. The MDPs are probably growing the market rather than eating anyones lunch. Legal businesses seek profits – no eviddnce that is different among traditional partnerships, ABS, listed firms, MDPs etc.

    Looking forward to warchibg reform unfold across the world. http://www.passmoreconsulting.co.uk

  7. Reading Jordan’s excellent piece reminds me of Harry Arthur’s seminal critique of self-governance in 1995 – THE DEAD PARROT: DOES PROFESSIONAL
    SELF-REGULATION EXHIBIT VITAL SIGNS? published in the 1995 Alta.LR. Much has changed and little is different.
    Prof. Arthurs was not concerned about A2J but he did deal with all the other usual defences of self-regulation as follows –
    We have all been through this debate; some of us can recite it with the same relish as we recite the dead parrot skit. First, there is the argument from principle: self-governing professions are needed to defend society against the all-pervasive power of the state. An autonomous bar, as the argument runs, is a sort of extrusion of an independent judiciary, which, in tum, is an indispensable adjunct of the rule of law. Secondly, there is the argument from practicality: professions must be self-governing because they alone understand what their members need to know, how they ought to behave, what constitutes deviant conduct, and which sanctions ought to be imposed when. And thirdly, there is the argument from past practice: professions ought to be self-governing because they have always been self-governing, as a result of which self-governance has become the distinguishing characteristic of a profession, as opposed to a “mere” trade or business.
    I am unsure of the collective noun for these parrots, so I will have to administer last rites to each of them individually.

    He then proceeds to do so.
    It’s worth a read.

  8. To Crispin, Darrel and others:

    Nothing is perfect, but self-regulation by the legal profession remains vastly preferable to regulation by government appointees. The latter is a sure way to erode, over time, the independence of the legal profession, and to set our society on the downward path toward those other societies who either have very weak bars or whose bars are rendered docile or are dictated to by the commissariats.

    Note that those downward evolutions take time, but are inevitable once government gets its clutches on regulating the most effective check and opposition to its bottomless power – the legal profession. That is Step One to the descent. I know, I know. People will say, what about journalists? But who will defend the journalists if lawyers are rendered toothless?

    Examine other societies with weak bars and intimidated or controlled media – China, Saudi Arabia, and many others – and understand that we are not better people than the Chinese or the Arabs. They are every bit our equals as humans and we theirs.

    Our advantage has been our system which we lucked into by virtue of Britain, FIRST, being an island defended by what became the strongest navy and, as a result, (a) being able to fashion modern democracy (over 700 years*, mind, that’s how arduous it is do set up and maintain democracy (*Magna Carta to women’s suffrage)) (b) being able to prevent neighbouring armies from marching in and stamping it out on the orders of continental monarchs and dictators who had no interest in seeing democracy take root, and, SECOND, being able to fashion a huge empire to which it ultimately exported, inter alia, its notions of democracy and judicial and legal profession independence. You erode the pillars of our more just society, you ignore the lessons of history and political science, at your peril and the peril of our better system and better society.

    If the Spanish Armada had won in 1588, Canada, the US, Aus, NZ and India would not be democracies today because Britain would not have replaced Spain as ruler of the waves, would not have built its empire, and would not have exported its system to those areas of the world. Latterly, without a democratic US policing the world and exporting its British-derived example, would Japan and non-France Europe have embraced democracy? Unlikely. We can thank King Philip’s lust for power and impatience with Queen Elizabeth I (and the British response to the resulting attack) for the existence of democracies in those major and critical areas of the world.

    The mistake so many commentators make is thinking that the government’s interest is synonymous with the public interest. Nothing could be more wrong. In blinks of history, it may seem synonymous, but that is to ignore the long view and the nature of governments. Governments act in their self-interests, always looking to take as much money for themselves as possible, and always looking for opportunities and weaknesses to exploit in order to expand their reach. We derive a lot of benefits from government when governments act properly and within the restrictions of well-calibrated covenants between government and citizenry, but those benefits tend to be doled out as close to the minimum necessary to keep the population docile. And the benefits are quickly harmed or lost when governments decide not to act properly or outside the covenants. Nothing so excites bureaucrats as more (well-remunerated) jobs for bureaucrats. That requires expansion. Why not into legal profession regulation? Especially when it comes with the additional benefit of eroding the effectiveness of the legal profession’s ability to stand up to government?

    If Crispin is right about markets, then why not just continue to consolidate? Why not go all the way to state control? It worked so well in Marxist countries, didn’t it? All those economically laggard Marxist societies? China did not boom until it threw off the strangulation of Marxist economics. Today, to the extent China is seen as behaving badly economically, it is to the extent that the Chinese government exercises too much control over its economy and industries.

    In industries where there is too much consolidation, public harm ensures. Take the title insurance industry for example. Thanks to its very high consolidation of providers, it delivers far higher real estate transaction costs and far inferior services to the public, compared to the lower costs and higher service delivered by the real estate bar. This has been established by various reports by such well-regarded entities as Fitch, Inc., a large US ratings agency, and by other informed commentators.

    By the way, Crispin, the British should do everything in their power to keep or drive title insurance out of Britain as it is the dry rot of the system. It is horrendously expensive (the true costs are hidden, for example, by having new premiums paid on each transaction even though the risk has not changed), drives down standards, and tries to grossly reduce competition (successfully in the US) in its rapacious self-interest.

    Most of the supporters of ABS seem to me to be either regulators (who are thus in love with regulatory schemes that they can be a part of), people who expect to profit from the all-seven-seas change that they seek, or misguided true believers.

    There is no to precious little evidence that ABS has benefited the public; rather, it has benefited the few opportunists, and has allowed big entities to get bigger – not a sustainably good trend.

    I agree that law societies have dropped the ball. One, they have been beyond sluggish in dealing with the threat. Two, at least one has wasted its time on such things as stigmatizing racialized lawyers with unnecessary, demeaning and probably unconstitutional victim industry pandering and thought-police bureaucracy growth. Three, they have spend endless hours addressing peripheral issues such as e-filing and trying to pry more legal aid money out of badly indebted governments (governments are mind-bogglingly incompetent stewards of the vast sums of money they extract from the citizenry, and yet some people want them to take over full regulation of our independent profession??). Four, they have refused to tackle effectively the only A2J barrier worth spending time on (for it dwarfs all other real and imagined barriers combined) and that is the Ruinous Time and Cost of Litigation.

    But that’s for another day.

  9. In a Law Times article on title insurers paying lawyers published last week an experienced real estate lawyer is quoted as having said: “The public doesn’t perceive the issue as a problem, the word isn’t out that this is costing them more money.” I dearly hope that quote is somehow out of context.

    It is also remarkable that none of the defenders of the fees mentions Rule 3.2-9.6 which requires lawyers to disclose to their clients they did not get a commission or a fee. A Rule required by the OIC when it licensed LPIC to sell title insurance but never once enforced by the LSO.

    To know the details of how – at the expense of the public – our profession responded, and continues to respond, to the competitive threat of title insurance is to have worked in a parrot mortuary for 20 years.

    https://bencherelection.lawtimesnews.com/article/perks-for-real-estate-lawyers-under-the-microscope-13593/

  10. Let’s just face it. The law societies and legal foundations across the country tasked with the management and regulation of our legal systems have proven themselves incapable of subordinating their economic interests to the interests of the public who need accessible affordable dispute resolution services. And from a public policy perspective the needs of the public for an affordable functioning dispute resolution service eclipses any concern any of us should have for the economic interests of members of the legal profession. And there can be no doubt that our rules of civil procedure, many of which have their roots in the problems of centuries past are left in place without any consideration of the cost they impose upon litigants in the modern world, so the question is why is the legal profession left in control?

    This is the argument (if not the imperative) for civilian control (participation in/of) the design and regulation of our legal system. The legal community has been aware of the problem for decades, they have been speaking urgently about it for the past twenty years and more then five years ago the Action Committee gave us its pathway forward. And what has been accomplished? Nothing! In fact from where I sit the situation is getting worse. What should anyone do when someone refuses to deal with a pressing problem? Fire them!

    I am not a lawyer. I did however work in the legal services business for many years in Ontario so I have a passing familiarity with certain aspects of its legal system. Looking about I can see so many problems with simple fixes. I see stupid rules, they are everywhere! Any idiot should be able to see them. Why won’t you fix them? It’s because you, the legal profession, have an economic interest in the status quo that makes you incapable of change. It matters not what you try to change someone in the profession will be adversely affected and this is what paralyzes you. You aren’t even trying. What you require is a countervailing force to press this issue.

    Let’s get stated: How much to file a writ of seizure and sale that covers all of Ontario? In my day (5 years ago) it was ($65 court fee + $100 sheriff’s fee each) x 50 bailiwicks = $8250.00. Can we not do better? Remember RBC v Trang? The SCOC decided to create the judicial declaration of the involuntary, irrevocable consent to disclosure as a way to fix PIPEDA. WTF? What did you guy’s do? Nothing! Might I suggest that if the sheriff needs a mortgage discharge statement to sell a property when there is a valid writ already in her hands then give her the ability to compel the Mortgage statement from the mortgagee directly. A Judgement creditor has no interest in spending money on motions to get a judicial override for everyday problems. Two trips to the Ontario Court of Appeal and one to the SCOC and still not one member of the rules committee or staffer at the AG’s office can conceive a solution… Someone needs to kick you guys in the ass.

    The above are only two examples of easy fixes that could be undertaken to make the system more efficient. I’m not the sharpest tool in the shed and yet I can come up with dozens more examples based upon my limited experience.
    I get that this stuff is not simple. I’d be happy to put in writing the changes I think could be made if only there was some one serious about this to deliver my proposals to. Let’s hire an economist or two or twenty two to evaluate the efficiency of our legal systems and possible avenues for improvement who would also sit the Rules Committees and to report to the PM, the Premiers, the Attorneys General and even to the public. These people will be technocrats whose job description would be set by statute and free from the conflicts that plague those in charge today. These would be people who want to see changes AND with a seat at the table.

    If the law societies of Canada were to recommend and co-operate with the implementation of a countervailing force to advocate for the public’s economic interest, because that is what the A2J problem is really all about, then those law societies may yet hang on to their privileged position as regulators for the profession. Otherwise you may find yourselves fired and soon.

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