Ontario’s ABS Struggles Continue

Earlier this month I was invited to the Law Society of Upper Canada’s Alternative Business Structures symposium. It was a bringing together of international speakers, thinkers and interested parties to discuss the possibility of allowing Alternative Business Structures (ABS) in Ontario – read: allowing outside investment in legal services providers, as is permitted in the UK and Australia.

Kudos to Benchers, Susan McGrath and Malcolm Mercer for organizing the event.

For those of us who were there, the consensus seemed to be that if ABS was allowed in Ontario the Four Horseman of the Apocalypse would not descend upon our province.

In fact, there also seemed to be consensus that ABS could provide for more innovative ways to deliver legal services because of the injection of fresh capital. And while there are no guarantees that an ABS-friendly Ontario would create innovation, it would create a better ecosystem in which legal service innovation could flourish due to the injection of fresh capital to fund those innovations.

Naysayers claim that the important role that lawyers play in society requires lawyers to be independent of influences that will compromise their ability to champion their clients’ interests against the state and major actors in society. That independence from other influences means, at the individual level, that clients will receive assistance from uncompromised advisors and, at a system level, that the profession is not controlled by the state or major enterprises. As such lawyers should not practice in economic association with non-lawyers so as to ensure this independence.

This argument has some merit if lawyers who are in economic association with non-lawyers, were immune from our current duties, values and regulations – but, they would not. ABS does not change any core values.

This argument would also have some merit if lawyers altruistically place the interests of their clients and society above their own personal interests……

I could go on, but Noel Semple’s paper, found here, deals with these issues in much greater detail.

Logic suggests that there is no rational reason to oppose ABS in Ontario or in the rest of Canada.

But, as Professor Bill Henderson remarked today at the Ark Knowledge Management Conference, “Reason is an ineffective tool in this environment.”

Those opposed to ABS are increasingly governed by fear, rather than reason.

The question then becomes, will today’s Benchers leave a legacy of inertia fuelled by fear?

Or one of fresh-thinking for the benefit of the public interest, fuelled by a desire to create an ecosystem in which legal services can be delivered in better, more innovative ways?



  1. Re: lawyers practising in association with non-lawyers:-
    Absolutely necessary because: (1) technology will be the basis of almost all laws, therefore we will have to practice with other experts in that technology; (2) records management law will be a major area of practice because, records are the most frequently used form of evidence and e-records depend for everything on their e-records management systems (ERMSs), and they must be compliant with the National Standards of Canada for e-records management, which standards require legal opinions, and every significant change to an ERMS requires a legal opinion re ability to produce records able to satisfy laws as to e-discovery, admissibility of evidence, privacy & access to information, electronic commerce, tax laws, and compliance with National Standards of Canada for e-records management; (3) all new technologies require a legal framework, which means more work for lawyers; and, (4) otherwise, other professions and service providers who now provide “legal information,” will begin to provide “legal advice” and other services that only lawyers should be providing. (Who should regulate those non-lawyer legal services providers?) So first, law societies have to make legal services affordable again, so as to be able to bring all this new legal work back to lawyers’ offices. Solution: replace the present “handcraftsman’s” method of delivering legal services with a “support services” delivery system. That is what the medical profession does, and all of large-scale manufacturing, because nothing cuts costs like scaling up, and scaling-up is why support-services delivery systems are used in other professions and in large-scale manufacturing. The result is, (1) competence is greatly increased by increased specialization as new technology is developed; (2) cost is greatly decreased; (3) response time is greatly reduced; and, (4) the probability of error that hurts the clients is reduced to a minimum. How to do it: make CanLII into the excellent support service that the LAO LAW division of Legal Aid Ontario (LAO) is for Ontario lawyers who do Legal Aid cases. It is the best centralized legal research service in Canada. It has a 34-year history of popularity, success, innovation, and know-how. But it is not a national service, and it services only those areas of law for which LAO provides legal aid certificates for legal services. But CanLII, although it is a national service, doesn’t provide LAO LAW’s wide spectrum of support services. They are different, but they are complimentary services. So, join them, by enabling CanLII to do for all lawyers in Canada what LAO LAW does for Ontario’s legal aid lawyers. Among other services, LAO LAW provides complete legal opinions faster and more cost-efficiently than any law firm can. CanLII can provide the same support services at cost to all lawyers. When I was its first Director of Research (1979-1988) we provided close to 5,000 complete, fact-specific legal opinions per year. So, a sophisticated centralized legal research technology has been built up that no law firm in Canada can match. Adapt CanLII so it can provide the same support services to the whole of Canada’s legal profession. That will solve the “unaffordable legal services” problem. I know, because that is exactly the problem that LAO LAW solved for LAO, beginning on July 3, 1979, when I became its first Director of Research for 9 years of intense trial-and-error innovation. No other lawyer has had that opportunity. Therefore no other lawyer has made this recommendation. I know the technology; I know that it can solve the problem. So, to reap the harvest of the great volume of new legal work that technology will bring the legal profession, it must first solve the problem of unaffordable legal services. Do it, and stop all this misguided talk about lawyers no longer being needed, and that only the big corporate-commercial law offices will survive. If the support-services method of legal services delivery is adequately developed as recommended herein, the opposite will be true. Next, creating specialties for all the new areas of practice that technology will create for the legal profession; e.g. “Information law” will include, (1) records management law, (2) privacy & access to information law, and, (3) e-commerce law. Example, I have practised with experts in electronic records management for 30+ years. — Ken Chasse, LSUC (1966), LSBC (1978).

  2. Note my comment immediately above has this relevance to Mitch Kowalski’s article above: the only justification for allowing non-lawyer investment into law firms is that without it, there will not be the necessary innovation that will make legal services against affordable and profitable. Even if true, the price is too high, i.e., it will create a “profit duty” that will conflict with a lawyer’s fiduciary duty to his/her clients. Secondly, small and middle-sized law firms and sole practitioners aren’t going to survive by becoming investment vehicles. They employ the majority of Canada’s lawyers, and deliver the majority of its legal services, thereby servicing the majority of its clients for legal services. And thirdly, as my comment above argues, ABS’s are not the only way for the legal profession to survive–the necessary innovation does not have to be forced upon the profession from external sources. — Ken Chasse.

  3. Mitch, I am currently at the Federation of Law Societies of Canada conference in Newfoundland. The regulation of entities (rather than just lawyers), and the liberalization of the legal services market – including ABS – is very much on our minds.

    Carsten Jensen,
    President Law Society of Alberta