Column

Why Do We Regulate Lawyers?

This is my first legal ethics column for Slaw. I am delighted and honoured to be taking the place of my former colleague, mentor, and all-around legal ethics and regulation rock star, Malcolm Mercer, who recently assumed the role of Chair of Ontario’s Law Society Tribunal. In the coming months and beyond, I look forward to using this space to consider rules of professional conduct and discipline; governance issues in lawyer regulation; legal education and training; and the future of legal services provision. But before diving into these topics, I propose to take a step back and first consider a bigger question: Why do we regulate lawyers the way we do—or at all?

Lawyers, law students, and members of the public frequently voice complaints about law societies and lawyer regulation. Many of these complaints have merit. But our regulators play an important role, and they do not have an easy job. We would do well to consider that role when levelling complaints against them (even if only to develop a more principled line of criticism).

The fundamental purposes of lawyer regulation should form the basis for regulators’ decision-making on all manner of professional responsibility issues. I respectfully suggest that both regulators and their critics sometimes lose sight of the “why” of lawyer regulation when caught up in the details of how to regulate legal services and their providers. Below, I explore the rationales for legal regulation we often turn to—and those we too often forget.

I. “To protect the public interest”

Part of the answer to the question “why do we regulate lawyers” can be found in law societies’ enabling legislation. Ontario’s Law Society Act (“LSA”) provides at s. 4.1 that “It is a function of the Society to ensure that (a) all persons who practise law in Ontario or provide legal services in Ontario meet standards of learning, professional competence and professional conduct that are appropriate for the legal services they provide” [emphasis added].

Section 4.2 of the LSA sets out certain “principles” the Law Society “shall have regard to”, including:

  1. The Society has a duty to maintain and advance the cause of justice and the rule of law.
  2. The Society has a duty to act so as to facilitate access to justice for the people of Ontario.
  3. The Society has a duty to protect the public interest.

When Malcolm Mercer previously wrote about the mandate of the Law Society in this space, he stated “the purposes of Law Society regulation are mostly obvious… for example, the Law Society is charged with regulating in the public interest rather than in the interest of licensees”. That the raison d’être of law societies is “to protect the public interest” is a common refrain.

I agree, of course, that regulators are supposed to serve the interests of the public as opposed to those of their member licensees—even if many lawyers often appear to be under the misapprehension that law societies’ role is to advance lawyers’ interests.[1] But I do not accept that this provides a helpful explanation of the purposes of law society regulation.

“To protect the public interest” is the answer to the question of whose interests law societies should prioritize when they do regulate lawyers, but it does not shed light on why we regulate lawyers in the first place. The public interest is multi-faceted and amorphous. It is not difficult to use “the public interest” to justify just about any measure or policy (lawyers are unsurprisingly good at doing this). To say we regulate lawyers to protect an undefined interest provides little purpose at all. (To Malcolm’s credit, he helpfully clarified his statement in a footnote, adding: “This is not to say that determining what is in the public interest is always straightforward”. Therein lies the rub.)

The “functions” identified in s. 4.1(a) of the LSA provide a better answer to my question: we regulate lawyers to ensure those providing legal services meet standards of competence (including learning) and professional conduct. Regardless of my concerns of its vague meaning, I think it is uncontroversial to say that it is in the public interest to ensure that those who provide legal services to the public are sufficiently trained and competent to do so and will meet standards of professionalism.

Developing and enforcing standards of competence and professional conduct for licensees is at the core of what law societies do, and this promotes one aspect of the public interest. What else is there?

II. The public interest in legal services regulation

Academics have explored the public interest theory of professional regulation in more detail,[2] and there appears to be a consensus in the common-law world about why the public interest demands legal services regulation. I would summarize the public interest purposes of lawyer regulation as falling into two broad categories, as follows:

1. Consumer protection

Legal services are a “credence good”, meaning their utility and value are difficult for ordinary consumers to assess on their own. Where there is a marked information asymmetry between a service provider and client, it is all too easy for consumers to be taken advantage of with poor quality services whose value (or lack thereof) they are unable to ascertain.

Moreover, consumers seeking legal assistance often have a great deal at stake; the effect of poor-quality legal services can be significant. The severity of potential harm to Canadians’ legal interests—whether from contracts affecting their livelihood, settlements affecting custody of their children, or litigation in a criminal matter affecting their personal liberty—provides a strong rationale for taking steps to address the information asymmetry at play. The issue is not only that consumers struggle to assess the quality of the legal advice and representation that they receive, but also that the consequences of poor advice and representation can be catastrophic.

It is thus useful to address the potential for market failure and protect consumer welfare through regulation that seeks to ensure quality services are provided for such significant matters.

Although sometimes categorized separately, I would include under the “consumer protection” heading concerns for other members of the public who would be harmed by poor quality services (sometimes referred to as “negative externalities”). A poorly drafted will, for example, harms the interests of the beneficiaries to that will (not just the lawyer’s immediate client, the testator). Low quality family law services in a custody dispute would harm not only the interests of the parent client, but of the children.

The consumer protection rationale applies equally to other professional services markets, such as accountants, engineers, and health professionals.

I will elaborate further on the extent of the consumer protection rationale below.

2. Protecting the rule of law

This rationale is unique to legal services provision, and goes as follows: The rule of law is a public good of fundamental constitutional importance in a free and democratic society. Maintaining and promoting the rule of law requires public confidence that the administration of justice will be fair and effective. Legal service providers are the gatekeepers to the administration of justice; they can stand between the state and its citizens to prevent miscarriages of justice (e.g. in a criminal prosecution, tax dispute, or social benefits appeal), and more generally allow individuals to access their rights and enforce others’ legal responsibilities by serving not only as advocates but as guides to a complex (and, to many individuals, impenetrable) system of laws.

In short, lawyer regulation is necessary and appropriate to promote public confidence in the administration of justice and the rule of law because it aims to ensure that Canadians can effectively access their rights through practitioners who will uphold the law and act with integrity.

III. Lawyer regulation is legal services regulation

At this point, it is worth pausing to consider what we really mean when we talk about “lawyer regulation”.

Generally speaking, Canadian law societies have jurisdiction to license and regulate individual lawyers. (Two caveats: Ontario licenses and regulates paralegals as well as lawyers, and the regulators in some provinces have been moving towards regulating entities through which lawyers provide legal services (e.g. law firms) as well as the individual lawyers who practise through them.)

As noted above, law societies regulate lawyers by developing and enforcing standards of professional competence and conduct.

But that’s not all.

Law societies also prohibit anyone who is not a licensed lawyer (or, in Ontario, licensed paralegal) from providing legal services—and what it means to provide legal services is broadly defined.

In Ontario, s. 26.1 of the Law Society Act provides that no person other than a licensee shall provide legal services, and s. 1(5) of the Law Society Act provides that “a person provides legal services if the person engages in conduct that involves the application of legal principles and legal judgment with regard to the circumstances or objectives of a person” and that this includes, without limiting the generality of that definition:

  1. Giving a person advice with respect to the legal interests, rights or responsibilities of the person or of another person.
  2. Selecting, drafting, completing, or revising a document that affects the legal interests, rights or responsibilities of a person;
  3. Representing a person in a proceeding before an adjudicative body, including drafting, completing or revising a document for use before the adjudicative body; and
  4. Negotiating the legal interests, rights or responsibilities of a person.

British Columbia’s Legal Profession Act provides a similar, non-exhaustive definition of the “practice of law”, which includes “appearing as counsel or advocate”, “drawing, revising or settling” various documents, and “giving legal advice” (and similarly provides that “No person, other than a practising lawyer, is permitted to engage in the practice of law”—see ss. 1(5) and 15(1).

Other provinces have not defined what it means to provide legal services. In Alberta, for example, the Legal Profession Act provides at s. 106(1) that “No person shall, unless the person is an active member of the Society… practise as a barrister and solicitor”—leaving it to the courts to confirm that this prohibition includes, among other things, appearing in a court or tribunal and preparing or assisting in the preparation, issuance and filing of documents in relation to litigation.[3]

I would be remiss if I did not note that there are certain exceptions to law societies’ prohibitions on the unauthorized practice of law (or “UPL rules”), whether expressed in the law societies’ enabling legislation (e.g. s. 1(8) of Ontario’s Law Society Act) or in their By-Laws or Rules. The exceptions are narrow. For example, in Ontario there is an exemption permitting a person to perform the services permitted within the scope of a paralegal license only, for a friend or neighbour, if they do so without “fee, gain or reward, direct or indirect” and “in respect of not more than three matters per year” (see LSO By-Law 4, s. 30(4)).[4]

But my point here is that law societies do not merely regulate lawyers—the combination of a broad construction of what it means to “practise law” and UPL rules mean that, in effect, law societies regulate the provision of legal services to the public entirely.[5]

In other words, as currently practised, lawyer regulation is economic regulation. Subject to narrow exceptions, if Canadians want (or, more importantly, need) legal services, they either need to hire a member of the Law Society or try to muddle through the problem themselves—or do without.

IV. More to consumer protection: Quality vs. Access

In my summary of the consumer protection rationale above, I focused on the quality of legal services. I did so because this has traditionally been the focus of law societies’ consumer protection efforts; standards of competence and conduct seek to ensure that clients receive legal services that are of high quality, meaning that the provider is competent, honest, and reliable.

But such a construction of the consumer protection mandate is too narrow.

As lawyers, it is understandable that we focus on quality services—particularly given what is at stake in many legal matters, as noted above. But economists would be quick to point out that promoting quality is not the only value at issue when it comes to consumer protection—one must also consider price and consumer choice.

This requires a difficult balance, and it is here where I would suggest the nebulous idea of promoting the (multi-faceted) “public interest” can become a serious problem.

For instance, law societies impose standards of minimum competence for entry into the legal profession, which include requiring several years of expensive post-secondary education. Although not empirically proven, common sense would generally support the suggestion that requiring certain training is likely to promote quality service provision (there are good questions about the nature and extent of training that is necessary and appropriate, but that is for another column). But this comes at a cost; expensive barriers to entry into the profession contribute to high prices for legal services, whereby the cost of just a few hours of a lawyer’s time is out of reach for many Canadians. Put simply, entry-level competence standards are likely to serve consumers’ interests in quality but harm their interests in price and choice.

The difficult balance can also be considered from the perspective of the “rule of law” rationale for lawyer regulation. Public confidence in the administration of justice is served by ensuring lawyers abide by professional conduct rules and effectually permit clients to access and enforce their rights. But public confidence (and the rule of law) are undermined if consumers perceive lawyers as gatekeepers to the justice system in the worst way—serving the interests of the wealthy who can afford them, but effectively keeping the ordinary public out.

I suggest that lawyers’ and their regulators’ traditional focus on ensuring high-quality legal services has been at the expense of other aspects of the public interest, and that the balance needs to be re-calibrated to better achieve the underlying objectives of legal services regulation—protecting consumers’ (multi-faceted) interests and promoting public confidence in the administration of justice—more effectively.

Ensuring quality services is of little use if members of the public cannot access them.

________________________

[1] Much of the time, the public interest and the profession’s interest are co-extensive (for example, it is both in the interests of lawyers and the interests of the public that law societies maintain high standards of learning, competence, and conduct). But sometimes the interests of lawyers diverge from “the public interest”—and this becomes more complicated when a Law Society regulates two professions, as Malcolm Mercer previously discussed in this space. I hope to discuss this potential for divergence between lawyers’ interest and the public interest further in a future column.

[2] See, e.g., Michael J. Trebilcock et al, Professional Regulation: A Staff Study of Accountancy, Architecture, Engineering and Law in Ontario Prepared for the Professional Organization Committee (Ministry of the Attorney General, 1979); Stephen Mayson, “Legal Services Regulation and ‘The Public Interest’”, Legal Services Institute, January 2013; Noel Semple, Legal Services Regulation at a Crossroads: Justicia’s Legions (Edward Elgar Publishing, Inc., 2015), ch. 2. This article also draws from the excellent writing and analysis of Alice Woolley and Gillian Hadfield, even though I have not cited any of their specific works here.

[3] See, e.g., Lameman v. Alberta, 2012 ABCA 59

[4] For more on this, Lisa Trabucco has written on the exceptions to UPL rules in her article, “Lawyers’ Monopoly? Think Again”, (2018) 96 Can Bar Rev 461.

[5] Moreover, where Canadian provinces have sought to license and regulate new classes of legal practitioners, such as paralegals, they have done so by amending law societies’ enabling legislation to permit existing lawyer regulators to regulate new classes of licensees, as Ontario did; see discussion of developments in B.C. and Saskatchewan here.

Comments

  1. Excellent column, Brooke! A couple of notes:

    1. There seems to be near-unanimous agreement that the purpose of lawyer regulation, as carried out by law societies, is to protect the public interest. It’s interesting, therefore, and I think problematic, that “the public” has relatively few representatives on the boards of directors (Benchers) of law societies. “Lay Benchers” are in the minority in terms of numbers — and based on my experience, they are in the deep minority in terms of getting the attention and respect of lawyer Benchers during meetings and debates. Frequently, their comments are patiently endured and then moved past.

    So if we’re serious about the public interest being at the heart of lawyer regulation, why doesn’t the public have stronger representation at the Bencher table? At the very least, as the Cayton Report in BC recently recommended in the context of health-care regulation, boards of directors in self-regulating professions should be drawn half from the regulated profession and half from the public that the profession serves. (And all of them should be appointed, not elected, but that’s a whole other story.)

    2. The choice of verb, when it comes to the public interest in lawyer (and legal services) regulation is interesting and important. Most lawyers (and most enabling statutes) use the verb “protect,” which has clear implications for how the regulator should view the public: paternally, benevolently, or perhaps even patronizingly. You, the simple member of the public, know so little and have so much at stake, and so we are here to protect you. “Protection” creates a default setting that regulation should prioritize the reduction or elimination of risk above any other goal.

    Consider for a moment how much differently we would proceed if we instead chose the verb “advance.” What would it mean to “advance the public interest” in legal regulation? It would open up vistas beyond simply guarding against the risk of harm — it would allow us to also consider the best possible outcomes, the most advantageous or beneficial results, of a member of the public’s interaction with the legal system. Directly to your point: If we used “advance” rather than “protect,” we could focus as much on the accessibility and affordability of lawyers’ services as on their quality.

    It seems to me that if we asked members of the public — who are not children, and who have the ability and the right to assess all options available to them to obtain the outcomes they seek — whether they feel their complex and multi-dimensional interests are accurately represented by law societies, and whether they would like their interests to be merely protected or dynamically advanced, they would offer different answers than the ones lawyers traditionally give. And it seems to me that in any conflict between lawyers and the public about what is truly in the public interest, the public has an awfully good case to make on its side.

  2. A very useful SCC case from 2019 sets out the fundamental duties of a legal advisor: “A lawyer’s duty to advise is threefold, encompassing duties (1) to inform, (2) to explain, and (3) to advise in the strict sense. ” Salomon v. Matte‑Thompson 2019 SCC 14 at para. 52 ) https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/17564/index.do)

    Why is there regulation of Lawyers, PQ Notaries and B.C. Notaries? At the very least to ensure a professional “eco-system” that competently delivers legal information, explanations, and appropriate advice. Regulated professionals are of course not the only current or possible source of these services. I do note that B.C.’s non-lawyer Notary Public legal service providers have been doing just that since the 1860s.

  3. On the first part with regard to s 4 of the LSA. Lawyers in the Ministry of Government and Consumers Services openly defend their support of raising prices of government services which have been determined by the Auditor General to be contrary to the decision by the SCC in Re: Eurig. Some 6 x what they should be.

    The director of titles shut down public counters forcing users to use lawyers and exponentially increased expense for lien claimants , lessees etc….

    S 4 reads great but government lawyers are actively involved in harming the public interest and exacerbating the access to justice problem .

    A title search in my years has gone from $2 to $40, a corporate search from $2 (for everything) to $30 for a small part of the file.

    The LSO has a duty to act in the public interest. We reached out to them to stop the closure of the LRO’s – and they won’t do it.

    Unless the public can take the LSO to court easily for dereliction of duty s 4 is nothing but empty words.

  4. There are a number of factors that result in lawyers being expensive, that are often overlooked by regulators. Some are obvious, such as the cost of education, with new lawyers facing an average debt burden of 83k (Law Grads’ Student Loan Burden is an Access-to-Justice Issue, The Canadian Bar Association, April 11, 2019.). Some are not, such as poor and inefficient design of many court processes, resulting in time and money being spent unproductively (i.e. that can’t be charged to clients).

    For instance, approximately 60% of lawyers work in firms having less than 10 licensees (http://annualreport.lso.ca/pdf/Annual-report-2019-en.pdf pg. 30). Lawyers in small firms collect, on average, 1.6 hours per day (Clio Legal Trends Report 2018, pg. 11), which in addition to covering their salaries, must cover their share of firm overhead and support staff. As a result, the median Ontario lawyer, in his/her 40’s, has an income of 93k per year (Canadian Business, Claire Brownell, Canada’s Best Jobs 2019: The Top 100 Jobs). Required licensing fees (~5k for LSO and LawPro dues) further drive up the cost.

  5. Yes, why do we regulate lawyers without regulating the unaffordability of their legal fees so as to ease the great damage being done by the A2J problem? Brooke, the following ethical issues affect (impact) everyone of the headings and subjects in your post above (very good it is), and those of Malcolm Mercer cited below (not so good):
    Why is it ethical for law societies to say that the unaffordability of legal services is government’s problem and not the law societies’ problem, given that:
    (1) unaffordability is as much an integral part of the way that lawyers’ do their work as is competence and ethical practice—the obsolete way in which lawyers produce legal services is the cause of problems in regard to all three. So, why should law societies be allowed to serve their own convenience by choosing only 2 of those 3 as being within their duty and purpose? And,
    (2) governments cannot afford to pay for the legal services of all the middle- and lower-income people who cannot afford lawyers’ legal services, and, if nonetheless governments did so, they would have to do to lawyers what they did to doctors, which law societies would strenuously oppose. As a result, law societies don’t want to solve the problem and they don’t want government to try to solve it. They should not be allowed to thus “have it both ways.”
    Given the great damage that the problem is causing to the population, the court system, and to the legal profession itself, that is an unethical position for law societies to take.
    And, nothing that the access-to-justice industry is doing by way of, committees, services, and the production of a voluminous A2J literature, is aimed at solving the problem. That too is similarly objectionable.
    And so, why is it ethical that no one in the justice system is trying to solve the problem given that all of the manufacturing of goods and services as been providing methods for solving this same problem for more than 120 years? They thereby have moved away from the very obsolete “cottage-industry-method” of production that the legal profession still uses, to a “support services method.” They did so to make more money and better goods and services. And so would lawyers if they did the same thing.
    But that would require law society benchers to provide the leadership necessary to bring about that transition, for which benchers do not have the time, if they are also to be good lawyers for their clients. Therefore, they choose to serve their personal interests rather than the public interest. Why is it ethical that benchers refuse to make the necessary changes to their management structure so that they can lead the way to solving the problem? Why is it not true to say that if law societies were doing their job and serving their purpose, there would be no access-to-justice problem?
    As to Malcolm Mercer’s views on these issues, see his Comment to my Slaw post of July 25, 2019, and my response immediately thereafter, and my further analysis of his Comment in my posts of, April 9, 2020, and, May 29, 2020, and the 4 posts that followed concerning these same issues, the last being on December 16, 2020, (which hyperlinks all of them). They cite the SSRN text of my own solution. And, they can all be accessed from my Slaw author’s page; at: http://www.slaw.ca/author/chasse/

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