Anti-ABS Arguments Continue to Be Based on Emotion – Not Fact
Tired of ABS fear-mongering.
Tired of disingenuous and protectionist arguments made by those who know very little about ABS – yet are fiercely opposed to it.
And tired of the misinformation being floated by ABS opponents.
Now I know what it was like in the McCarthy-era.
Lawyers (particularly trial lawyers) are trained to argue a position based on logic and evidence – not hyperbole and emotion.
OTLA’s recent pronouncements in the Law Times on December 29, 2014, are particularly troubling:
“We have studied ABS from the time it was first raised by the law society in the summer of 2013, through the release of the CBA Futures report, to the LSUC paper released just this past fall,” said Charles Gluckstein, immediate past-president of the OTLA. “As an association, we do not accept that there are any compelling reasons to move ahead on ABS.”
This however, is merely opinion, not logic – and it’s devoid of any evidence in support. Amusingly, OTLA has provided no compelling reason not to move forward with ABS.
“The proof is just not there,” added Gluckstein. “No matter where it’s been implemented —– whether it’s Australia or the United Kingdom — ABS has not resulted in greater access to justice, lower costs for consumers, nor has it facilitated technological advancements and innovation in the profession. “Despite what the main proponents suggest, ABS is no panacea for any real or perceived ills within the legal profession,” he said.
Sadly OTLA’s “research” is flawed.
OTLA’s “research” seems to have completely missed Salvos Law in Australia.
Salvos Law is owned by the Salvation Army, something that is not permitted in Ontario.
Since its creation in 2010, Slavos Law has conducted over 11,000 pro bono cases in Australia – all at no cost to taxpayers, Legal Aid or even to the Salvation Army.
Perhaps OTLA’s members have conducted a similar number of pro bono cases in the last 4 years. Perhaps OTLA could share its data on this point.
Perhaps helping 11,000 people who could not otherwise afford legal services, at no cost to anyone, is not a compelling reason for OTLA to support ABS. If so, perhaps OTLA could share its metrics for determining what would be a compelling reason. 12,000? 20,000?
Salvos Law is really two firms: Salvos Legal (which is a commercial law firm) and Salvos Humanitarian (a pro bono law firm) – both are wholly owned by the Salvation Army (again not allowed in Ontario). All profits from Salvos Legal fund the work of Salvos Humanitarian.
In 2014, Salvos Law won the very prestigious Australian Law Firm of the Year Award, beating every other law firm in the country. Perhaps OTLA does not consider winning such an honour to be a compelling reason in favour of ABS; again perhaps OTLA could share its metrics for making such a determination.
OTLA’s “research” should have come across Vancouver’s Pivot Legal. In the early part of this century, Pivot Legal tried to create a structure similar to Salvos Law.
An admirable attempt, but unfortunately it failed.
Failure was due to a number of reasons, but most importantly, it was due to a lack of affordable capital, and lack of business management skills. Two things that ABS would bring to law firms.
Again, if OTLA does not see Pivot Legal’s failure versus Salvos Law’s success as compelling, perhaps it should provide an explanation.
As for innovation and technological advancement, OTLA’s “research” has also missed out on Riverview Law in the UK, and Slater & Gordon in Australia. Both firms are miles ahead of every other law firm around the globe in terms of technology – I know, because I’ve actually been to their offices. Both firms have stream-lined the “process” of legal services delivery to make the client experience better and more affordable; both firms were built through access to outside capital.
In fact, Slater and Gordon’s mission statement is: To give everyday people easier access to world class legal services. How many law firms in Ontario have a similiar mission statement?
Legislation in Australia has permitted outside investment in law firms since 2000. So, it’s hardly at the experimental stage. Anyone who suggests otherwise, is being disingenuous.
Finally, what OTLA has forgotten, and by doing so, done a grave disservice to its members, is that ABS provides an exit strategy for lawyers seeking to retire from law.
We hear so much about the so-called “greying of the bar” and that older lawyers have no one to sell their practices to; so they simply close them. Lawyers spend a lifetime building something only to watch it quietly slip away into nothing.
Even mediocre “research” would have found that many UK ABS applications are from small firms – I imagine similar in size to that of many OTLA members – who use conversion to an ABS as an exit strategy, and a way to allow their staff to share in profits. In Australia, Kain C+C Lawyers is a small firm of 17 lawyers which converted to ABS in order to source management expertise that lawyers simply don’t have.
Even the simplest “research” would have found that in Australia, Slater and Gordon has grown through acquiring practices, not destroying them – providing many “greying” Australian lawyers with an exit strategy.
Given these huge “misses” by OTLA, one has to wonder if it did any “research” at all, and whether its fierce opposition is grounded more in emotion, than evidence and logic.
In response to Mr. Gluckstein’s “demand,” I am running for Bencher in 2015, and I am in favour of ABS.
So, OTLA, I have now provided you with the evidence that your “research” missed.
Now, please show me some evidence to support your position that ABS should not be permitted in Ontario.
“Now I know what it was like in the McCarthy era” is a particularly good argument to trot out when accusing your opponents of basing their arguments on emotion and not fact. Nicely done.
@ Mr. Burley,
That OTLA/Gluckstein offered no supporting evidence in its Law Times column is a fact. Thus, in the absence of any evidence to support OTLA’s position – one can fairly argue that Gluckstein’s argument might be based merely on (self-serving) emotion. No? I’m not a lawyer so I could be wrong on this point.
In any event – we can only hope that OTLA will cite its supporting research/evidence (if any) here – in order that we can with it against that cited by Kowalski.
RE: “basing arguments on emotion and not fact”.
Here’s a fact: OTLA provided/cited no supporting evidence for the position it took in Law Times. So perhaps, in response to Mr. Kowalski’s critique – Mr. Gluckstein will provide OTLA’s supporting studies/evidence here (in the form of a Slaw post) – so we can weigh it against that which Mr. Kowalski has offered.
Nice one Craig.
But it wasn’t my argument at all.
I stated my case and provided evidence.
I’m still waiting for an evidence-based argument as to why ABS should not be permitted in Ontario.
All I hear is emotional rejectionism. Kindof like the McCarthyites.
It seems some lawyers have an awfully hard time with the concept of evidence when outside the context of a courtroom.
I agree with Mitch that advocating a position without providing any supporting evidence is not a particularly effective strategy to win the case either for or against ABS. The proponents of ABS have provided numerous examples (i.e. evidence) of how it is working in other jurisdictions, but ultimately cannot yet do more than speculate on how it would work here because the regulatory barriers remain in place.
Oftentimes, opponents of ABS seem to be assuming the onus is all on those wishing to see change happen in the legal profession, and that the standard of proof is no less than beyond a reasonable doubt. No evidence is put forward other than in defence of the the status quo (“we’ve always done it this way and what worked in the past is good enough for the present and the future.”) We as a profession are asked to swallow a position based entirely on fear-mongering and nostalgia.
I’m more convinced by the evidence in favour of ABS and don’t need to be absolutely certain of the outcome to conclude on a balance of probabilities (the reasonable civil standard),that the way forward does not look anything like the way behind us.
An interesting article on jotwell.com by John Flood, “The Relevance of Professionalism in a Post-Legal Services Act World”. I notice that he differentiates between the UK’s ABS and Australia’s model of publicly owned law firm as he describes Slater & Gordon; however, ABS is being used consistently in Canada as an alternative to the existing “traditional” structure. I’m just not sure which model is being advocated in Canada. Is it a hybrid of the two? Or, is Canada contemplating it’s own unique model, if so, what would that be?
Ontario has requested comments on 4 models:
(i) unlimited non-lawyer ownership of an entity that provides only legal services;
(ii) unlimited non-lawyer ownership of an entity that provides legal services and other services;
(iii) minority non-lawyer ownership of an entity that provides only legal services; and
(iv) minority non-lawyer ownership of an entity that provides legal services and other services.
The last two models however, are useless.
Thanks, Mitch. I know the topic of conflict of interest has been raised in other posts but I don’t suppose these proposals will be open to a public referendum — after all this does affect the client/consumer/public? Since there has been so much mention of the need to educate the public about justice reform it would be interesting to see the results.
Mitch, why would you suggest the last two models are useless? It seems that minority ownership by non-lawyers could at least have some benefit (ability for larger or botique firms to bring in non-lawyers with complimentary practices as partners (accountants, patent and trademark agents, etc.)
In terms of access to capital it may have limited impact (I doubt there’s much public interest in acquiring non-controlling shares of a law firm), but could still have some benefit, either by increasing the number of potential partners as per the examples above, or by providing additional security or repayment options to a lender. Another alternative might be for a company to provide services/assistance in exchange for a minority ownership interest in the businesses they are assisting. There could be some scalable benefits to such a model (common reception services, technical support, bulk subscription and supply purchases, etc.) while at the same time no majority ownership would be required.
Salvos Law merely lets the government off the hook for its chronic underfunding of legal aid. Let us assume that Salvos Law is doing what you say it is doing, and that some people are benefiting, not least the government. Nevertheless, it is not a strong enough argument to allow ABS because ABS causes many more problems than it solves. The Salvos model might help some people (and so would a non-ABS Salvos model*), but ABS would hurt vastly more people. Further, it would take so much money out of the public that the public would have that much less to devote to charitable endeavours. Such harms are hard to measure, but they are real.
*What stops the Salvation Army from donating to a law firm willing to accept donations in return for flat fees on work that the Sally Ann would mandate be done? There is no need for the Sally Ann to own the law firm. Further, even if the Australian Salvos model does some good, the cost of ABS to the broader society is far, far, far, far too high.
There is nothing that is claimed for ABS that cannot be achieved without ABS. We would be far better off if we put our talents and resources into achieving those benefits without resorting to the bottomless hell-hole of profit-motivated, bean-counter remote ownership of the legal profession.
ABS is absolutely certain to lead to corporate concentration and loss of competition. The people in England make no bones about it. Slater and Gordon is targeting over 400 law firms in England to expand their bulk.
Once the cartel were to be fully and firmly in place, the public, after a dubious early beneficial period, would soon (in historical terms) become permanently and badly victimized. Further, again over time, non-lawyer ownership would erode our professional ethics. There cannot be any other result. The current generation of lawyers would continue on as we have mostly out of habit, but the next generation, the generation that will have known no other world other than one featuring remote, non-lawyer paymasters, would be the one that would bring about the erosion. There are no protections that you can devise that would prevent this from happening – money is too powerful. To the extent you give up ownership, you give up independence. To ignore that fact of life is to bury your head in the sand.
Every real benefit foolishly attributed to the ersatz panacea of ABS can be achieved, including the benefits of the Salvos model, without resorting to the myopic and irreversible blunder of selling the ownership of the legal profession to mostly remote bean-counters. Why would the giant accounting firms and venture capitalists want to buy law firms in the first place? To make money of course. And how will they do that? Not by the efficiencies proffered up, but by extracting more cash from the public.
Look at the differences between giant law firms and small law firms. Giant law firms charge horrendous fees partly because they have such high overheads to pay and “rainmakers” to feed and water. Clients who go to a small firm are paying only for the lawyer actually doing the work and the modest overhead of the small firm. Clients who go to giant law firms are paying for the lawyer actually doing the work, the far higher overhead of the firm, and the cut taken by the senior partners. That cut is usually in the 33% range of the total fee and is almost entirely non-productive as far as the client is concerned. Clients who would go to a giant ABS would be paying for the lawyer actually doing the work, the overhead of the local office, the overhead of the head office of the ABS, and the dividends and other returns to the capital venturers.
Look at the title insurers in the US. They killed off a hundred thousand independent real estate lawyers with predatory prices and, once they had the market essentially to themselves, jacked up the prices to the fleeced American public to about four times what the lawyers ever charged and let “standards” plummet.
Look at the real estate agency world. A cartel of agencies keeps the commissions at the very high level of 5% (not the fault of the local realtors) in order to commandeer half of it to feed and water the head offices who contribute next to nothing to the transaction. In Scotland, where there is no cartel of large real estate agencies, the commissions are 1.5%. These are the sorts of permanent damages that ABS would be certain to bring about.
Further, many small ABS applicants applied only to add family or staff to the firm revenue split. That is a terrible and insufficient reason to throw away the independence of the legal profession, an independence that took centuries to win. If you want to benefit staff, give them bonuses based on either their performance or the performance of the firm or both. Do not sell them ownership. For Heaven’s sake, how daft do we have to be to permanently and irreversibly harm our independence because some nitwit could not think of bonuses as a means to reward staff? Trust me, the staff receiving the bonus will be delighted.
Several people heavily involved in ABS in England have been quoted in publications as happily predicting astonishing levels of corporate concentration and the loss of small, highly competitive firms. Jeff Wynn, for example, predicts about six firms in all of England, population 60,000,000 – one firm per 10,000,000 people, in his area of practice*. What do you think will happen to prices if that happens? They are content to be candid because ABS has been adopted there and is therefore permanent. The government there will never admit the colossal blunder it made, and so the situation will ever deteriorate.
*Ontario’s population is 15,000,000. Ontario could accommodate only about 2 or 3 firms in Wynn’s model in his practice area. What would happen to prices then?
We listened to five English experts. Their consensus was that, (a) even after two years, there was no evidence to date that the public will ever benefit from ABS in the ways naively claimed, and (b) the main (in the sense of virtually only) “benefit” has been that ABS allows access to outside capital to fund consolidations in the legal market place. What does history teach you about such consolidations? Higher prices, that’s what. Look at your cable bill. I’ll bet it is over $100 a month, and you have to pay for literally hundreds of channels you never watch. Further, Rogers, despite its mammoth profits and desire to pay grown men tens of millions of dollars to play baseball – a child’s game, recently announced a 6.25% increase in your cable bill for 2015, and that in an ongoing era of 1% inflation. Are they able to do this because they are in a highly competitive environment featuring hundreds of competitors or is it because they are in “competition” with essentially one other player (Bell)?
We are also aware that several of the large ABS entities in England have suffered badly and have lost millions and millions of pounds. Of course, the ABS supporters will simply dismiss that as growing pains. The better view is to acknowledge that ABS is not the panacea it is made out to be and to be courageously and far-sightedly firm in our opposition to it.
As far as I am concerned, much of what is driving ABS is the desire by some to be seen to be “doing something” about access to justice while simultaneously doing nothing or virtually nothing about the real barrier to access to justice, the barrier that dwarfs all other real and alleged barriers combined by a factor of 100, namely, the time and cost of litigation. Attack the modest costs of wills, but do nothing about the time and cost of litigation seems to be their mantra.
The real beneficiaries of the ABS are not the public. The real beneficiaries are the giant companies that would buy us up and sew us up, and the big law firms who have those companies as clients. I, too, am tired. I am tired of constantly having to address the downright loony notion that selling out the profession (an exact synonym for ABS) is the way to go. While I wish you well in everything else you do, I am very sorry that you are running for bencher given your support for ABS, and for that reason I very much hope you lose.
We do not need benchers who are, probably unwittingly, panderers for giant business. What we need are benchers who understand that having 10,000 small law firms competing ferociously with one another is far better for the public than having a cartel of 5 to 10 gargantuan, non-lawyer owned firms. We need benchers who want to do something effective about the real barrier to access to justice – the time and cost of litigation. We need benchers who are not dazzled by the shiny new toy with the poisonous inner parts. We need benchers who, perhaps having been initially seduced by what seemed, initially and superficially, to be a good idea, have the courage to change their minds and reject ABS and work toward far, far better solutions.
Benchers are required to govern the profession in the public interest. Engendering anti-competitive cartels and compromising the independence of the legal profession are not in the public interest. Taking a flyer on an irreversible course that is already proving to be mostly harmful, expensive and problem-infused in other jurisdictions is not in the public interest.
@ Bradley Wright
RE: ” We need benchers who want to do something effective about the real barrier to access to justice – the time and cost of litigation.”
Where are they? Despite endless hand-wringing discourse on access to justice issues – I’ve seen virtually nothing tangible put forward by way of solutions aimed toward reducing the problem of excessive “costs of litigation” largely rooted in the billable hour (articulated in this Slaw posting: Death Knell for the Billable Hour? Bank of Nova Scotia v. Diemer ONCA by John O’Sullivan.
So to the extent that the notion that “selling time” via the billable hour is driving the high cost of litigation – what alternative model do you suggest? Given laypersons don’t set out to buy a lawyers time – what would “value billing” look like? I ask only because your post begs the question.
@ Bradley Wright
To the extent that Kiowlaski’s ABS arguments and your argument regarding the “cost of litigation” are both access to justice issues – does this recent Toronto Sun column offer anything to the discussion? Do any of the current crop of Benchers agree with Shanoff that greedy, nonsensical billing practices are denying public access to legal representation”? Do you?
Lawyers billing badly
Greedy, nonsensical practices denying public access to legal representation, justice
By Alan Shanoff, Toronto Sun
First posted: Saturday, December 27, 2014
I wonder what the average hourly rate is for the benchers for whom you’re advocating? Talk to the managing partner of any firm about AR, look at the cars in the lawyer-only spots, visit the average partner’s home, then tell me that the profession isn’t motivated by money just like any other industry.
When you have some evidence to back up your theories, please present them.
The ABS discussion suffers when emotion and conjecture take the place of evidence.
I think the better question about ABS is “why not”? The main argument against ABS I’ve seen so far is that non-lawyer ownership will lead to erosion of our professional ethics and responsibilities.
I’m still waiting for someone to provide evidence showing that non-lawyer ownership in Australia or England has lead to more incidents of lawyer misconduct or malpractice. I’m not sure why a lawyer with a company-driven mandate to be profitable can do that only at the expense of his/her professionalism. Partners and associates on Bay Street seem to have no problems balancing these tensions today.
So far all I’ve seen on this subject is conjecture.
1. The first duty of a Canadian law society is to solve the unaffordable legal services problem–ABS’s can’t do that because legal advice services cannot be automated, they being the bulk of the problem, not the lack of automation of routine legal services.
2. The cause of the problem is that the method of delivering legal services, i.e., the use of the very outmoded handcraftsman’s method instead of a support services method. For example, no doctor’s office provides all treatments for all patients. Instead, the medical infrastructure is a sophisticated collection of mutually interdependent support services, such as family doctors, specialized doctors, specialized technicians & technical tests, specialized drugs, and hospital services. That is an example of the support services method’s key features: (1) a high degree of specialization within a flexible system of creating new types of specialization as circumstances require; and, (2) greatly scaled-up volumes of production by each specialty so as to take advantage of the economies of scale, i.e., the more produced, the smaller the share of overall costs is born by each unit produced, plus the fixed costs factor whereby many of the costs of making anything do not vary in proportion with the volume produced, again mean “bigger is better.” For example, whether a law firm has 10 lawyers or 100 lawyers, it still needs an adequate law library. The greater the volume of legal services produced, the smaller the share of library costs each service must pay for.
As engineers say, “nothing is as effective at cutting costs as scaling-up.”
But a lawyer’s office provides all legal services to all of its clients with no reliance upon external specialized support services. Therefore it can’t have the cost-efficiency provided by high degrees of specialization and scaled-up volumes of production.
All of large scale competitive manufacturing relies upon the support services. For example, no car manufacturer makes all parts of every car, but instead relies upon the support services that are the special parts companies. They combine a degree of specialization of staff, materials, equipment, and methods of manufacturing, with greatly scaled-up volumes of production, so as to gain the economies of scale that such large volumes provide. And they make millions of each of the parts that they make for the car manufacturers.
The handcraftsman’s method has been abandoned everywhere in the competitive manufacturing of goods and services, except in the legal profession. Therefore the profession’s problem of unaffordable legal services is inevitable. No law firm has the necessary degree of specialization of staff, legal materials used, re-use of previously created work-product, or scaled volumes of production, to be able to cope with rapidly expanding volumes of laws, complexity of laws based upon technology, and the masses of records created by the automating of records by electronic technology–every interaction, communication, and transmission that we have now, produces a record, which could be related to some legal service, and records are now the most frequently used kind of evidence in legal proceedings. Therefore, every legal service takes more time if its required quality is to be maintained. Time has to be paid for. If there isn’t a mechanism whereby cost-efficiency is constantly being improved, the price of legal services must increase. That is what has caused the A2J problem of unaffordable legal services. The handcraftsman’s method is can’t provide a sufficient degree of cost efficiency applied to large volumes of production.
I learned this form of analysis by creating LAO LAW, beginning in July 1979. It is the best legal research unit in Canada now, with a 35-year history of successful innovation and saving Legal Aid Ontario (LAO) millions of dollars by reducing the payout for legal research hours claimed on lawyers’ accounts. By specializing my staff, materials used, and principles of database management, by 1988 we were producing more than 5,000 complete legal opinions for lawyers in private practice who do legal aid cases. That is the way to drive down the cost of litigation. I had created the high degree of specialization and scaled-up volume of production that maximizes cost-efficiency to a degree that no law firm can match. LAO LAW is a highly specialized support service.
And the same strategy can be applied to any type of legal work that lawyers find hard to make render a profit, which is why the special parts companies exist. That difficult work or part is studied, made a specialized type of work, and then produced at high volume.
I wrote an in-depth paper that I sent to CanLII’s Board of Directors recommending that CanLII provide the legal opinion services that LAO LAW provides, at cost, to all lawyers and judges in Canada. It was ignored. I sent it to all LSUC benchers for whom I could find an email address. Again it was ignored.
When I worked at LAO, LSUC’s Legal Aid Committee was the manager. When the LAO LAW system was well developed, I asked to be allowed to sell LAO LAW’s legal opinion serves to lawyers for their non-legal aid cases. It would have made LAO a lot of money as indicated by its great popularity with legal aid lawyers, and it would have improved the service to legal aid lawyers because of the greater volume of production. And it had no competitors, and still doesn’t. That request was quickly refused, without analysis, and without any reason given.
3. A new management structure has to be imposed on LSUC by law, or some of its regulatory powers given to a new agency. A law society that cannot provide legal services that are affordable, has no purpose.
The same refusal to innovate by LSUC has caused the present unaffordable legal services problem. And that same refusal to innovate is what got LSUC removed as the manager of LAO in 1998 by reason of the McCamus Report of 1997, which led to the Legal Aid Services Act, 1988. And a report published in 1997, by Professors of Zemans adn Monahan, also of Osgoode Hall Law School, said the same thing about LSUC–remove it because it won’t innovate for the best future for LAO.
LSUC has an outmoded system of management that is not under sufficient public or political pressure to make perform its duties under s. 4.2 of the Law Society Act, specifically as to: (1) advancing the cause of justice and the rule of law; (2) facilitating access to justice; (3) protecting the public interest; and, (4) acting in a timely, open and efficient manner.
As a result: (1) thousands of people have had their lives severely damaged by lack of legal services provided by lawyers; (2) the courts are clogged by self-represented litigants (SRL’s)–dates have to set way off in the future now; (3) the legal profession is facing a very poor economic future; and, (4) funding LAO better is politically unwise because it means taking more money from taxpayers, the majority of whom can’t afford legal services for themselves.
Taxpayers pay for the justice system which provides employment for judges and lawyers, but those same taxpayers cannot afford lawyer services and must use the courts without lawyers. SRL’s are now appearing in the Courts of Appeal. And meanwhile, Canada’s law societies do nothing about the A2J problem.There is no program in effect, the purpose of which is to solve the problem so as to bring back to lawyers’ offices, all those people who cannot now afford legal services.
4. I fear therefore, that now that LSUC is finally beginning to show some concern about the A2J problem, that it will take the easy way out by approving ABS’s, implying that the ABS proposals are the best available solution to the A2J problem, which will never be true.
5. I agree with those who say the legal profession can do for itself all that ABS proponents say that they can do, and more. ABS’s are based upon retaining the handcraftsman’s method of delivering legal services, therefore they never will be able to solve the unaffordable legal services problem. But that’s not their proponents’ purpose. Concentration of ownership of law firms is, so as to control the market for legal services and then the price of legal serices.
6. See my papers on Slaw: (1) “Legal Advice Services Cannot be Automated by Alternative Business Structures,” October 10, 2014; (2) “CanLII as the solution to the unaffordable legal services problem,” October 24, 2013; (3) “LSUC’s Worrisome ABS Proposals,” November 25, 2014. And on the Access to Justice in Canada blog, “The Failure of Law Societies to Accept Their Duty in Law to Solve the Unaffordable Legal Services Problem,” Part 1 on August 12, 2014, & Part 2 on August 14, 2014. The first 3 pages were a “Thursday Thinkpiece” on Slaw, on Sept 13, 2014.
7. What hasn’t been emphasized sufficiently in the ABS debate is, the independence of the legal profession is essential to the independence of the judiciary–judges make decisions only on what evidence and argument that is provided by lawyers. If that process is improperly interfered with, so is the judicial branch of government. So the independence from ABS control of professionalism and duty to the courts, is a very important factor. Judges will never know how the conglomerate ownership of law firms has affected the independence of the lawyers who appear before them.
8. As to automating routine legal services as ABS proponents allege will greatly cut the costs of legal services, which they won’t: if all lawyers in Canada paid a one-time $200 addition on annual fees, that would produce about $20 million, with which the Federation of Law Societies of Canada could bargain on behalf of all lawyers and their law societies, for the software programs necessary. What with the annual maintenance fees, that would be a very attractive contract for any supplier. It would provide a far more powerful negotiating strength for all of us, than individual law firms negotiating with ABS investors who what to buy up strings of law firms to be franchised. (Whatever the size of the necessary size of the one-time increase in annual fees, that’s the way to get the necessary automating of routine legal services without worry as to loss of independence and ownership whose purpose is to control the market for monopoly power that dictates price.
The practice of law is not a business, and business is not the only agency that can make the practice of law as automated and cost-efficient as necessary.
Critical of OTLA’s position on ABS? That’s absolutely fine.
But before you draw conclusions based on a Law Times article, why not take a look at their official submission to the Law Society:
I believe that a lot of the “ABS” principles can be implemented without the regulatory “ABS” changes. But I am interested in change and curious about what ABS can offer lawyers and the public.
I follow Mitch and other ABS proponents with interest. I have to say, I am disappointed at his dismissal of some of the points raised in this discussion. For example, the point about the impact the title insurers had on real estate practices is an important one to at least consider in looking at the possible consequences of ABS. And not just from a pricing but also from an ethical perspective. Many new/young lawyers who have worked for title insures are very concerned with the ethical issues of certifying title in a commoditized manner. Or they are so inexperienced, they aren’t aware of the ethical issues until it’s too late. So if there aren’t outright issues (by way of on-record disciplinary matters in UK and Australia), rest assured, there are internal struggles and dilemmas inherent to being expected to push documents through a process and close files quickly. I guess that’s the same in large firms and in house roles, but the ABS model surely won’t be spared.
More importantly though, is that I see a real disconnect in the discourse being used. Law societies often use the “access to justice” label as code for “making legal representation cheaper”. Often that falls on the shoulders of solos and small firms, who are already doing their fair share of pro bono and low bono work. And yet no one seriously thinks that making law more corporate (via deregulation) is motivated by anything other than profit margins. I think law societies have a lot to answer for and they should not be let off the hook for their anachronistic rules and support of outdated business models. A huge impact can be made by simply changing the approach to governance.
I am commenting as someone who owns a small, specialized law firm using (what is considered, I guess) a newer business model. We have been operating since 2007. I employ 3 full-time lawyers – all on salary – we charge only flat rates and there are no billable hours or targets. We use a very secure cloud server and a simple practice management system. All 4 of us work together in an open space and have separate rooms for meeting clients. We serve clients all over the world from a smaller centre in eastern Canada, so our overhead and cost of living is lower. We spend almost nothing on marketing but watch our Analytics closely. We don’t use support staff other than a general receptionist. We do top-notch work for predictable prices. We run circles around our competition, but they don’t even notice us.
Todd, I have read it. And it is filled with conjecture and fear-mongering.
The report provides no evidence on increased risk to the public by ABS. It provides no evidence that any so-called “core values” will be eroded with ABS; all of this despite 15 years of ABS experience in Australia.
OTLA raises the already debunked theories of loss of quality of service, professional standards or independence, which are wholly without evidence anywhere in the world.
Because of this lack of evidence, OTLA gets into the silly season.
It relies on the fact that not every ABS is a technological super giant as the basis of disproving that ABS provides innovation or tech to law firms . If OTLA had spent time in Melbourne with Slaters, or in the Wirral with Riverview, as I did, it would see how ABS brings capital, management expertise, good governance and better technology to a firm. This is a big miss by OTLA.
BTW I also spent time speaking with Andrew Grech of Slaters, one-on-one. He is strongly in favour of ABS and the benefits it brings to Slaters clients.
OTLA raises Canadian examples of innovation then suggests that nothing more needs to be done, because a few people have raised capital on their own to fund some new projects. I organize the Legal Innovators Round Table in Toronto; nearly all the legal innovators in this group support ABS, and the advantages that clients, the profession and themselves can gain from it. Several are filing comments to LSUC in support of ABS.
OTLA has also resorted to the silly argument about market consolidation – which can already occur under the current model. There is no ban on personal injury or other law firms buying each other up and consolidating now, so this point makes no sense.
Again emotion and conjecture replace logic and evidence in the OTLA paper.
Oh, and about the access to justice issue?
OTLA and the famed “Harvard Study” (which is a dishonest name for a study that happened to be done by a professor who happened to be at Harvard at the time.) both missed Australian Law Firm of the Year, Salvos Law and the 11,000 pro bono cases it did. That is a pretty big miss if one is suggesting that it spent any time researching the issue of access to justice. This miss calls into question the integrity of the “Harvard Study” and the OTLA paper.
OTLA has also failed to show in its report how Salvos Law could exist under the current model – because it can’t.
All of these make the OTLA paper sadly underwhelming and disappointing.
Such papers add little to the discussion if they rely almost entirely on fear, ignorance and hyperbole.
“When the LAO LAW system was well developed, I asked to be allowed to sell LAO LAW’s legal opinion serves to lawyers for their non-legal aid cases. It would have made LAO a lot of money as indicated by its great popularity with legal aid lawyers, and it would have improved the service to legal aid lawyers because of the greater volume of production. And it had no competitors, and still doesn’t. That request was quickly refused, without analysis, and without any reason given.”
If only could find the capital to fund such an innovative idea… Oh well, I guess well just let LAO decide what ideas have legs and what don’t.
Kudos to Salvos Law; however, there appears to still remain a gap in the provision of legal services primarily to the disadvantaged, this according to the Productivity Commission:
To address the more pressing gaps in services, the Australian, State and Territory Governments should provide additional funding for civil legal assistance services in order to:
• better align the means test used by legal aid commissions with that of other measures of disadvantage
• maintain existing frontline services that have a demonstrated benefit to the community
• allow legal assistance providers to offer a greater number of services in areas of law that have not previously attracted government funding.
The Commission estimates the total annual cost of these measures to the Australian, State and Territory Governments will be around $200 million. Where funding is directed to civil legal assistance it should not be diverted to criminal legal assistance.
Access to Justice Arrangements –Productivity Commission — Submitted December 3, 2014
January 2, 2015
So much to respond to, so little space. Of course a lawyer at Slater and Gordon would praise ABS. He is part of a firm that is making a killing, and killing hundreds of smaller firms.
Market consolidation can happen in the current world, except it doesn’t, at least not to a degree that harms the long-term public interest. But such harms are guaranteed to happen in an ABS world. As I mentioned, but Mitch ignored, the English experts were unanimous in saying that, despite two years experience there and the 10+ years of Australia’s experience to draw on, it is still too early to tell whether there will ever be any benefits to the public of the types claimed by the ABS supporters. They were also unanimous in pointing out that the one main “benefit” seen so far is that ABS provides access to outside capital to fund consolidations – the very evil that leads to cartelization and higher prices. Mitch criticizes me for conjecture. He needs to re-read what I wrote, and realize that he is the one swimming in conjecture.
Mitch thinks that 10 – 15 years of experience in Australia is enough to go on. I say it is not. That is just the first burp down there. The next burp will take through to a full generation, 25 – 30 years. It is at that point, if not earlier, that the real cartelization will take place and the real loss of independence will occur. History and human nature tell us that. The US title insurance cartel took a generation to reach the critical mass needed to then kill off the independent real estate bar. The real estate agencies took a generation to consolidate down to the current seven. The Big Accounting firms, more on them below, took decades to evolve to where there are just four of them. And so on, and so on.
I ask again, why would the four giant international accounting firms (just four firms – Deloittes, PwC, E&Y and KPMG – do 98% (by capitalization) of all corporate audits in the World according to the Economist) want to buy law firms in the first place? To do pro bono legal work???? All they will care about is the return on profit to themselves, and they will engender an environment designed to do just that. Someone said that the profit-motive drives big firms. Yes it does, but that will worsen under ABS. It cannot help but worsen when there will then be yet another level of cost to cover, namely, the return to the outside owner. The big firm model is in place to service large and or wealthy corporations and their 1%-member owners and senior staff. Those corporate clients get to deduct their legal costs from their taxes. On that basis, a very significant part of the revenues earned by the partners in the big firms comes from taxpayers, making them, to that extent, not very different from welfare bums. Do we want to expand that model by having thousands of small firms consolidated into giant franchise operations, the only difference being that individual clients for the most part cannot deduct their legal expenses?
Do we want lawyers in the ferociously competitive environment of small firms, who currently only have to charge their clients enough to cover (a) their modest local overheads and(b) their retire-at-75 take-home pay, to suddenly have to charge their clients enough to cover (a) their modest local overheads and (b) their retire-at-75 take-home pay, (c) the return to the lawyers in the head office running the franchise/megafirm, and (d) the return to the non-lawyer outside capital venturers on their investments?
The big firm model suffers from additional, anti-best-interests-of-the-public problems. The lawyer in that model has divided loyalties. One is pleasing the client. The other is pleasing the compensation committee. While this happens in small firms, it happens to a far lesser degree. In my sole practice, I have no one other than the client to whom I owe any loyalty. The client is the only entity I have to please. I have no compensation committee looking over my shoulder at what I am billing.
When I do business transactions, I give my client a fair quote. But if I later learn that a huge firm is on the other side, I call my client and tell them that my quote just doubled. This is due to the phenomenal amount of additional time I am going to have to spend on the file as a result of the demands from the lawyer in the big firm. As every small-firm business lawyer will know, I am not kidding. Of course, the lawyer in the big firm will swear up and down that everything he is insisting on is essential, but we all know that a lot of it really is not essential. But he is used to billing deep-pocketed clients and he has to hit his very high billing targets.
I say let the wealthy corporate world continue to over-pay if that is what they want to do, but do not bring that model down on the heads of the rest of the public.
Btw, as mentioned, only four accounting firms do 98% of all corporate audits by capitalization. Until Arthur Andersen bit the dust, there were five. When AA when under, fully 20% of the accounting cartel went with it, to be absorbed by the remaining four. When Heenan Blaikie went under, 3.3% of the large firms in Ontario were affected. What would you rather have? 20% of the legal profession going under or 3.3%?
Do we want giant swaths of the legal profession to be owned by future versions of Lehmann Brothers, AIG, Bear Stearns, Enron, WorldCom, Arthur Andersen, Principal Trust, GM (kept alive only by the influx of 12 billion dollars of taxpayers’ aid), Royal Scotland Bank, and Tesco (the largest grocery chain in England)? Again according to the Economist, Warren Buffet described Tesco as one of the very worst mistakes of his career. What happened was that Tesco is alleged to have deliberately misstated its fiscal picture for years and the Big Four Accounting Firm Auditor allegedly abetted them. Tesco was an early diver into the English ABS pool. Is that who and what we want the legal profession aligned with and taking orders from? Btw, all four of the Big Four accounting firms are headquartered in the US and have American CEOs. Presumably, the ABS pushers are confident that such owners will have the Canadian public’s best interests uppermost in their hearts.
The Economist goes on to state that the Big Four Accounting firms are often in sometimes criminal trouble with US regulators but are merely fined because closing one of them down would only exacerbate an already non-competitive market. The Big Four also have capitalizations that absolutely dwarf into near insignificance the capitalization of even Canada’s largest law firms. Who do you think is going to call the shots once Deloittes and PwC and E&Y and KPMG own BLG, Blakes, Osler’s, Tory’s, McCarthy’s, McMillan, Gowlings, and a chain or two of formerly independent small firms, etc? If you think it is the lawyers, then you are about as naïve as can be.
I have an idea for the Salvos model. Perhaps Mitch and others can approach the Canadian Salvation Army and other reputable charities to donate to the LPP to fund paid placements of those students in poverty law clinics. About half of the students are in unpaid placements. Think of the good such funding would do, and it would not need ABS.
Turning to the time and cost of litigation, first, the rise in unrepresented litigants has risen in lock-step with the prodigious rise in the number of lawyers per capita (in the last 20 years the number of lawyers has risen 40%, far higher than population growth, due to the failure of the law schools, starting in the early 90s, to ever fail anyone and to their bloating up in size – Ottawa U LS alone has more than doubled in size). This lock-step paradox is counter-intuitive but true nonetheless. The main reason for the paradox is that each lawyer now has too few clients to make a living from and must charge too much per file. This is done by dragging things out when in the old days the lawyers would have told their respective clients not to sweat the small stuff (and that allowed the lawyers to settle earlier and more often and move on to their other files). Now the most minute stuff is sweated. That puts the cost of the average file out of reach for the average potential client. Another reason is that many of the SRLs could afford a lawyer but choose to do it themselves in the mostly mistaken belief that a little internet research and mimicking what they see on TV has prepared them to convince a judge to see it their way.
Another reason is that the litigation process invites the wasting of horrendous amounts of time in having to deal with the many stages between drafting the pleadings and getting to trial. I say eliminate the mandatory mediation stage, eliminate the pre-trial stage, greatly shorten discoveries, make better forced use of offers to settle, and make the lawyers analyse their way to early and reasonable settlements or face the consequences of adverse cost awards imposed by a judge annoyed that the file even got to trial.
While I have not done litigation for a while, I used to do it, ahem, very successfully. Since then, I have been the expert witness in seven cases, twice retained by giant firms, and we have won all seven (touch wood)(they should make keyboards out of wood, don’t you think?). I have also been exposed to or been told about a variety of other cases. In every single case, it was possible to do an analysis early on and very, very reliably predict the outcome before a sensible judge. Not one of those cases needed anywhere near the time they took.
What we need to do is work toward truncating the time wasted in litigation files which, as we well know, constitute by far the biggest barrier to access to justice. That would bring the cost of litigation per file down and make it affordable to far more people, thereby replacing the revenue that barristers fear they would lose by the truncation. Twice as many files done in half the time of current files at half the cost of current files yields the same revenue. Considering that 70% of cases feature SRLs and that it is claimed that a lot of legal needs remain unmet, making litigation files affordable for the general public could even generate more revenue for the profession.
Instead, we stumble around like drunks attacking the modest cost of wills and work assiduously at being bootlicks to big business by offering to sell them our profession when (a) there is literally nothing offered by ABS that cannot be achieved without it, (b) we have the golden opportunity to cherry pick any unexpected benefits that might arise in England or Australia without adopting their blunders, and (c) there is plenty of evidence that ABS does and will cause anti-competitive cartelization and loss of independence over time.
Are we completely daft? Are we that blindly and brainlessly cavalier about the true public interest and even the profession’s long-term interest? I sure hope not. Do those who initially thought ABS was the way to go have the courage to renounce that view? I sure hope so.
Btw, I laughed when I read the criticism of Nick Robinson’s excellent paper on the perils of ABS to the effect that it should not be called a Harvard study because Professor Robinson was merely teaching at Harvard when he wrote it. Not a single point in Professor Robinson’s thoughtful essay, published with no objection from Harvard U, was addressed by the critic.
In sorrowful personal amity with those with contrary views,
Professors need to publish or perish – the paper is his alone. Harvard cannot object to his publication as that would be against the principle of academic freedom.
If I published a paper while at University of Calgary Law School (which I teach at) it would not be referred to as the U of C Study. It would be the Kowalski study.
ABS opponents seem to find some magic in the name “Harvard” as if it gives greater legitimacy to their claims. It’s the Robinson paper – plain and simple. And he missed Salvos Law – which is a pretty big miss when his paper seeks to review access to justice in Australia.
Consolidation is either permitted or not permitted.
Currently it is permitted for law firms in Ontario to be bought up and consolidated without restriction. End of discussion.
You cannot say it is permitted for some firms but not for others.
The profession needs to keep in mind that law is not created to give lawyers jobs. Law is there to protect the social fabric, and clients alone decide which lawyers – or other service providers – are worthy of their business and those that are not.
If you have evidence to suggest that clients are worse off now than they were in 1999 in Australia, please present it.
If you have evidence to suggest that clients are worse off now than they were in 2011 in the UK, please present it.
Regulatory authorities in both country have never stated that clients are now worse off. Nor have they raised the alarm over any consolidation, service levels, loss of professionalism, etc.
Chris Kenney is CEO of the Legal Services Board in the UK. He spoke at a Harvard conference on disruption in legal services 9 months ago. So according to your logic and that of the OTLA, the fact that Harvard is hosting a disruption in legal services conference must mean that Harvard deems ABS to be acceptable.
Kenney said: “The case for some kind of supply-side reform to ensure that social and economic need is met is actually pretty overwhelming,” he said. In addition, there’s no evidence that ethical standards have been lowered or that customer service has suffered, he added. Deregulation needs to happen because unmet need for legal services is still great, he concluded.”
Here is the link to the video: https://www.youtube.com/watch?v=a38QYjDifEQ
Please alert me as to where in the video he stated that ABS was destroying the UK legal system, law firms and lawyers. I can’t seem to find it.
So here you have it, “straight from the horse’s mouth” – not a second-hand extrapolation in some protectionist propaganda put out by the OTLA.
Finally, to state that we need to wait several generations in order to determine if ABS is good or bad is just plain silly.
1) While litigation costs are often prohibitive and an obvious issue in access to justice, litigation often arises only as a result of failure to obtain (sufficient) legal advise in the first case. (contracts that are drafted by the business owner based on a free 15 year old US precedent dealing with different subject matter, etc.)
Those who can’t or choose to risk not affording the solicitor’s costs upfront are likely those who can’t afford the litigator’s costs when things go sour.
2)”Do we want lawyers in the ferociously competitive environment of small firms, who currently only have to charge their clients enough to cover (a) their modest local overheads and(b) their retire-at-75 take-home pay, to suddenly have to charge their clients enough to cover (a) their modest local overheads and (b) their retire-at-75 take-home pay, (c) the return to the lawyers in the head office running the franchise/megafirm, and (d) the return to the non-lawyer outside capital venturers on their investments?”
If the small firm market is so competitive, and clients would have to pay more for a franchise or megafirm, then they would presumably only do so if they feel they are getting a benefit, or if they aren’t aware that they are being charged more. If they are getting a benefit, good for them, and opening the choice up to lawyers and clients seems to be a good thing.
With regard to the accounting example, there are still many independent accountants and accounting firms, offering a wide range of services. No one forces you to go to one of the big 4, its a choice that businesses make, feeling that the reputation benefit of the big 4 is worth the higher costs. If you prohibited non-accountant ownership you could eliminate the big 4 from operating in Canada potentially, but would that benefit consumers of accounting services, or simply reduce their options?
I merely found it funny to criticize Professor Robinson’s essay on the basis of its label, not its contents. The contents remain unaddressed except to say he missed Salvos. We do not know that. He may have considered Salvos as unimportant in the scheme of things, which it is. Certainly, Salvos type benefits can easily be created without selling out the rest of the profession. I repeat, we can meet that public need in ways that do not require selling the legal profession to accounting and insurance companies.
The fact that consolidation among law firms is permitted is certainly not the end of the discussion. What the English experts said is that the main “benefit” of ABS is accessing funds to consolidate, i.e., at rates far greater than would happen without the access to the outside funding. Given the capitalizations of the venturers, the consolidations would occur on an entirely different scale than in the past, and that is the nub of the problem. If two of the biggest 30 firms in Canada merge, we still have 29 of them. With Deloittes and other such behemoths funding the process, you could end up with a mere handful of big firms, similar to what has happened in other industries to the detriment of the public. There are only four Big Accounting companies worldwide. They would see nothing wrong with engendering a legal profession of four giant world-wide firms that they would control. None of the several examples of cartelization that I have given is ever addressed by the ABS pushers. They just plough on repeating their mantra that selling ownership is all good – when it clearly isn’t.
I did not say that consolidation is permitted for some but not for others. I say that cartelization is almost invariably bad for the public.
The five English experts we heard from said that two years’ experience had not produced any evidence that the public will benefit. If the public will not benefit, why would we sell our profession? In fact, Mitch, there have been difficulties in the UK with firms closing, with large companies suffering colossal losses on the stock exchange, losing several high-profile managers who were seduced in, only to leave later, and so on.
I do not know anything about Chris Kenney, except, as CEO of the LSB, he is charged with making the blunder work, and his views are coloured as a result.
I did not say that we have to wait “several” generations to see the ill-effects of ABS. I say that a little over a decade in Aus and two years in the UK are not enough. I said that it would take a generation (which demographers define as 25 years give or take). I say that the current crop of lawyers would carry on as we have to date out of habit and that it would be the next generation, a generation that would know no model other than a cartel controlled by outsiders, that would see the erosion of legal ethics. I say that real estate standards have plummeted where title insurers have taken over. I quoted you previously the words of a former lawyer who, having been put out of business by the title insurance industry and took a job with one of them, said, “We’re now charging four times what lawyers ever did and our service is shit”. The cartelization of real estate delivery, the destruction of the real estate bar, the rise in cost to the victimized public, and the reduction of service to the level of “shit” took a generation.
In future, kindly address my criticisms directly instead of re-writing what I’m saying.
By the way, I will have been a bencher for 20 years this Spring. In just that amount of time, I have seen a marked difference in the big-firm benchers. In 1995, the big-firm benchers had virtually all started in smaller firm because the big firm phenomenon started after they had started their careers. They had all had experience in small environments. Now, virtually all if not all the big-firm benchers join the big firm right out of law school, and never experience small-firm life. It has, and I say this very respectfully and with admiration for them, made a difference in some of the decisions they support and the perspectives they have. So, I feel I know what I am talking about when I say that the practice environment one is raised in does indeed have an impact on how you see the legal world.
Furthermore, with the rise of giant law firms, we have also seen the rise in legal costs to the public. No firms gain more by dragging out litigation than the big firms because they have the clients with the tens and hundreds of millions of dollars of capitalization who can afford, with the help of the taxpayer, to pay the astronomical fees they charge for as long as it takes to take on similar corporations similarly represented, or to squash the little guy (which is why FCT has McCarthy’s on retainer and Stewart has Borden’s on retainer – the given real estate file/title insurance claim is small potatoes but the title insurers make it dead obvious that if you sue them, you will up against a Big Firm. If FCT were forced to hire a local firm of the same size as the firm acting for the plaintiff, the playing field would be level and the litigation would cost less).
Come to think of it, maybe there should be a law that says the plaintiff gets to choose the size of law firm both the plaintiff and the defendant must retain, and that both firms must be the same size within a range. Even large companies would be inclined to hire a small local firm just to keep the costs down. Yes, yes, I know. A plaintiff could hire a giant firm knowing that the defendant would not be able to afford similar.
Anyway, you still have not addressed the points, among others, that (a) we do not need ABS to achieve the claimed benefits of ABS and (b) we can cherry pick any benefits that do arise without having to suffer the disadvantages of cartelization, loss of independence over time, and the erosion of our ethics over time.
Anyone interested might want to read the Consumer Impact Report 2014, online:
Here’s the link for the Consumer Impact Report, 2014: http://www.legalservicesconsumerpanel.org.uk/publications/research_and_reports/
January 2, 2015
James, I agree with your first point. The failure of the public to access prevention lawyers (solicitors) badly hurts them downstream when they have to access cure lawyers (barristers). Part of the problem is that the media, from newspapers to TV Land, only ever babble on about the high cost of court room lawyers. Solicitors get unfairly tarred with that brush to our undying annoyance and to the very real detriment of the public. But the problem is easily addressable. For a mere $90 per member a year, the Law Society could advertise on an on-going basis to the public of the benefits of seeing solicitors early on in the process. That would be far cheaper and carry far more weight with the public than a bunch of self-serving ads placed, at high cost to the individual firm (and passed on to the clients) by ABS behemoths.
It is not, however, the case that the vast, vast majority of the public cannot afford to seek the advice of the solicitor. Instead, it is the case that they choose not to, because they are unaware of the cost-effective benefits of doing so. I have dealt with numerous clients over the years who have chosen not to pay the modest cost of a solicitor’s advice; yet, they think nothing of spending far more on any number of other things. Their annual cable bill is more than the solicitor’s advice. The cost of their cigarettes. The cost of their booze. The cost of the tickets to the professional sports teams. Their cost of the car they really should not have bought (what was wrong with the next cheapest car? Nothing.) This comes down to not knowing just how valuable the modest cost advice of solicitors is. That comes down to the failure of the Law Society over the years to do something about it. Doing so would clearly be in the public interest – the Law Society’s own mandate. What’s more, we could probably get funding from the Law Foundation of Ontario to help pay for it because public education is squarely within the LFO’s mandate. Why there is reluctance at the Law Society to do this is a mystery.
As for your second point about the public only going to franchise lawyers if they perceive a benefit, you miss the point that a heavily-backed franchise gets going, they can and will (as history has repeatedly shown – see the US title insurance predation of the real estate bar) temporarily offer low prices until the independent lawyers are wiped out, at which point they will have the public at their mercy. Do you think the American CEO of an American- headquartered 500 billion dollar conglomerate is going to give two hoots about the best interests of the Canadian individual legal service consumer? Or is he going to worry about his compensation package?
As for your comments about the Big Four accounting firms, yes, there are lots of small accounting firms, but they do less than 2% by capitalization of audits worldwide. They mostly do non-audit work, and any audit work they do is different from the audit work the Big Four do. The point is that, in the field of publicly traded audit work, there are really only four of them that businesses needing large audits can go to. The US and UK governments have identified this as a very serious problem. But comparisons only take us so far. I am not equating the accounting profession with the legal profession for all purposes. So far anyway, the Big Four have not attempted to put the small accounting firms out of business the way the US title insurers did to the real estate bar, but if it happened, what do you think would happen to the fees the public would have to pay for non-audit work?
You say opening up choice to the public is a good thing. Yes it is in an environment where there is no real competition, but solicitors operate in an environment that is ferociously competitive. ABS would be certain to reduce that very competitiveness. Not all competition occurs on a level playing field. When small firms have to go up against a cartel that is willing to take losses for as long as it takes to put the small firms out of business, that is not a level playing field. Such untrammelled “competition” ends up destroying competition and leaving the public far worse off that it was before. That is the promise of ABS, to wit, if not in the early days, then certainly in the longer-term.
By the way, perhaps some supporters of ABS are dreaming that they will be among the lucky beneficiaries of an ABS world. Dream on. The real beneficiaries are already in place. They are the big law firms and the big companies in their client bases. They, not you, are the ones placed to pounce and take advantage of any foolishness on the part of the Law Society to cave into them.
Further, I would never prohibit ownership of accounting firms by non-accountants. Indeed, the Big Four are traded on the stock market. But accounting is not law. Accountants, while important, do not occupy the same position in the health of a free and democratic society that lawyers do. While their ethical demands are high, they are not as high as those of lawyers. They do not enjoy something similar to solicitor-client privilege. They are not officers of the court. And their customers do not bring to them the breath-takingly wide range of issues that our clients bring to us. Accountants do not deal with a seamless web of law – a web that touches virtually every aspect of everybody’s life. They just deal with money, numbers and financial statements.
I come back to these points, points that have not really been credibly challenged.
Under ABS, cartelization is a dead certainty (ABS proponents in other jurisdictions make no bones about it. They gleefully predict it and are self-servingly working toward it and achieving it. Slater and Gordon has already brought about an incredible concentration of firms in their main practice area, and they want to do the same thing to England. It is the last thing we should want here.).
Harm to small firms is a dead certainty (see, for one example, US title insurers predation of the real estate bar).
Harm to the public over time is a dead certainty (ditto).
That loss of independence over time goes hand in hand with loss of ownership is dead obvious (following the money is what humans do; indeed, it is one of the chief reasons that quite a number of ABS supporters support it).
That the claimed benefits can easily be achieved without ABS is dead obvious (so obvious that no elaboration is needed).
That ABS is mostly a smoke-screen to avoid doing anything about the time and cost of litigation is dead obvious to me (even though it is being done without deliberate malice); otherwise, we would be spending these resources on dealing with the real barrier instead of spending them on fake barriers.
When are we going to turn our resources away from the unnecessary ABS hell-hole and toward addressing the barrier that dwarfs all other barriers? Spending our resources on ABS is like sending the entire fire department to dowse a candle in an empty metal pail while ignoring the 100 city blocks ablaze down the road.
You continue to jump to the conclusion that ABS causes damage – you provide no evidence of this.
I’m happy to see that term limits will not permit you to seek re-election. Fear-mongering is the last thing Benchers should be engaging in.
You seem to have secret information about the Robinson report that Salvos Law was intentionally deleted because it was not relevant.
Good gosh is there no limit to your fabrications and propaganda?
ABS was introduced to Oz in 2000 – making it 15 years of experience. Slightly less than your time as Bencher. Yet you seem to float “20 years as Bencher” as some kind of badge of special experience which you do not afford the Australian ABS experience.
You are clearly arguing for the sake of arguing, rather that adding something constructive.
Then you insult the CEO of the LSB in order to further your argument?
This kind of shameful behaviour is unbecoming a Bencher. This is exactly why new blood is needed at the Law Society.
You have lost touch with the profession as it is in 2015.
I wish you well in your retirement.
January 2, 2015
Mitch, you say that “The profession needs to keep in mind that law is not created to give lawyers jobs. Law is there to protect the social fabric, and clients alone decide which lawyers – or other service providers – are worthy of their business and those that are not.”
I agree. But for hundreds of years, society and governments have wisely decided that lawyers are the best people to get legal advice from. And when it is shown that lawyers are not the best people, changes have been made. For example, paralegals should be and are empowered to deliver legal services that are not economical to the public for lawyers to deliver. The public can go to other service providers (non-lawyers) if they really believe they will get better legal advice from non-lawyers. Funnily enough, they rarely do get better legal advice from non-lawyers. The law has always allowed the public to do their own wills and buy kits. Turns out, those are the most lucrative estates files I ever get. They would have been vastly better off to have paid me the pittance for a well-drafted will than the higher cost of my having to deal with a bad will.
No case whatsoever has been made that small-firm solicitor services can be delivered to the public better and cheaper than solicitors in Ontario do now. In jurisdictions that have replaced solicitors in areas of the law (US real estate), the costs and harms to the public have soared and services have plummeted. Furthermore, despite the outrageous cost of most litigation, no case has ever been made that non-barristers provide better services except at the bottom end of issues like traffic tickets and some narrow-specialty tribunals. The real issue, the issue that ABS supporters and others do not seem to want to deal with, is how do we make the cost of accessing barristers affordable? ABS will not do it or at least is not needed to do it. As I have dealt with some of the ways to reduce the cost of accessing barristers elsewhere, I will not repeat them here.
You have to be careful about how far you open the door to non-lawyers delivering legal services. If you open it too far, greater harm occurs than if the door were ajar only enough to maintain balance. If you allow anti-competitive behemoths who are willing to predate competitive lawyers into extinction through temporary loss-leadering, then you have created an unkillable monster.
Some ABS supporters say goofy things like ‘the delivery of legal services should be open to all competition’. They don’t really mean it; they just want to open it up to the big company clients of the big law firms. If they did mean it, it would mean letting anyone at all hang out a shingle claiming to be a legal services provider. We know how that has worked whenever it has been tried. Why not let anyone claim to be a doctor or an engineer. Would you allow your child to be operated on by such an “anyone”? Would you drive over a bridge built by that “anyone”? So, yes, education and other standards are required. And those standards are best protected by the total, hard-won and uncompromised independence of the legal profession. ABS would compromise that, make no mistake.
As you say, law is there to protect the social fabric, and I say that lawyers are the best tailors. If all you need is a button sewn on, sure, go to the tailor equivalent of a non-lawyer. But if you do not want the entire suit to spring off you in all directions in the middle of the subway, go to the tailor equivalent of a lawyer. If you have your fabric tailored properly in the first place, it will clothe you without incident forever. If you do not go to a trained tailor or sew it yourself, you will need a tailor to come down to the subway and try to apply the suit back on you to the schadenfreude of the other commuters. That will be far more costly and painful than having a proper suit made in the first place. Good heavens. You might have to take that suit* to court where it will cost you, on average, the average Canadian’s annual income to deal with!!
*A pun as vile as that deserves to bring this post to a clothes.
Sigh. I did not say that I have secret information. Sheesh. All I said was that we do not know why Prof Robinson made no mention of Salvos. The point you will not address is that we do not need ABS to achieve the benefits of Salvos.
ABS may have been introduced in 2000 but it took a while to get going. The real experience is a more recent development. But it has produced the very kind of consolidation in Slater and Gordon’s main practice area that I have been warning about. That is not a fabrication. That is reality. And the quotes from ABS types in the UK candidly predicting more consolidation (that they have helped bring about!) are not fabrications; they are attributed quotes in respected legal trade journals.
It is not an insult merely to observe that the CEO of the LSB has an interest in having a perspective favouring ABS. The government has passed it. It is irreversible. He is a government appointee. There is nothing in it for him to oppose ABS in any way. Would he keep his job if he relentlessly criticized the UK government for adopting ABS and did everything in his power to undo it?
I can assure you I am not out of touch with practice in 2015. I am heavily computerized and so efficient that, at the request of others, I have led adoptions of efficiencies in Ottawa some of which have been copied by other counties in Ontario. No, I do not have a website*, but that is because I am swamped with work from a 32-year build-up of happy returning clients and their referrals.
*I will get one as a courtesy to clients who want to see a map of my new office location. I will also put various essays on Whither the Legal Profession on it so that readers can see that thousands of independent lawyer-owned firms in fact, in fact Mitch, deliver far better and far more cost-effective legal services than other models, that we are wide open to any beneficial innovations as we always have been, that the real barrier is litigation, and that they, my precious clients to whom I devote my undivided loyalty, should take preventative steps to avoid barristers like the plague, at least until they become affordable. Btw, the system and costs are not all the barristers’ fault. Good barristers, and they are legion, do a tremendously good job for their clients and they do try to contain costs. They are the barristers I refer my clients to when they need them.
But at the same time, I have not been duped by the shiny new, time-bomb toy of ABS.
My reference to 20 years as a bencher was simply to illustrate that I have seen a generational shift in attitudes caused by nothing other than a narrowing of the career-long practice environment of a certain type of bencher (I do not fault them for their human nature) – similar to the generational shift that I confidently predict will happen to lawyers whose practice environment would feature behemoth, non-lawyer owners. You make the conjecture that it won’t happen. I say it will and give a concrete example of it having happened in another but still applicable context, and I say the role of the legal profession in society is too precious to jeopardize based on a conjecture that you happen to prefer.
There has always been plenty of new blood in Convocation. Even in the worst turnovers, we still had over 30% new benchers (usually closer to 40 or 50%), meaning that, even in the slowest turnover times, we would have a 60% renewal in the span of two elections, i.e., four years and one day. Any management consultant would tell you that that is an excellent rate of renewal for any organization. But continuity and institutional memory are also valuable. During our wretched governance reform process, the pushers of governance reform constantly trumpeted the need for renewal, but none of them had done the analysis. When I did the analysis proving that we had, even at the worst of times, objectively excellent renewal, the pushers never wavered, but continued to spout the nonsense that we needed reform to address a non-existent renewal problem. Also without analysis, they claimed that there were too many life benchers. I did the analysis. Only 10% of newly elected benchers ever made it to life bencher status, and most of them did not attend Convocation. Yet, over the years, the life benchers proved to be an utter God-send. They often saved Convocation from silly blunders, and they filled out discipline panels by bringing over 16 years’ experience on hearing panels to the proceedings. The reformers, in their zeal to pass reforms, any reforms, to be seen to have done something, threw out the baby with the bath water. We have had to replace the work formerly done by life benchers mostly for free with outsiders who cost the Law Society (our members) quite a bit of money.
The real reason for our governance reforms was to make it easier for downtown Toronto lawyers to manage their bencher ambitions. That’s it. The other reasons advanced were just smoke. Convocation is not what it was, and I say that with great respect to the benchers elected since the reforms were implemented. At one point, except for one minor recommendation, Convocation, post-reforms, did not turn down a committee recommendation in four years. That may still be the case. The old Convocation often sent work back. I can assure you the routine rubber-stamping of virtually all committee recommendations since reform is not because benchers are smarter now than then. They are not dumber either, but the culture has changed, and not for the better.
I am signing off for today.
January 7, 2015
“Helped to lead” that is to say regarding the Ottawa efficiencies. There were several of us on the Ottawa committee. Btw, a provincial committee (which I was also on) later tried to roll out the Ottawa efficiencies across Ontario. The stumbling block was Toronto. That’s too bad because if every county and district adopted the Ottawa protocols (proven splendidly effective over 15 years), then, based on Ministry statistics, we would save 3,000,000 pieces of paper per year and all the toner that goes with them. If would be much better off if we could spend our time improving the practice instead of fighting the nonsense of ABS.
Mitch, you keep asking for proof of harm. Cartelization is harm, and it is happening right now, as gleefully and candidly admitted by early, palm-rubbing beneficiaries of Aussie and UK societal blunders. And it can only worsen (in fact, said early beneficiaries candidly admit that they both expect and are working toward worsening the cartelization) in an ABS world where multi-billion dollar companies increasingly take over the delivery of legal services. The harm is right there, looming over you. You ignore it to the detriment of both the legal profession and the public. I do not fault anyone who was initially seduced by ABS. It sounded okay. It sounded sexy. It looked like something one could later brag about for being in the vanguard. But it is poison. It is immeasurably harmful. It is like communism once was – a superficially appealing philosophy that garnered a number of adherents even in the West, but which, as history has proven, engenders and spreads harm like an ebola virus sneezed into a classroom. You may not appreciate it but I am trying to prevent you and the other misguided sponsors of this evil from later garnering for yourselves the scorn of history.
2015 is the 800th anniversary of Magna Carta. If we adopt ABS, the document evidencing the adoption will do down in history as Puny Carta, Cowardly Carta, Myopic Carta, Lazy Carta, Bootlicks to Big Business Carta, take your pick.
The reasons offered in support of ABS give real meaning to the last two letters of ABS.
“Do we want giant swaths of the legal profession to be owned by future versions of Lehmann Brothers, AIG, Bear Stearns, Enron, WorldCom, Arthur Andersen, Principal Trust, GM (kept alive only by the influx of 12 billion dollars of taxpayers’ aid), Royal Scotland Bank, and Tesco (the largest grocery chain in England)?”
Really, is that supposed to be a serious argument? Let’s damn ABS because out of the few millions sucessful businesses in the world, you can name 10 that failed (setting aside for a second that at least one of those examples, GM, was a world leading car company for the better part of a century before it failed). Gee, have no law firms under the existing regime every failed, or disappeared with the client’s money – it seems to me that there have been a number of instances of just that on the LSUC’s plate right now. By that logic (such as it is), the lengthy list of disciplinary complaints against lawyers under the existing structure (often, as in the case of trust fund infractions, a function of the current ownership model,), is a compelling case for ABS.
“2015 is the 800th anniversary of Magna Carta. If we adopt ABS, the document evidencing the adoption will do down in history as Puny Carta, Cowardly Carta, Myopic Carta, Lazy Carta, Bootlicks to Big Business Carta, take your pick”
Now, you’re just embarassing yourself. Good lord , are you really a bencher of the LSUC? I’d be embarassed to hear these sort of silly rhetorical argument from some know-nothing undergrad. I AM embarassed to hear a representative of my profession making them.
Many risks of abuse have been identified in the comments above by those against ABS however it is naïve to think that there aren’t equally harmful abuses, issues and concerns existing within the current system. Look no further than the many lawyers who readily admit that their friends and family couldn’t possibly afford their fees, the person I know who, to their lawyer’s knowledge, spent more per month on legal fees than they made, the ongoing firm consolidations, or the dairy farmer that was found to have been grossly overcharged for a routine receivership (Nova Scotia v Deimer, 2014 ONCA 851).
More importantly, this ABS debate deflects from the main issue – clients aren’t happy.
Deimer is an excellent example of one of the reasons why: fee churning. While I am not aware of any firm that has a policy of churning, there are clients at pretty much every firm who have experienced it. Usually not intentional and generally due to the lawyer and client not working together to scope, plan and budget at the outset of the matter.
Despite the best of intentions, many lawyers focus on the effort they have put in as opposed to the cost and value of what the client received. This is flawed. Lawyers should be focused on figuring out what the client wants and then addressing the client’s needs in a manner that generates a fee that the client is comfortable paying. This doesn’t mean the services have to be cheap. It means they have to be proportionate to the benefit received. More fundamentally than a profession, law is a service that clients pay for (lawyers need to eat too). No clients, no profession.
What I know from my business is that clients aren’t happy with the lack of fee transparency and certainty associated with legal services and they want things to change. Lawyers want change too. After all, who wants to work all weekend and then get in a bun fight over the bill?
There are a number of trends currently facing the legal profession (increased client sophistication, fee pressures, stagnant growth, the number of lawyers growing at a faster rate than the general population, succession planning needs and an increased emphasis on non-traditional skills – see the CBA Futures Report for a more fulsome list) that make the traditional practice model difficult (impossible?) to sustain.
While I don’t think ABS is the magic bullet, it is one of many options that the profession should be actively pursuing to get ahead of these trends. With the ABS risks so thoroughly identified by those against ABS, the proponents for ABS should be well armed to plan and introduce an ABS framework that anticipates and mitigates those risks. An essential step in project and change management.
Whether it be ABS, AFA’s or some other approach, change is desperately needed in order for the legal profession to better align itself to serving the needs of clients (from commercial to constitutional) while providing lawyers with a reasonable living. There are no easy answers. Change is difficult. Change is also inevitable, even if lawyers do nothing, because everything around the profession is rapidly, constantly changing.
Kudos to anyone suggesting and actively pursuing (on a micro or macro scale) tangible solutions or alternatives that address any of the issues facing the profession. Let’s focus our problem solving skills and efforts on how to make the suggestions work versus why to dismiss them entirely.
January 7, 2015
Dear Mr. Smith,
I guess I hit quite a nerve. I am actually a gentle soul in my personal life. I am glad you wrote.
GM may have been successful, but it still failed, catastrophically so. It took 12 billion tax dollars to bail them out. What if it had owned the largest law firm (a much larger law firm than our current crop), and the government had not been in a position to bail GM out with our own money? And the list was a partial list.
Yes, there are some lawyers who misappropriate funds. Most of those lawyers are in small firms, but then most lawyers are in small firms. Part of my point is that when it happens in a large entity, and it does happen in large entities, the damage is far greater. ABS will not eliminate defalcations; it will only make the defalcations that do occur vastly more serious. One trader brought down Barings Bank. One man brought down the financial institution in France (the name escapes me at the moment). In each case, one man out of thousands of employees.
By way of understatement, ABS is a very serious matter. If adopted, it is permanent and irreversible. It is not just a sea-change; it is an all seven oceans change. Never in our history has the LSUC ever contemplated selling any molecule of ownership of the legal profession to non-lawyers, let alone huge swathes of it. Why would we? There is no need. We can achieve all of the supposed benefits of ABS without adopting ABS. It took the British hundreds of years to establish the independence of the legal profession. Why would we toss that aside in the span of one or two generations for any reason?
Those opposed to ABS are told that our objections are based on suppositions and conjecture, that we are behind the times, that all will be well. Trouble is, if ABS turns out to have been a mistake, we will be stuck with it for all time. It is really the supporters who are engaged in conjecture. They say we have ten years’ experience, mostly in Australia, with it. I say we have several centuries’ experience without it. The only reason we are even contemplating it is because we have “to do something” about access to justice. There is plenty we could do to enhance access to justice, but ABS is not even in the conversation if we are truly serious about addressing the real barriers to access to justice.
And why can’t we sit back and cherry-pick any (surprising, long term) benefits that somehow arise out of ABS in those jurisdictions? We are in the cat-bird seat. Why not take advantage of it? We can have it all – the guaranteed independence of the legal profession, the non-cartelization of our ownership, and whatever tweaking benefit that we cautiously and judiciously import. Why not do that?
ABS partly came about in Australia because they had a bad discipline system and the government stepped in to make changes. As so often happens, the changes went too far. In England, it was because the law society was seen as having forgotten its role as advocate for the public and having preferred its role as advocate for the profession. In Ontario, the first role is performed by the LSUC, and the second by the CBA. We already have a salutary dichotomy. In England, to address a problem they had but we do not have, the government stepped in to make changes, and again went too far. We have neither the Australian nor the English problem in Ontario, so we do not need their fix. Note that, even in Canada, the CBA can misapprehend what is good for the profession. A faction in the CBA supports ABS, but others do not.
I say that ABS will lead to anti-competitive corporate concentration – cartelization. That is already happening. It is candidly admitted by people in the, shall we say, vanguard of ABS in the UK. Quality Solicitors swallowed up 400 small firms but did not appreciably increase the amount of solicitors’ work that is done. They just moved the work from independent lawyers into the maw of a corporate Godzilla. In Australia, the cartelization is apparent to see when a firm like Slater and Gordon can balloon up to a huge, one firm, market share. Perhaps cartelization will not result in immediate harm to the public, but it is sure to in the longer term. I provide examples. One is the title insurance industry in the US that essentially took over conveyancing from lawyers, driving up the cost to the American public. Another is the real estate agency world that still drives a commission market of 5% compared to 1.5% in non-cartelized Scotland. Another is our cablevision market. It has so few competitors that Rogers has no problem increasing their rate this year by 6+% in an era of 1% inflation. No-one addresses those examples. Instead, we are told that cartelization or its ill effects will not happen in the legal services market. Why would it not, I ask? No reply. I ask why do we not listen to the English ABS types who happily admit it is happening and who are happily working to bring about more of it? No reply.
I listed an incomplete list of giant corporations that have gone under. When a lawyer in a small firm goes bad, it is a manageable problem. Even when, once a generation or more, a firm like Heenan Blaikie implodes, it is still manageable (and in their case there was no defalcation – they imploded for other reasons). But even Canada’s largest law firms are pipsqueaks compared to the companies that would buy them, and if one of those companies goes under, the fallout will be far more serious and damaging.
Part of the stability and success of the legal profession is our non-reliance on a handful of giant entities. Yes, we have 30 large firms (not a bad number considering the entire Ontario legal market is the size of Los Angeles’s), but the overwhelming majority of firms consist of 1 to 5 lawyers, and if some of them close for bad reasons (as opposed to a sole practitioner simply retiring), then the fallout is nothing by comparison. I point out that until Arthur Andersen died, there were five major accounting firms. Five were too few, now there are only four. The Economist points out that four is so few that even when one of them engages in highly questionable, even criminal, behaviour, the government cannot afford the fall-out of shutting them down or to take them to court beyond fining them amounts that, for them, are relative pittances.
My own accountant says that we would have to be nuts to let the Big Four accounting firms own law firms. So does my dentist. So do lots and lots of people who need the services of lawyers.
Small entities equal small problems. Big entities equal big problems. Big entities equal inevitable cartelization. Cartels routinely lead to anti-competitive behaviour. Please address those issues.
I would bet you that the total cost of the higher costs of legal services brought about by cartelization plus the costs of dealing with giant firm financial defalcations would dwarf the
total cost of the small firm misappropriations that happen in our non-ABS world. An ABS supporter would say, let’s try ABS and see if you’re right. But when I am later proven right, it would be impossible to unscramble the egg of ABS. That is not a risk we should impose on the public just because some people want to put their spouses on the firm’s revenue distribution list.
I also point out that we can reward our non-lawyer staff with bonuses based on their own performance or that of the firm or both, and that we do not need to make them owners to do so. No-one addresses that point.
I say that outside ownership will lead inevitably to a lowering of our ethics, if not in the current generation who will carry on out of habit, then in the next generation when that generation grows up knowing no other system. I give examples of generational changes due to changed environments. No-one addresses that. They just hope that it won’t happen (but human nature and experience say that it will). Further, by the time the change were to become manifest, ABS would be so entrenched as to be utterly immoveable. ABS supporters don’t want to address that. If ABS turns out to be a mistake, it can never be corrected. No government is going to force Deloittes, PcW, E&Y or KPMG to sell off their giant law firms after they have spent a ton of money acquiring them. They will only sell them off if they turn out to be bad investments. How is that good for the legal profession and the public?
If we are beholden to non-lawyer owners, how can we withstand attacks from those who wish to deprive us of our part privilege and part right of self-governance and say with a straight face that our only loyalty is to our clients? That we are wholly independent of any considerations other than those of the clients, the courts, the overhead of one’s own law firm, and the integrity of the profession? We simply cannot, at least not over time. People forget that lawyers are just about the only group who must, by law, act only in the best interests of their clients, not in our own interests, and that, by law, publically traded corporations (the ones we are mostly talking about) must act in the best interests of their shareholders. When the interests of the shareholders of the corporate owner and the interests of the lawyers’ clients diverge as they surely frequently must, what then? Why would we compromise our role in society in that fashion? ABS supporters say that we will put in rules to prevent the paymasters from imposing their duty to their shareholders on us, and that they will buy law firms knowing that up front. Piffle. Money is too powerful.
Many people think the bank is their friend. Hardly. As Walter Gordon said, the bank is not your buddy. The bank is in business for the bank, quite properly I might add, not the client. Do we want banks to take from small firm lawyers the responsibility for drafting wills? The banks will loss-leader the will (a “loss” of $200) in exchange for being named estate trustee (a gain of 5% of the value of the estate – $5,000 for every hundred thousand). Is the public better off in that scenario? Definitely not.
Are you aware that bank staff are given targets to hit and bonuses for hitting them for such things as selling their lousy mortgage life insurance, possibly the worst life insurance “deal” out there? Do you not realize that bank staff would also be given incentives for the number of wills customers they talk into naming the bank as estate trustee? We lawyers typically agree to serve as estate trustee only as a last resort, and even then, we do not get an immediate bonus if the client does name us. We have to outlive the client before we would earn a dime out of doing any estate trustee work.
My wills are well-drafted, and almost all of them feature trusted family members as estate trustees. Often the family member does not even charge, or they charge far less than the 5%. Even if they do charge the full 5% (and they have to earn it), at least the money is circulating in the deceased’s family, and not goosing the bottom line of a bank that is already worth 50 to 90 billion dollars.
Returning to giant entities owning legal service delivery, the UK has had it only for two years. In that time, Quindells, an early ABS, has seen its formerly large market value plummet precipitously, Co-op has been bleeding star directors, Tesco has been described by Warren Buffet as a huge mistake of an investment. How is that good for public confidence in the profession? Experts from the UK say that the main benefit to be discerned so far is that ABS allows access to capital to fund consolidations in the legal marketplace (!) and that it is still too early to tell whether the public will ever see the benefits claimed. No-one addresses that.
A Harvard professor writes a thoughtful paper warning of the issues that arise under ABS. The content of his paper is unaddressed; instead the criticism that is levelled is that his paper should not be called a Harvard study. The ABA has rejected ABS. No-one addresses why. Various Canadian legal groups have come out against ABS but the criticism levelled against them is that they are fear-mongers. Why? For wanting to protect the public interest against a legal services environment that will feature yet another level of expensive overhead to deal with? Owners who will be motivated by a corporate bottom line far more than most law firms are? Sure, big law firms are highly profit motivated, and they work their associates and junior partners to the bone (most of the senior partners continue to work hard too, but, truth be told, some do not – they don’t have to, and good for them). I know a lawyer who worked for a giant law firm in New York who worked six days a week on four hours sleep a night to meet the crushing billing targets imposed on him before he finally burned out or wised up and returned to Toronto. But that, even in Toronto, is mainly the culture of big firms. Those of us in small firms just do the work that comes in (it still involves long hours), pay our modest overheads, and take home the rest. Our clients hugely benefit from the fact that we do not have to cover multiple overheads (remote head offices, dividends to venture capitalists). We only have to please our clients, whom we treat as the life-blood they are; we do not have to please a compensation committee made up of senior lawyers many of whom do not even know the faces to the names of many of their associates.
There is legal work that is best handled in a big firm. We need them. Good for the big firm model. It works for them and their clients, most of whom are large companies who can write off every dime of the legal bill. But that model does not work for the vast majority of individual clients, so why would we want to bring in a corporate model to serve them? Such a model will only drive up prices to them. Address that. Address how it can possibly benefit the average individual client when, instead of dealing with a lawyer whose entire loyalty is to him or her, they will be forced to deal with a lawyer working in one of a handful of giant franchise operations whose loyalty is divided between the client and the compensation committee? and whose mandate is to hit a billing target set by a committee in another city?
I dislike billing targets. It is one reason I have not accepted invitations to join large firms in Ottawa. Billing targets distort how you handle the file. Too often, hitting the target becomes the most important consideration, not the best interest of the client. The vast majority of individual members of the public are better off with 10,000 small independent law firms than they will ever be in a system that features 7 to 10 behemoths (see the real estate agency cartel) or even just 4 behemoths (see the US title insurance industry cartel). Address that.
History contains many examples of changes fought by many people who were later proven wrong. But history is also littered with examples of people who fought changes and were later proven right to have fought them. ABS is of the latter type.
Prohibition, the Volstead Act, seemed like a good idea to a lot of bright, highly respected and influential people at the time. The sponsor of the Act said that ever repealing the Act was as likely as a hummingbird hauling an elephant to Mars. (He was an inspired metaphorician but a lousy prognosticator.) And how did that Act turn out? It created out of nothing organized crime, which plagues us to this day even though the unrepealable Volstead Act lasted what? ten years? Have we learned from the mistake of prohibition? The illegal drug trade screams that we have not, although that may now be, slowly and decades late, changing. Illegal drug use is an illness and should be treated as such. We would have far fewer deaths and burglaries as a result.
I say any document that would bring ABS into Ontario would a terrible document and the saddest moment in the history of the Law Society of Upper Canada. I call it lazy because we can address the problems of access to justice far more effectively if we apply our talents, energies and wisdom to doing so. I call it puny because it would start the undoing of centuries of hard-won, wholly uncompromised independence. I call it myopic because it would fail to address generational shifts in attitudes. I call it cowardly because I am fed up to my teeth having to fight it when there so many better things that I and my fellow benchers could be spending our time on. Maybe ‘cowardly’ was a bit strong, but there we are. ‘Bootlicks to big business’ was just as bad, but it is deeply disappointing, to put it mildly, to have a non-real estate lawyer say that real estate lawyers are ‘mere technicians’, to have the cost of wills (!) repeatedly used as an example of a barrier to access to justice when the litigator saying it has nothing at all to say about the ruinously high cost of litigation, to have the Law Society spend all this time and effort on ABS while spending comparatively little time on investigating how to realistically reduce the cost of litigation. But I can say and mean it that such words as cowardly and bootlicks raise dander not discourse.
Note that we are not doing nothing about access to justice. We are looking at ways to help better educate the public, to instill in law students a greater sense of altruism, and to assist in evolving better ways for our First Nations people to resolve disputes outside the court system. I welcome all these worthwhile initiatives. The first is helpful and easily doable, the second is nice but will not have much of an impact in the real world, and the third is dear to my heart. But they do not touch on the issue that dwarfs all other issues, namely, the cost of litigation for the vast majority of litigants. As for altruism in our students, that will last right up until they have to (a) start paying their $70,000 student loans, and (b) start billing enough to meet the targets imposed on them, directly or indirectly, by the non-lawyer speculators.
The obvious real beneficiaries are the giant entities that would swallow up the wide swathes of the legal profession. Why would they bother unless they could make a pile of money at it? And who will supply that money? The public of course.
Why is US health care so incredibly expensive? Could it have something to do with the fact that the primary drivers are the huge HMOs? The CEOs of the HMOs make a lot more than the vast majority of the doctors.
And you should know that, with a mere two exceptions out of the 140 or so benchers I have had the privilege to serve with, I hold my fellow benchers in the highest esteem. They are a truly great group to know and hobnob with, and the last 20 years have been the best 20 years of my life partly because of the friendships I have made with so many of them and the work we have done together. Even benchers with whom I have strongly disagreed on some policy matters remain among the lawyers to whom I would refer my precious clients. I have encouraged numerous good people to run for bencher over the years, including ones with whom I would then be in a kind of competition with come election time, because (a) I thought they could make a fine contribution and (b) I thought they would benefit personally from it. It is a great thing to do.
But I do not want these great people, my friends and colleagues, to go down in history as the benchers who brought the ABS virus to Ontario. I want them to be remembered as the benchers:
who stood up to the siren song of big money,
who, in some cases, are able to say that they were initially intrigued by ABS but, based on more information and time to ruminate, are now opposed,
who looked far enough into the future and applied common knowledge of human nature and the power of money to see the dangers,
who put the long-term interest of the public ahead of short-term quicky fixes to non-problems,
who set up effective committees to streamline and improve how real estate law is conducted (it would not take much as we are highly efficient already given how ferociously competitive real estate law is),
who set up effective committees to work with the government to streamline the litigation process so that the time involved was greatly truncated, saving the clients and the government immeasurable amounts of money, and saving the clients immeasurable amounts of family stress and drops in workplace productivity caused by suffering through the three-year litigation nightmare,
who, as a result of the streamlining, made litigation services affordable so that great numbers of heretofore self-represented litigants could afford the services of highly trained legal dispute resolution advisors each of whom had enough clients so that they were not compelled to bring stupid cases or drag out both good and stupid cases just to make a living,
who worked to reduce the reliance on billing targets,
etc. etc. etc.
Will you help me work toward some or all of those goals?
Btw, flat fees are trumpeted as a way of reducing costs to the public. Lawyers who do real estate, wills, powers of attorneys, and small business incorporations, have been doing 99% of that work on a flat fee basis for decades. It is not new to us.
Unfortunately, flat fees in litigation are quite problematic. What happens when one litigant has deep pockets and the other does not? The lawyer acting for the poorer client is run out of the flat fee and thereafter either has to work for nothing (and human nature dictates that the lawyer’s desire to work on the file will drop), convince his client to take a poor settlement, or require another flat fee. Often the flat fees are highly qualified, giving the lawyer various ways to require yet more retainer money when the initial fee is close to being used up. What is an hourly rate anyway? It is a flat fee for an hour’s worth of advice and work. Flat fees are too often just a gimmick. Better to eliminate litigation stages to reduce the scope for billing skullduggery.
I do almost no work on an hourly billing basis, but that is due to the nature of a small firm solicitor practice. Almost all my files have predictable beginnings and ends, except for a few unexpectedly onerous real estate deals. And even on those, my fee rises only by one (usually) to a few (rarely) hundred dollars, not by the thousands and tens of thousands by which litigation fees rise if the litigation file proves to be more time-consuming than originally thought. Litigation is far more unpredictable, especially if the lawyer on the other side is a lawyer who is starving and desperate or has a whopping billing target to hit.
Given the pressures of the system, it is amazing that there are still so many terrific barristers out there who truly do great work for their clients and who truly do try to contain costs. But, thanks to the incredible intake and output rates of the law schools, that is changing for the worse. As we approach the number of lawyers per capita that exists in the US, we will approach their disaster of a litigation system. We are not better people than Americans. We have simply benefitted from a better system – a system that many people are trying to harm. Of course they do not realize they are harming it – they are good people convinced they are doing the right thing – but the proof is in the American pudding. We have been given examples of what not to copy. Sometimes we have copied errors anyway; sometimes not. Let us please, please, please not copy the Blunder of the Century – ABS.
There are a lot of Bob Smiths. Which one are you? What is your practice background? If you are in eastern Ontario or Toronto, I would be happy to treat you to lunch.
You didn’t touch a nerve, you were simply making statements that were simply silly and unbefitting a bencher of the Law Society of Upper Canada (or, perhaps, if befitting a bencher of the Law Society of Upper Canada, indicative of desperate need for reform of that institution).
I’m not going to respond to the entirety of your long-winded rant, much of which bears no obvious relationship to the question at issue, but I will address your specific comment about the “Harvard” study. I note that while you cite the “Harvard” study, you don’t appear to have read it all that carefully. More’s the pity.
First, had you read the Harvard study carefully, you wouldn’t be making the claim that ABS leads to cartelization, as the evidence in the Harvard study squarely rejects that claim. It notes that in the UK, even in fields where ABS modelled firms have been most successful (personal injury) there are 102 ABS modelled firms in that sector, and they only account for a third of the market share. I don’t know what you think a “cartel” is, but an industry where over 100 players account for a third of the market is not a “cartel” is any objective sense of the word.
Likewise, the Harvard study’s review of the longer-term Australian experience does not support the claim of cartelization. Although two of the three largest players in the personal injury space are ABS modelled firms, the the third is not, and those 3 players only account for 40-45% of the market. Moreover, the Harvard study notes that concentation in that sector was occuring prior to the the introduction of ABS (i.e., Slater Gordon had been expanding rapidly prior to becoming listed), and is, in part, a function of the Australian regulatory regime which prohibits contingency fee arrangements and, in some states, limits or prohibits “uplift” fee arrangements, given a competitive edge to firms with deeper capital pools. In addition, the recent prohibition on advertising has given an edge to established “brands” (like Slater Gordon). If anything, the Australian example suggests that better (and less) regulation by legal regulatory bodies might be a better way to address concentration.
Second, far from being a damning critique of ABS (it actually notes that the claims by both proponents and opponents of ABS are overblown – a point you clearly missed), it merely concludes that in one particular respect ABS has not, at least as yet, achieved one of the possible benfits that some of its proponents have claimed- namely increased accessibility for civil litigation services for lower and middle-income legal consumers. That’s a pretty modest conclusion, not a basis for rejecting ABS in its entirety (especially given that, in the case of the UK, ABS has only been in place for a short period of time).
Mind you, it doesn’t surprise me that the Harvard study concludes that ABS hasn’t increased access to lower- or middle-class. The problem with access to justice is a function of the existing regulatory framework, which ABS doesn’t change – namely that legal services must be provided by lawyers who, in order to become lawyers, must be highly skilled people (in order to jump through the hoops to become lawyers), and who typically have high reservation wages (i.e., they don’t need to be lawyers, they could get good jobs in other fields). In other words, the regulatory regime in Canada, as in Australian and the UK, is that legal services have to be provided by expensive service providers – and people wonder why access to justice is an issue? Introducing ABS might change that at the margin (and I think the Axxess law model, if scaled up, would be a good example on the solicitor side) or through the establishment of captive law firms by charitable or community organizations, but isn’t going to make a huge diffences, especially not on the litigation side.
I can think of other means of achieving that goal – including allowing non-lawyers (including paralegals) to provide more “legal” services (and I note, have the LSUC regulate paralegals is a serious problem in that regard). That, admitedly, will require broader regulatory changes, beyond what the law society can do, but anyone seriously concerned about access to justice should be pushing for those changes. I note that in many areas, we’re already seen that sort of change where services which were formally done by lawyers (or articling students) have been outsourced (notably, document review) as a way for driving down costs for clients.
But saying that ABS isn’t a panacea in that respect, isn’t much a criticism of ABS. Just because it isn’t a cure-all doesn’t mean it’s not worth doing. I have no trouble envisioning ABS being able to provide better services at better prices in many areas of the law. Take my practice. I’m a tax lawyer at a big law firm. My clients would be better served if we could provide them with integrated legal and accounting and tax services (or other business related services, such as valuation). There are some things that accountants can do better and cheaper than I can, others that I can do better and cheaper than they can. Certaintly, we would provide our clients with better services if I could go down the hall to talk to them, rather than having to call someone at another firm. This might not neccesarily be better for me personally, but my self-interest shouldn’t be what drives our regulatory regime.
Moreover, that example isn’t merely hypothetical, we see the big accounting firms offering precisely those sorts of integrated tax (and other) services through captive law firms (consider KPMG Law, which provide tax and immigration legal advice to KPMG’s clients). Indeed, ironically, given your fixation over “cartelization”, the current regulatory regime gives the big four accounting firms an advantage in that respect, since only they have the economies of scale sufficient to implement the complicated structures neccesary to comply with the existing regulatory regime while still providing their clients integrated services (the same might be said of the multinational law firms such as Dentons and Norton Rose, providing integrated multi-national legal services). Our current regime makes it easier for big firms to provide the sorts of services that clients want.
All of which is to say, if you would refrain from lengthy rants about AIG, prohibition (?) and the Magna Carta (in the process confirming Mitch’s thesis that many of the anti-ABS arguments are not based on fact) and conducted a real critical examination of the evidence about ABS, the LSUC and the people of Ontario would be much better served.
Thank you for your thoughtful piece. Yes, there are problems in the current delivery of legal services, but they are on the litigation side of the profession. We do not need ABS to deliver low-cost, high-quality conveyancing services. We have that already in a highly competitive market. ABS would worsen that – see the US experience. We do not need ABS to deliver low-cost, well-drafted wills and powers of attorney. We have that already in a highly competitive market. ABS would worsen that market – extrapolate from the US conveyancing market and see how the banks took refinance work from us by giving FCT an unfair subsidy by doing 80% of the work for FCT while refusing to do 80% of the work for us lawyers. I believe they took the refi work from us and made it virtually impossible for us to compete (it is almost impossible to compete against an 80% subsidy) so that they could sell more mortgage life insurance.
The real problem is on the litigation side. That is where we should be focussing our talents and energies. I am sometimes criticized because I want to save the independent small-firm solicitor bar because I am in it. But when I criticize the litigation bar for, so far, not being particularly interested in doing something about the real problem, I am criticized ever more.
I love barristers. Imagine society without them. Near anarchy. Most of them do great work in a very tough environment. The problems in their environment are mainly two-fold. (1) There are too many steps between drafting the pleadings and resolving the dispute. The steps invite delays, they invite spending as much time on the file as the client can bear, but the extra steps do not really lead to better and earlier settlements or court decisions (in a better system, the information leading to the settlement could have been found and applied earlier). (2) With the prodigious increase in the number of students being admitted to the law schools, several of whom have increased in size including Ottawa which more than doubled in size and it was already the second largest school in Ontario, we have seen a great increase in the number of lawyers doing litigation per capita. Each of them now a smaller client base from whom to derive their livings. And the problem is worsening every year. This is not healthy for the public. It is one the main causes, if not the main cause, for the tort morass in the US. (Another major cause is their systemic failure to have at least part of the costs follow the event. Another is the lack of a cap on pain and suffering damages. In Canada, we have been able to temper the harms of those latter two causes.)
I sympathize with barristers who worry that, for example, dropping the mediation and pre-trial stages would cost them too much, but with the tens of thousands of self-represented litigants out there, it should be possible, if we can cut in half the cost of a typical file, for perhaps twice as many people to then be able to retain a lawyer. We would have to calibrate this carefully, but it is doable.
Improving the litigation system, i.e., lowering the cost per file, is something that can be achieved without selling ownership of the profession. Any perceived benefits of ABS are more than offset by the twin harms of loss of independence and cartelization, and in any event are achievable without ABS. Yes, we can do better without it, and we should be applying our talents to doing it.
Yes, the world is changing around us, but we are changing too. The profession is highly computerized and keen for more. The profession is widely accessible through social media, and that is expanding all the time. Without ABS, we have firms in grocery-department stores. They admittedly only want to do “simple“ stuff (they are in for a surprise), but they are there, and they did not need to sell a large equity stake in the firm to do it.
It is said that some clients would like to visit their lawyer and their accountant at the same time. Perhaps, but that is not a good enough reason to allow behemoth accounting firms to own half of a large law firm. They still will not be in the same office space until the two leases expire and at least one of them relocates. If it is that important, let the relocation occur but do not sell the law firm to them. Big Papa Chartered Accountants can take the 45th floor and Big Mama LLP can take the 46th floor, and the lawyers maintain the wholly uncompromised independence. In my business practice (32 years), I have never had a client complain that they had to see me and see the accountant at different times.
Thank you for you contributions.
Dear Mr. Smith,
In the light of the following day, I accept some of your scathing remarks toward me. In my mind, it was clear the words `puny carta` and so on were referring to the document that would allow ABS (and I used the word `document`), not to the people behind it. They are well-intentioned people in almost every case and in almost every regard. Indeed, one of them is the third most important man in my life and has earned from me by long association quite literally the highest regard of which I am capable. But I accept that the subtlety that was in my mind was not apparent from the words on the page. That is my fault, not yours. My further intent was predicting the judgement of historians as it would apply – to the document – from a perspective 30 or more years from now. Again, the failure to make that clear is my bumbling fault, not yours.
Let us assume that my incompetent writing has left me permanently diminished in your eyes. Consider how easy it was for me to diminish myself in your eyes. All it took was a few sentences in a lifetime of writing. Now consider how easy it can be to diminish the entire legal profession. All it would take is one irreversible bad decision featuring untetherable ripples. I am so worried about that happening that it has disrupted my sleep patterns and even my health for over a year now.
Let me briefly return to the Volstead Act. Every single backer of that Act truly believed they were doing the right thing. They were undeflectably convinced that they were saving their citizens from evil. After the Act passed, they all slept the sleep of the angels. Instead, they delivered their citizens into the seemingly permanent evil of organized crime, still with us today, even though the Act was later repealed.
Governance decisions are fraught with unintended consequences. Something as vital, fragile and precious as the independence of the legal profession simply cannot be risked on an altar of short-term or hoped for benefits.
Feel free to dismiss me as someone capable of producing nitwit sentences. In the scheme of things, I am as inconsequential as an amoeba`s wink. But please do not allow a few sentences to deflect you from a due consideration of the very sound arguments against ABS.
My offer for lunch stands.
According to the OTLA submission to the Law Society, “Representatives of OTLA’s Board has met with Andrew Grech, the managing director of Slater & Gordon, and other lawyers familiar with the
ABS issue in Australia, the UK and the United States.” Here is the shortened URL: http://ow.ly/H0OQq
I believe most OTLA members operate on the no-win, no-fee model. Indeed, the law firms finance disbursements such as medical reports and discovery expenses. This is not pro-bono, but there is no economic barrier per se to clients getting representation. Their argument, as I understand it, is that the onus is on proponents of changes to the current law firm ownership model to demonstrate the public benefit. OTLA is also restricting its submission to that of its membership, i.e. a significant retail sector of the legal services market.
As a board member of Canadian Defence Lawyers (OTLA’s counterpart on the insurance and corporate defence side), I am interested in this issue and do find OTLA’s analysis to be thoughtful.
An elephant in the OTLA room is the existence already of market convergences which, through alliances and marketing, already funnel a large proportion of personal injury claims into a handful of firms based in Toronto. This has not helped the succession planning of the regional and small-town practitioners, whose median age is approaching the standard retirement age and who have traditionally helped local citizens with their MVA and other accident cases. Ontarians need those small, independent firms because there are a lot of people who won’t pick up the phone to call a Toronto or Ottawa lawyer for advice on bringing an action.
From the defence perspective, I wonder how my practice and ethical obligations would be affected in a transition from a partner in an independent law firm to a middle-manager of a firm owned by an insurance company or claims adjusting firm in a vertically-integrated claims market. My knowledge of that labour market is that there is a huge amount of turnover, command management and employee stress.
OTLA has asked the wrong question. The test is not to demand that public benefit be shown – which Salvos Legal clearly passes – but to show that a new model (which not everyone will use) demonstrably creates more risk to the public than the current model. And we know all too well that the current model creates risk to the public interest.
Turnover, command manager and employee stress need to be proven. And if they are, the question is, how is that different from current law firm models where suicide is the 3rd leading cause of death and depression is commonplace? Next question is, where does turnover, command manager and employee stress fit with the role of the Law Society under the Law Society of Act?
You may wonder all you want about supposed practice and ethical issues, but until you provide some evidence from the UK and Australia, your wondering does not constructively further the discussion.
Again, you make an emotional argument, rather than one steeped in evidence, logic and reason.
Mitch, with respect, it is you who has got the onus backward. It is not the case that those opposed to ABS have to show that an ABS model demonstrably creates more risk to the public. Rather, it is you, the supporters of ABS, who have to show that an ABS model will demonstrably create less risk to the public. You have to show that changing the current model will not worsen the situation; otherwise, there is no point in making the change.
There are three possible outcomes of adopting ABS. Change for the worse, the status quo, and change for the better. In only one of those three is ABS beneficial. You have to show that the last outcome is virtually guaranteed to happen, because the profession and the public cannot take the risk that the first outcome will happen and because there is no point to this exercise if the middle outcome happens. By status quo, I do not mean the same way of practising as we do now. I mean no net benefit to the public. And in terms of how we practise now, we are in constant flux as it is. We always are. The profession has always happily and willingly adopted and adapted technological and other improvements as needed and as they arise. Teraview and social media are but two examples. We do not need ABS to continue to do that.
If you want to make an irreversible change that can never be undone, that is already showing clear signs of anti-competitive cartelization, that features players who candidly admit, in effect, that further cartelization is exactly what they are continuing to aim for, that currently features several ABS entities going through very rough times (e.g., Quindells), that is guaranteed to harm our professional ethics over time whether you want to believe or not, then it is up to you to demonstrate that the public and the profession will not be harmed. The onus is squarely on you and the other ABS pushers. So far, you have failed. Miserably.
You and I agree that there are problems with delivering certain legal services to the public. I say that they are, overwhelmingly, on the litigation side of the bar. I say that numerous salutary changes can be made to the delivery of litigation services. I say that the benefits can be achieved without selling ownership of the legal profession. You have to show why those benefits cannot be achieved without ABS, and I say you just cannot do it. Frankly, and with respect, I wonder if that is a reason why you do not address the real criticisms levelled against ABS; instead, you accuse us of fear mongering, engaging in conjecture, trying to reverse the onus, and so on. You criticize us for how we label a Harvard professor’s study without addressing the contents of the study, and so on.
If you want to make gargantuan changes to a profession that has served the public extraordinarily well at, except for the cost of litigation, fair cost for decades, then you need to prove that the changes will be beneficial, and to do that you have to overcome numerous examples of where ABS or ABS-like scenarios have done nothing but harm and hose the public (e.g., US title insurers taking conveyancing away from lawyers). So far, you have not even addressed it.
Once again you use the example of Salvos law. I have pointed out to you that the benefits of such an entity can be achieved without resorting to ABS, for example, by having the Salvation Army fund more LPP students in poverty law clinics or by donating to law firms willing to apply the donations to the purposes and at the rates specified by the Sally Ann but where the Sally Ann does not own the firm thereby opening the door to other less altruistic owners dictating bottom line considerations to their sudden employees. You have not responded to any of that.
You say that turnover, command management, and employee stress have to be proven. My understanding is that is no shortage of evidence proving it. People in that field say so and that is more evidence than either you or I have, one way or the other, but since they are there in the trenches, I value what they say.
Furthermore, there are many studies that show employees suffer from stress far more than owners because employees lack the level of control that owners have. Your ABS world would turn thousands of independent owner-lawyers into employees of large companies where remote people in remote head offices will dictate to you what you have to bill to hit their targets, your quality of life and the best interests of the company’s clients be damned. That is a recipe for far more stress, suicide attempts, and hospitalizations than we currently have. How could you be so cruel?
What is the Law Society’s role in this, you ask? The role is to govern the profession in the best interests of the public. Keeping the number of stressed out employees of remote bean counters to a low and manageable number is one way to do that; i.e., keeping the number of independent lawyers as high as possible. The role is to deny non-lawyers and greedy lawyers the opportunity to bring about the anti-competitive cartelization of legal service delivery. The role is to be deaf to the entreaties of people whose desire for ABS is driven by questionable motives, naked profiteering motives, failed arguments, wishful thinking, attempts to reverse the onus because the supporters cannot meet their own, desires to put the spouse and kids on the revenue stream at the cost of the broader tax base (certainly not a move in the public interest, but then none of the ABS moves is), the puzzling refusal to accept that staff can be rewarded with bonuses without selling ownership, and many other silly and illogical arguments. The Law Society needs to be far-sighted, not myopic; anti-cartelization, not pro; ferociously on guard against any incursions and Trojan horses that would damage our ethics and our abilities to deliver low-cost solicitor services; and fervently seeking improvements to the delivery of litigation services to bring down the costs thereof. The Law Society can, indeed must if it is to properly fulfill its mandate, fulfill these roles without allowing the profession to sell itself out to the highest non-lawyer bidders.
Another aspect that I have mentioned before that ABS supporters do not address is (1) the fact that Australia’s legal profession fumbled the handling of discipline cases, causing the government to step in and make changes and (2) the fact that England’s law society fumbled the division of governing in the public interest and advocating in the profession’s interest, causing the government to step in and implement a report prepared by an accountant. In each case and in accordance with both human nature and government tendencies in general, the governments went too far. ABS came about there because of problems we do not have.
If you want another example of governmental over-reaching, read the Sarbanes-Oxley materials. They exceed 7,000 pages. It would have been better if the US government had simply sent the financial institutions the following one-page letter:
Dear Financial Institutions,
We require that you and your management and employees behave in a wholly honest and ethical manner at all times in all your endeavours. We will conduct a sufficient number of audits and other examinations to ensure that you are meeting this requirement. We will punish you severely, including your management, if you are not. Thank you.
The Government of the United States of America.
But I digress.
It is increasingly evident that ABS is a bad and bogus policy. Go ahead, call me, Lee and the many others who have deep and sincere concerns about ABS emotional, but please delay doing so until you have addressed the many, many compelling points that militate against the irreversible blunder of ABS. Explain why we absolutely have to have ABS in order to engender benefits. Explain why these benefits simply cannot under any circumstances be achieved without resorting to ABS.
Thank you for sharing your thoughts on my comment. With respect, I strongly disagree that the issues concerning client discontent and access to justice lie within the litigation element of our profession alone.
These issues lie within every aspect of our profession – as evidenced by:
(i) BMO reducing its roster of firms from about 800 to 200 with further reductions planned;
(ii) the clients of seven sister firms hiring me to help them get control over their legal spend and forge stronger and more value based relationships with their firms;
(iii) the many small and mid-sized businesses who hire accountants to do all of their tax and structuring work because it is cheaper than dealing with lawyers;
(iv) firms hiring me to help them figure out how to budget, set and meet client expectations without losing money;
(v) “clients” who never become clients at all as they do their own legal work based on precedents that friends share with them;
(vi) the various forms of outsourcing that are now prevalent (from offices in India to Tory’s office in Halifax);
(vii) clients hiring me to figure out how to increase internal capacity without increasing headcount in order to reduce external spend;
(viii) the success of firms like Conduit, SkyLaw and Cognition (to name a few) who are taking new approaches to “big” and “medium law” work;
(ix) the introduction of full time project managers in many firms; and
(x) the number of lawyers throughout the profession who regularly don’t docket chunks of their time in order to avoid unpleasant fee conversations with their clients.
This list goes on. It is perplexing and distressing that you think this is a litigation issue alone.
Your comments remind me of the feedback a participant relayed to me following one of my sessions – “Everything you covered was right on point and I’m sure my partners in the other departments will benefit. I’m good though.” Really? If lawyers are so confident that they are perfect and above improvement why are more and more clients issuing RFP’s and demanding discounts, write-offs, fixed fees etc.?
In the current “post 2008 reset” environment (which is not a passing fad) clients need more targeted and cost-effective services from their lawyers than ever before. While clients have some responsibility for the relationship, the onus is on the profession, as the service provider, to show the value of their service to their clients and to make the changes necessary to deliver that value at a reasonable, sustainable price for both the lawyer and the client.
Melissa thank you from bringing up the clients. As any who have done focus groups and met with clients of all shapes and sizes know clients are generally and materially unhappy with many aspects of the delivery of legal services. Clients do not believe that there concerns are being addressed and are looking to alternatives. One thing that is really not coming to the fore in the debate I am afraid is the concept of innovation. It cannot seriously be disputed that innovation in our profession has lagged most if not all professions. Unfortunately without innovation I for one fear that a day of reckoning will befall the profession. Innovators that do exist are crying out for regulatory change to allow them to bring such change. All I can say is that if we don’t heed their voices the result is likely to be much less palatable.
The taxi industry has been a highly regulated industry. Licenses have steadily gone up over many years. I suggest that the taxi experience is little different today than it was 50 years ago. Companies have not innovated. Uber comes along with great technology and better service and disrupts thereby dramatically hurting the cab companies and the value of licenses. The cab companies are crying to the regulators about safety and the public interest albeit without a great deal of empirical evidence to suggest there has been a problem. There certainly has not been a lot of examples of all the accidents involving Uber drivers. The public continues to love Uber (and it isn’t much cheaper). I leave it to others to determine if there is a moral. I can already here the lawyers arguing that we are not taxi owners. No we are not. However the longer we keep distinguishing ourselves as special from every other so called “non-lawyer” the more Rome burns and we fiddle.
Is Uber a good example? See Ellen Huet, “What Happens To Uber Drivers And Other Sharing Economy Workers Injured On The Job?” Forbes, January 6, 2015, online:
The problem with access to justice is indeed overwhelmingly on the litigation side. Yes, people will complain about the cost of any legal service, but there is a whopping difference between complaining about the cost of a will (two months cablevision cost) and complaining about the cost of taking your case to trial (on average, the average Canadian’s entire annual income before tax).
With respect to your comments, I have the following observations.
(i) BMO reducing its roster of firms from about 800 to 200 with further reductions planned;
What do you mean by that? BMO deals with many more than 200 real estate firms if the buyer is getting a BMO mortgage. Where powers of sale are concerned, all the big banks now each use one or two law firms to do them all across Ontario. As a result, the legal costs to the poor homeowner who is losing her house have jumped. A small local law firm can do a power of sale for a fee of $1,500 to $2,000, but the big firms used by the banks are charging very often in the $4,ooo to $5,ooo range and up. One way to bring down the cost of those legal services to the poor sap who has to pay them is to force banks to use small local law firms to handle the powers of sale. Such files do not need the expertise of Megafirm LLP. Big means higher cost, and ABS means even bigger big. Yes it does, if not now then certainly later, in the considered opinions of experts in Aus and the UK who candidly say so.
(ii) the clients of seven sister firms hiring me to help them get control over their legal spend and forge stronger and more value based relationships with their firms;
Are you a lawyer or a management consultant, or a lawyer who is essentially a management consultant? The seven sisters and their 23 siblings who form the 30 largest firms in Ontario are the very law firms that insist on the highest overhead locations in Canada, the plushest offices, etc. etc. The large law firms do charge incredible amounts, but ABS would simply add yet another layer of overhead to cover, namely, the return to the venture capitalists, which overhead will have to come from either the clients or in reduced revenue to the lawyers. It won’t come from efficiencies that only ABS can provide, because there are no efficiencies that only ABS can provide. Nothing stops the big law firms from reducing their rates, and if enough of their clients refuse to pay the higher rates, then it will happen. We don’t need ABS to produce that. If you can help your clients get a better deal from the large firms, then great. We don’t need ABS to produce that. You have been doing it without ABS. If boutique firms are taking clients away from the large firms by, among other things, operating out of cheaper office space, then good for them. They didn’t need ABS for that. If firms are outsourcing research work to India and it works for them and their clients, then good. They didn’t need ABS for that.
(iii) the many small and mid-sized businesses who hire accountants to do all of their tax and structuring work because it is cheaper than dealing with lawyers;
Most tax lawyers are in large firms, charging a lot. Most tax lawyers do more than accountants such as appearing in tax court. Most people and businesses do not need the services of a tax lawyer, which is why there are far fewer tax lawyers than there are accountants. ABS is irrelevant to that. Tax law is so complicated that you are unwise to do it unless you are doing virtually exclusively tax law. I was surrounded by nearby classmates in my tax course at law school who looked to me to translate into understandable terms what the professor had spent the last hour explaining. Yet, I do not touch tax work at all. CRA sends out an Interpretation Bulletin or Information Circular every 5th day of the year. You can only keep up with that by specializing in it. Instead, I send my business clients to either their own accountant if they have one or to my excellent accountant if they don’t. I am rewarded for that mostly by having happy clients and by the referrals that my accountant and his firm send me. We have no self-serving referral scheme set up. We just send the clients. No, I do not want my accountant to have any say whatsoever in how I conduct my law practice, nor do I want to have to worry about any billing target he would impose on me if he invested in my firm and took an ownership interest. If I did receive a referral fee, then the client would be paying me for not working on his file. That, to the client, unproductive payment is similar to the, for the client, unproductive 33% of an associate’s fee that is paid to the senior partners who never even knew the file existed. Some will argue that the referral fee is paid by the accountant, not the client, but that is like saying the buyer doesn’t pay the real estate commission, the seller does. But where did the seller get the money to pay the commission? From the buyer of course.
(iv) firms hiring me to help them figure out how to budget, set and meet client expectations without losing money;
I am glad you are doing that. We don’t need ABS for that.
(v) “clients” who never become clients at all as they do their own legal work based on precedents that friends share with them;
There will always be clients who will do their own work. It is more likely that they got their precedents from websites or kits in pharmacies. That is their prerogative. The most lucrative estates files I ever handle are the ones featuring home-made wills or kit wills because we have to spend time fixing the errors and the omissions. No amount of internet help is going to appreciably diminish the mistakes self-helpers make. Most of them lack even the grammatical skills necessary to avoid ambiguities, let alone the fine judgments they are asked to make (and currently make, if they are wise, after consulting with a lawyer ultimately face-to-face). Those self-help clients are penny-wise and pound-foolish, but there will always be people like that.
You cannot say that the cost of a lawyer-done will is a barrier. It is the best bargain that the public can get from the legal profession. Except for extreme and rare cases, everyone can afford a lawyer-done will. They just have to decide to spend some of their discretionary income on that service instead of spending it on cablevision, alcohol, cigarettes, and whatever else. If they have absolutely no discretionary income, then they may not have any assets and may not need a will. Not everybody does. If they have no income but own a home or other assets, then what you are saying is that we should compromise the independence of the legal profession in order to subsidize a person’s asset wealth. Besides, there is zero guarantee that ABS would ever bring down the cost of wills. They are already dirt cheap from good lawyers and even cheaper from silly, assembly line lawyers. What is more likely to happen is that, with the decimation of small independent law firms in favour of a cartel of large franchises etc., the cost of wills would actually rise. Please do not use Xcess Law in Walmart as an example supporting ABS. Xcess, with its advertised price of a $99 will, was (a) set up without being an ABS, and (b) apparently does not give the client much more than a kit will for that price. Proper wills cost more than $99. Even Xcess knows that. Good grief. If the companies putting out the kits need to charge $40 to $50 just for the kit, what would they charge if they actually had to interact with the client, access capacity, prepare and have sworn the affidavit of the other witness, and do all the other things that we do to ensure that the client is getting what they truly need? Answer: a lot more than small firm lawyers do.
The vast majority of services offered by small solicitor firms are done at prices that reflect a highly competitive marketplace, the reality of overhead (modest in the case of almost all small firms), and the reality that we should take home enough in a year to allow us to retire by an average age of 75 in noticeably less security than an elementary school teacher. This shows that lawyer-done wills are priced right. If anything, given the value for money they represent, they are priced too low, but that is how our highly competitive market works.
(vi) the various forms of outsourcing that are now prevalent (from offices in India to Tory’s office in Halifax);
If outsourcing is beneficial, then good. We don’t need ABS for that.
(vii) clients hiring me to figure out how to increase internal capacity without increasing headcount in order to reduce external spend;
Almost everybody I know does that or applicable versions of that. What has that got to do with ABS? or with compromising the independence of the legal profession?
(viii) the success of firms like Conduit, SkyLaw and Cognition (to name a few) who are taking new approaches to “big” and “medium law” work;
Good for them. They saw opportunities and have taken advantage. Great. They did not need ABS to do it.
(ix) the introduction of full time project managers in many firms; and
If hiring such managers makes economic sense, then go for it. We don’t need ABS for that. Remember, they can be rewarded with bonuses based on performance or outcome. We do not need to sell them ownership and compromise our independence.
(x) the number of lawyers throughout the profession who regularly don’t docket chunks of their time in order to avoid unpleasant fee conversations with their clients.
Lawyers who do not docket or who rarely docket (I am one of the latter) end up billing less than if they had docketed. This has been conclusively demonstrated many times, and it is one reason why large firms insist on meticulous docketing by their lawyers and staff. So if you are saying that ABS would enhance the number of dockets being kept, then that will translate into higher cost to the public. How is that good for the public? But we do not need ABS to generate additional docketing. Every lawyer is free right now to docket every single tenth or less that they spend on the file. What we really should be focusing on is how to reduce the number of dockets litigation lawyers write by truncating the litigation process.
If you are saying that discussing fees with clients is unpleasant, then you do not practice in a small firm solicitor office. There are always the few who complain, but the vast, vast majority of my clients and the clients of lawyers like me are very happy with the cost of our services. Our real estate fees are a tiny fraction of the real estate commission (almost always far less than the HST on the commission, never mind the commission), less than the government costs (land transfer tax + registration costs + search costs), and given that title insurance is essentially useless to the buyer, a far better bargain than the title insurance premium. In all of 2014, I had one person express mild surprise at the cost of the will ($200!!!). She came in to do her will three weeks after she sold her lake-side country home to move into a cheaper city condo with a difference of over $100,000 in her bank account. ABS would not help that situation one iota except to drive up costs as the inevitable result of cartelization.
“This list goes on. It is perplexing and distressing that you think this is a litigation issue alone.”
The reality is that it is overwhelmingly a litigation issue. Barristers frequently say, and they are not kidding, “I cannot afford me”. You never hear a small firm solicitor say that about their own fee structures. What I would like to see, and so would the public, are sincere efforts to do something about the ruinously high cost of litigation, and an end to the campaign to harm the practices of small firm solicitors in the guise of “doing something” about access to justice. Let’s do something truly helpful. Let us not send the fire department to extinguish the candle in the metal pail; let’s send them to douse the conflagration engulfing the ten city blocks down the street.
“Your comments remind me of the feedback a participant relayed to me following one of my sessions – “Everything you covered was right on point and I’m sure my partners in the other departments will benefit. I’m good though.” Really? If lawyers are so confident that they are perfect and above improvement why are more and more clients issuing RFP’s and demanding discounts, write-offs, fixed fees etc.? ”
I do not know any lawyers who think they are perfect and above improvement. To say that is to create a straw man to denigrate. We are not opposed to change. We are opposed to any changes that would compromise our independence (and loss of ownership will do just that), and decimate over time the number and quality of competitors.
The clients demanding the things you cite are demanding them overwhelmingly of lawyers who are not small firm solicitors. Small firm solicitors already do 90% of our work based on up front flat fees and have been for decades. Flat fees are not a new trendy thing for us – they are the reality of long history. I do not give discounts, except to, for example, elderly pensioners who do not have any assets for me to subsidize. Instead, I set my fees in a ferociously competitive market and stick to them so as to treat my clients equally and fairly. In that sense, every client is already receiving a discount because I should be able to charge more. I should be able to charge enough so that I can retire, not at 75, but at 65 like so many of my clients, and in greater security than a finite RRSP, but like so many of my clients who have government-backed, fully indexed, lifetime pensions. For lawyers like me to have what average civil servants have, I would have to charge more per file. But I can’t because of the ferocity of the competition. I am not complaining. If I did not like what I do, I would go and get a teaching or government job. But please do not insinuate to me that lawyers in small solicitor firms are overcharging the public. And do not fall into the disprovable trap of thinking that a cartelization of thousands of small solicitor firms into a few behemoths would either lower costs to the public or enhance incomes to local lawyers.
“In the current “post 2008 reset” environment (which is not a passing fad) clients need more targeted and cost-effective services from their lawyers than ever before. While clients have some responsibility for the relationship, the onus is on the profession, as the service provider, to show the value of their service to their clients and to make the changes necessary to deliver that value at a reasonable, sustainable price for both the lawyer and the client.”
I agree that we need to educate the public on the value of our services. That can be done very effectively at a cost of less than $90 per year per lawyer by the Law Society and it would be among the best $90 lawyers would spend as part of their law society fees. I repeat, however, that small firm solicitor fees are already, demonstrably, well within “reasonable, sustainable price for both the lawyer and the client”. What are not are the prices for litigation and for non-litigation big firm work. Frankly, I do not know why anyone would go to a giant law firm unless they themselves are huge or wealthy enough that cost is of no or little concern. There are excellent lawyers in small firms and, thanks to our far more modest overheads, we are far more affordable. I also do business law. I will give my client a reliable quote. But if it later transpires that the other side is using one of the giant firms, I immediately call my client back and tell them that the quote just doubled because of the prodigious amount of additional time I will be forced to spend on the file. Every small firm business lawyer will tell you the same thing. The lawyer in the big firm will claim that they are just being careful and doing so takes time and time is money, but they do all too often indulge in overkill. I have been practising for 32 years. In all that time, I have never had a business deal go sour because a lawyer wasn’t careful enough, but the deals featuring two small firm lawyers cost the clients far less than the deals featuring a big firm lawyer on the other side. The answer to that is not to reduce the number of independent small firms by having them swallowed up by ABS franchises and the like. We can discuss in depth later what the answers are, but clearly ABS is not it. Briefly, the answer is to educate the public that lawyers in small firms are excellent sources of representation, that it is not the case that all the best lawyers are in big firms, and that clients should shop around and retain the lawyer they think will provide the best combination of work and price. ABS would reduce their choices.
Perhaps you will say that there will still be enough small firms even if some ABS franchises are set up, but you will be wrong. History has shown that big begets bigger. A hundred thousand US real estate lawyers were killed off by the predations of the billion dollar US title insurers. Now the US public has a handful of title insurers to, ahem, choose among, and their conveyancing costs to the US public have soared.
Endemic among the ABS pushers is this notion that somehow lawyers cannot innovate. What nonsense. What total tommyrot. If we can get a competitive advantage over other law firms by adopting or creating innovations, they we do so. We embrace all good ideas. I am far from alone in always being on the lookout for better ways to do things, and for dreaming up some of my own, but I will never swallow the codswallop that we have to compromise our hard-won independence and position in society in order to access some hoped for, dubious innovations that, it is falsely or naively claimed, cannot be achieved except through ABS, especially when the harms of adopting ABS are so obvious and so apparent from the lessons of history, economics, human nature, politics, physics* and philosophy that I sometimes wonder if there is some willful blindness at play. Then I remember that the ABS pushers are mostly true believers, and are just tragically misguided.
*In physics, as in societies, everything defaults to a mean. Overall, we have an above-average legal system. It is a natural process for things that are above average to regress to a mean. If we do not want to regress, then, as with democracy, the price is eternal vigilance. If we adopt ABS – an irreversible turning point, we will have regressed and failed in our responsibility of vigilance. History will then scorn us for our failure. Solicitor services bring the mean up because we offer excellent services at low cost. Barrister services bring the mean down because they offer excellent services at ruinous cost. If we truly want to improve the system, we need to address the main element that is bringing down the mean – the ruinous cost of barrister services.
(I put in the paragraph about physics because I knew that people would wonder why physics was in the list. There are much better arguments militating against ABS to be found in the other disciplines that I listed.)
Please consider your position afresh, and please be careful about mixing the solicitor apples with the barrister oranges. Thanks again for writing.
Brad, the examples I raised were to illustrate that significant change is underway throughout the profession as a result of the fact that clients of all shapes and sizes are unhappy. The unhappiness is most definitely not restricted to litigation.
My comments were also an attempt to elevate the detailed diatribe against ABS structures to a bigger picture consideration of options available to the profession, including but not limited to ABS, for addressing the discontent.
While there are concerns to be aware of when considering ABS, surely lawyers are clever enough to devise a framework to protect against the possible ills that have been identified in order to introduce something innovative that benefits clients and lawyers alike. Surely history doesn’t have to repeat itself and we can learn from our mistakes and improve and introduce something truly helpful.
Given the cost of opening a firm and building a client base, I am sure there are many lawyers who would be interested in hanging up their own shingle with the assistance of an ABS structure – it doesn’t have to be a behemoth shareholder to make this possibility a reality – it could be a collection of individuals who have faith in the lawyer and want some form of security/ownership/return for the risk they are taking by supporting the set-up and initial operating costs of that lawyer. Why should a loan from the bank be the only effective form of financing available to lawyers setting out on their own? How do newly minted lawyers with student loans and no house as collateral get started in a small practice?
I invite you to pull out from your established, successful small firm experience perspective and consider the bigger picture and how to help the grim realities facing many in the profession, at all ages and stages of practice. While I don’t profess to have any answers, I do profess to having an open mind and being willing to explore options and be solution oriented rather than a naysayer.
January 9, 2015
You say that “clients are generally and materially unhappy with many aspects of the delivery of legal services. Clients do not believe that there concerns are being addressed and are looking to alternatives.”
Which clients? I have literally thousands of clients who are very happy with (a) the quality of the legal services I rendered, (b) the fee I charged them, and (c) how I treated them on a personal level. This is a banal boast because it is a boast that literally thousands of lawyers can make. Think about it. If we were not doing good work for fair fees and treating them well, there are scads of competitors who will welcome with open arms any clients who are unhappy with me and the thousands of lawyers like me. In fact, because it is impossible to please everybody, there are a few clients who have dropped me over the 32 years. I had one client who was quite literally prejudiced against me because I was a man. So you see it can happen in reverse. She even candidly told me so. She said it was nothing against me personally but that she had had such a bad experience in her divorce (I was doing her real estate) that she just did not want to deal with men anymore, so she apologized and went to a female lawyer to have her will done. I gave her the names of several female wills lawyers. She had no trouble accessing several lawyers to do her will at competitive and modest rates. But the vast majority of clients of mine and of the lawyers like me are happy and satisfied.
If the members of the public who are being asked these survey questions are fair and informed, they cannot, except exceptionally, be unhappy with the delivery of small-firm solicitor services. Remember also what John Stuart Mill said: “The surest way for a man to feel he is unhappy is to ask him if he is happy”.
Other surveys have routinely produced the following responses: No, I do not like the legal profession. Yes, I do like my own lawyer (I must be a lucky client). Similarly: No I do not like politicians. Yes, I have been very impressed with the ones I have actually met.
Again, the vast majority of complaints over cost have to do with the time and cost of litigation. I have had my account assessed by the master exactly once in my 32 years (I won) and that covers well over 10,000 files. Can litigators make the same boast – one assessment in 10,000 files? (No, and is largely not their fault.) It is the litigation clients who are overwhelmingly looking for alternatives; hence, the explosion in self-represented litigants. Clients who want alternatives to lawyers for wills have numerous cheap options such as kits and assembly line law firms, even though a large number of those clients will discover, or their beneficiaries will discover, that they were penny wise and pound foolish. Further, the savings to such clients (the difference between the cost of a well-done, lawyer-done will and the cost of the kit) is pretty minimal. On the other hand, the difference to clients who represent themselves in a court process and the cost of retaining a lawyer is monumental, even bankruptingly so. Here, too, though, the individual may bitterly rue the day they did not retain a lawyer. But the barrier to retaining a litigation lawyer dwarfs by a factor of 200 to 1, and often far higher, the trumped up, virtually non-existent barrier to retaining a lawyer to prepare a well-done will, handle a real estate deal, incorporate a company and so on.
Squads of ABS supporters routinely fail to differentiate between what are essentially non-barriers on the solicitor side and sky high barriers on the barrister side; yet, it is the solicitor services that are mostly under attack.
You say, “One thing that is really not coming to the fore in the debate I am afraid is the concept of innovation. It cannot seriously be disputed that innovation in our profession has lagged most if not all professions. Unfortunately without innovation I for one fear that a day of reckoning will befall the profession.”
With respect, that is simply not so. Lawyers make amazing use of innovations. Just look at the websites and so on. Just visit the offices featuring the considerable computerization that we have happily adopted and adapted. There are very few industries that are more heavily computerized than ours, and they typically deal with numbers and products, not directly with people where, for an important part of the service, you have to set the computer aside.
You say, “Innovators that do exist are crying out for regulatory change to allow them to bring such change. All I can say is that if we don’t heed their voices the result is likely to be much less palatable.”
If innovators have something worthwhile for the legal profession to buy or adopt, let them sell, lease or licence those innovations to us, just as they have in the past. ESC Corporate Services has been very beneficial, but there is no need for that company to own law firms. Teraview has been very beneficial, but there is no need for Teraview to own law firms. Apple and Microsoft have been phenomenally beneficial to the legal profession, but there is no need for them to own franchises of lawyers. The cell phone industry has been very beneficial, but there is no need for Blackberry, Apple or Samsung to own franchises of law firms. Note that in all those examples, there are far fewer competitors than exist within the legal profession. ESC has one competitor that I know of. Teraview has no competition whatsoever. There are only a handful of computer companies and a handful of cell phone companies. You know the names of practically all of them. Can you name all the law firms in Ontario? Not even 0.1% of them.
There is no case whatsoever to be made that we need to sell ownership of our profession to non-lawyer companies and venturers. What are their “voices” that you speak of? “Let us own you so that we can make money off you, money that will have to come from the public”. Is that the voice you wish to heed?
You say, “The taxi industry has been a highly regulated industry…..”
You later say, “we are not taxi owners”.
Both statements are correct but irrelevant and, therefore, do not advance the discussion. But consider this. One of the biggest problems in the taxi industry is that most of the licenses in any given market are owned by a small number of rather wealthy owners who have structured the taxi industry for their personal benefit with the help, witting or unwitting, of the municipal governments. The taxi industry is another example of a cosy, highly cartelized industry. It already is the structure that ABS supporters want to bring to the legal profession – a much smaller number of much wealthier owners with a badly hollowed out middle. The current taxi structure, imposed on the legal profession, would see the death of thousands of independent law firms in favour of an anti-competitive cartel. Uber is giving choice back to the public. We already offer the choice of thousands and thousands of competitors (there are a thousand law firms in Ottawa alone but only a handful of taxi companies). Why would anyone want to harm that, other than through misguided idealism, a misreading of history, or naked (as in the candid UK ABS types) or hidden (as in some of the Ontario pushers who harbor delusions of Croesus) self-interest?
Our public gets excellent services for almost all their legal needs from both solicitors and barristers. The difference between the two sides of the bar is the cost of accessing them. The public gets very affordable services from solicitors, especially those in the small firms. The two areas where they do not get affordable rates are in their litigation needs and whenever they deal with a large firm for any reason.
ABS would greatly accelerate the consolidation of the legal marketplace and that would be terrible for the public, and us. Remember that the English experts unanimously and candidly advised us that the, ahem, main benefit of ABS is that it provides access to outside capital to fund consolidations in the legal marketplace – the very anti-competitive cartelization that I and others have been warning against for two years now. Why won’t the ABS sponsors accept that? Why can they not admit error? Why are they so hell-bent in compromising our independence when it is totally unnecessary to do so? Why? Cui bono?
You say, “(taxi) Companies have not innovated. Uber comes along with great technology and better service”.
Well, we in the legal profession have innovated and we continue to innovate. We use great technology already and are very open to more if it is beneficial, provided we can buy, lease or obtain a licence for it. Mindful of our critical role in society, we should not be willing to sell our ownership to get it, especially when we do not have to sell our ownership to get it.
Uber is often more expensive that regular taxis. They charge quite a bit more during high-demand periods. The regulated taxi industry is not allowed to do that by law. Perhaps if (a) the regulated taxi industry had always been allowed to charge more during peak periods based on demand, and (b) the system had never been allowed to degenerate into a cartel, Uber would never have been needed. Btw, in my real estate practice, and this is true of all real estate lawyers, we do not charge more for the file simply because the closing is in the peak Summer moving season. The smaller number of moving van companies do, though.
You say, “However the longer we keep distinguishing ourselves as special from every other so called “non-lawyer” the more Rome burns and we fiddle.”
With all due respect to those with an inexplicable contrary view, we are, in fact, special. In fact, very special. History, reality, common sense, and our legal/constitutional construct say so. We occupy the second most important professional position in society after the medical profession (I would rather have access to doctors than lawyers no matter what society I lived in). Many would argue that we occupy the most important position in society because who wants to have their cough checked if you have to live under the Taliban? We, especially the barristers which is one reason I love them, stand between the public and the government. The criminal defense bar, with significant justification, regard themselves as the last line of defense of democracy. We are, by far, the most important protection against government over-reaching in existence*. It is for that reason that we must never allow our profession to become regulated by government appointees as has now happened in the UK. What a tragedy that the birthplace of the modern concept of the independence of the bar is now backsliding from that.
*Some will add the media to that, but without lawyers defending the media against government over-reaching, then the media would be as free as Taliban reporters are in their mountain villages.
Further, we grease the wheels of commerce. What would happen if the entire economy could no longer count on the validity of contracts, the security of loans, the title to assets? We would be back to bartering with people we know personally. What would happen if testators no longer had the certainty of fulfillment of their testamentary wishes? What would happen if civil litigation and family law barristers no longer saved us from the anarchy of self-help enforced by guns and baseball bats? Even self-represented litigants have to play by the rules set up to allow barristers to serve the public in the arena of dispute resolution.
We have a sacred public trust – a trust that has never been compromised by loyalties to non-lawyer owners. We would be on the wrong side of history if we were ever to compromise it. Remember: To the extent you give up ownership, you give up independence. There is no amount of protection that you can put in place that will long survive the power of money.
We betray the trust of the public only if we deny them access to affordable legal services. There is only area where that routinely, widely, consistently, endemically, and systemically happens, and that area is litigation. In virtually all other areas, legal services for individuals are easily and affordably available. To the extent that the clients of the big firms feel or are overcharged for non-litigious matters, there are numerous steps they and the profession can take to deal with that without adding the additional layer of overhead that ABS would entail. Indeed, many of those steps have been taken as I pointed out in my reply to Melissa. I would encourage more of those steps. None of them has needed ABS.
What we need to address is the time and cost of litigation. That is where the Massive Problem is. Everything else is just smoke to obscure that simple truth.
And we do not need ABS to do it. ABS is simply not needed to address the Massive Problem. If anything, it would over time worsen it. It is crystal clear that over time ABS will certainly worsen the delivery of solicitor services. Why would be go down that road even one inch? Ask yourself who is most likely to benefit the most from ABS? Could it be the large companies that would buy us and the large law firms who act for them?
If we “fiddle” with our independence, then something will burn – our self-respect, our position in society, our part privilege and part right of self-regulation. There are some who may want to be Nero, but count me out.
Brad I don’t have the time to address all of the points you raise; many of which we will have to agree to disagree. Your cavalier rejection of survey and overwhelming evidence collected in numerous studies publication panel discussions association reports on the changing client environment is frankly cavalier. More importantly however I have spent a huge amount of time over the last couple of years talking young members of our profession and entrepreneurs (most of the latter driven from our profession). It is interesting that in the groups of young lawyers and entrepreneurs there is overwhelming recognition of the issues and for moving to new strategies such as ABS. If you canvass that group they will tell you that innovation has to be around the fringes because they can’t finance it. What you fail to address is quite apart from the access/self represented litigation problem clients are simply abandoning using lawyers. I have heard from many small businessmen who simply no longer use lawyers. They make due with what documents they find online. They find they no longer get value and that the technological ineptness of the profession as a whole doesn’t meet their needs. Brad we have a problem that is far broader than you acknowledge. I frankly have very little stake in the game. I am near the end of my career but I care deeply about those that follow and I don’t like the legacy we are leaving one bit.
January 10, 2015
I am glad you care about our legacy. So do I, and it is for that reason that I am opposed to compromising the independence that it took us centuries to win and entrench.
I disagree that I am cavalierly rejecting survey results. Instead, I am examining them in the depth they require. A lot of the complaints arise out of (a) the human desire to want everything for less even the current price is totally fair (there are some clients who, even if you paid them for the privilege of doing their legal work would still complain that you were not paying them enough), and (b) a self-harming and broad lack of knowledge of the value that we bring to the equation. Further, it is still the case that the largest area of complaints regarding costs is litigation. What do think excites people more? The $200 cost of a will? The $850 cost of buying a $400,000 house? The $1,500 cost of closing a $200,000 business transaction? Or the $40,000 cost of the average litigation file that reaches trial?
Are we supposed to compromise our independence, a compromise that is irreversible and will surely weaken us over time, because some survey respondents answer the questions in (a) their naked self-interest (and I would argue that penny wise and pound foolish is contrary to their self-interest if they but knew it), or (b) out of ignorance or lack of knowledge?
Given that the real-life cost barrier of litigation dwarfs any alleged non-barriers to wills, conveyancing, and small business advice by a factor of about 200 to 1, please explain to me why 99% of the time and resources of the Law Society that are being devoted to access to justice issues are being devoted to harming the low cost services and virtually nothing is being devoted to dealing with the real barrier?
The reality is that, on any objective analysis, small firm solicitor services are very affordable and provide superb value for money. Contrary to your experience, I have never heard of any businessmen “who simply no longer use lawyers”, although I agree that there must be some (found in any field). They use us when they need us, and they can get our services readily and for modest cost. If they are making do with documents they find online, then good for them. ABS will not stop them from doing so. The law never stops anyone from doing things themselves (except appearing in some levels of court). They use us when we add value. Some of them will not understand that we add value, but that is an easily addressable public education issue that I have dealt with elsewhere. ABS will not stop them from using online forms. All it will do is add a layer of overhead – the return to the investors. Absolutely nothing stops law firms right now from offering legal documents on line. Nothing. And, increasingly, many do. We do not need to sell our ownership to do it.
You describe “technological ineptness of the profession as a whole” and also talk about younger lawyers. Are they not the ones who are technologically adept? Are they not the generation who were given laptops instead of rattles? I communicate a great deal with my clients by email (and I could use Skype etc.), including sending them draft documents for their review and comments. They use me and this process because I can tailor the document they need to their needs better than any program can, but we use programs to make the task efficient and client-friendly.
You say that younger entrepreneurial lawyers are leaving the profession and that innovation has to be around the fringe and they cannot afford it. First, there are far too many lawyers (a situation worsening every Spring) for all of them to make a decent living in private practice anyway (I can hear the howls over that, but it is true, thanks to the law schools graduating students at a rate five times greater than population growth for years now, and never failing anyone they admit to first year. If they maintain that level of graduates, someday every client will have their own personal lawyer, and every lawyer will have one client each from whom to extract their entire annual income).
Second, innovations have routinely occurred at the core of what we do. Consider the differences between how we practiced when we started and how we practice now. Very different, and I would not want to go back. Wills have gone from being laboriously typed by a secretary to being tailorable by the lawyer on his computer. Instead of relying on codicils to make amendments and rare corrections, any amendments or corrections are done in the time it takes to type them. Can’t get faster than that. Real estate conveyancing has moved from requiring a trip to the Registry Office to reaching for your mouse. Please do not tell me that we have not innovated at our core.
Again, to achieve or take advantage of innovations, we do not need to sell our ownership. If there are truly beneficial innovations out there, then, by definition, they will enhance revenue, and can be paid for by debt rather than equity or they can be leased or licenced. At least with debt, leases or licences, once the debt is paid or the lease is over, the creditor/lessor is gone forever, but with equity, the owner is there forever exercising the influence that his money bought. Big, and crucial, difference.
What innovations are they talking about? For much of law, you cannot safely discard the human interaction between lawyer and client. We already have tremendous ways to interact with our clients without either the client or the lawyer having to leave his or her office, or, for that matter, beach umbrella. As for producing the work needed, in most of legal practice, you cannot safely replace the lawyer’s input, either directly or by supervising trained staff, with an algorithm.
Last year, I attended an Information Session in which the six invited panelists were (1) a graduate student who had never practiced law, (2) another graduate student who had never practiced law, (3) a professor who had never practiced law, (4) another professor who had either never practiced law or hadn’t in 50 years, (5) a technology expert who had not practiced much law compared to running his businesses, and (6) a senior partner in a giant law firm which is now defunct. Collectively, the six had very little experience in a private practice environment, and no experience in a small-firm practice environment. Noticeably absent was even one speaker from the small-firm bar – the part of the bar that would be the most affected by ABS and the part of the bar that could have brought considerable, relevant expertise to the Session. We do not seem to count or matter, you see.
One of the organizers was a big firm barrister who once said to me, without ever having practiced real estate law, that real estate lawyers are “mere technicians”. “Come work in my office for one month”, I told him, “You would no longer think that.” Sadly, there is a notion out there among the ignorant or the mischievous that small firm solicitor work is expendable (especially if it helps deflect attention away from doing something effective about the time and cost of litigation). Pause for a moment. What that last parenthetical remark cynical and unfair or a realistic appraisal of what is going on? If you are unsure, keep reading.
At the end of the lecturing, each table was given a case study. Ours was about a proposed website that would allow a “user” to sign in and, by answering questions, obtain a “tailored” will. The user would then have a “free” consultation with a lawyer by Skype who would help the user finalize the document.
The case study was structured to blunt criticism. Who can be against the public obtaining “free” legal advice to cover their entire legal need, in this case a will? Let us accept that if all lawyers provided their services for “free” for the entire mandate of the legal need, the public would benefit, but only until the lawyers all starved to death. The reality is that the “free” Skype consultation is not free at all. The cost of it will be included in the website’s fee, or it will be borne by the lawyer’s other clients, including by the user when the user needs other services from that lawyer or from other lawyers who are in the same trap. By definition, loss leaders are made up elsewhere with no overall savings.
The case study used “user”, not “client”, because these websites contain disclaimers denying any solicitor-client relationship and any liability. So what is the user really getting? The company that owns the site will be clear of liability, but the Skype lawyer will not be and should not be.
Further, the website could be owned by a disbarred lawyer from Ontario or anywhere operating out of Buffalo (how would we know or be able to police it even with entity regulation?), the Skype lawyer could be in Windsor, and the user in Ottawa. The user never builds a relationship with a trusted, local lawyer, someone who will get to know the user. Such a user (the word “client” does not really apply to them) does not get a lawyer he or she can call for all kinds of good, and often free, advice over the years and for reliable referrals to specialists when needed. (Local lawyers are content to give free advice where appropriate on a variety of matters because the client is already part of the lawyer’s family of clients – a family the lawyer is keen to serve very well because his or her livelihood and local reputation depend on it. The Skype lawyer cannot perform these valuable functions. A good deal of what local solicitors do is prevent small problems from becoming big problems. Society gains immeasurably.)
The case study was obviously created by someone who does not know enough about wills law, but then it is easy to denigrate or even jettison a practice area one knows little about, does not practice in, derives no income from, and never receives the appreciative feedback from the individual, as opposed to corporate, clients who have been so well served at modest cost by the lawyers in that “expendable” area.
Even if the will coming out of the user’s printer was sensibly drafted (many will not be), it still needs to be witnessed. Even if it is witnessed properly (many will not be), one of the witnesses needs to swear an affidavit of execution with the will properly stamped as an exhibit. The witness and, probably, the user would have to go to some lengths (travel and appointment time) to ensure that the affidavit was properly done using the right government form (which changes periodically), properly attached to the original will with the exhibit stamp in the right place (on the back of the signing page, not the front, and not on any of the other pages), and properly commissioned.
Btw, would you, acting as a commissioner, be comfortable swearing an affidavit of witness without knowing the circumstances? Are you not a great deal more comfortable when commissioning the oath of your secretary than that of some stranger?
Without the affidavit, exhibit stamp and commission, submitting the will to probate could easily be costly, time-consuming and difficult. The witnesses could die or move away in the intervening years. Then what? An expensive mess, that’s what.
Probating a will with no affidavit or a badly done affidavit would necessitate a court application which would run up the cost to the estate by an amount many, many times the cost of having the will done properly by a local lawyer in the first place, and would delay the administration of the estate and the payments to the often needy beneficiaries by a considerable period.
Further, during the drafting of the will, how would the user’s capacity be reliably assessed? Facial expressions and body language are important clues when assessing capacity. The Skype lawyer might be able to see some of the facial expressions if the camera angle is narrow or some of the body language if the camera angle is wide, but not both simultaneously, and nowhere near as well or as law-suit proof.
Further, how would the presence or absence of undue influence be reliably assessed? How could the Skype lawyer be certain that the intimidating presence of a self-interested beneficiary is not in the room or within view or earshot? If the user is being unduly influenced in general, how could the Skype lawyer be sure that the user was answering truthfully the question, ‘Are you being unduly influenced?’
While one may hope that lawyers doing such poor jobs would get sued into the stone age, such claims would be costly for the profession and a far worse outcome for the users and beneficiaries than having the wills done properly and cost-effectively in the first place.
Even if some people could go through the entire process through to proper completion, the online scheme does not justify making the means of getting a proper will this attenuated and amorphous. Too many people will be sucked into believing that they somehow saved money and got excellent wills when, in fact, they didn’t and instead left an expensive mess for their family to pay for.
The law allows people to do their own wills, and the government does not stop the sale of will kits, but the law has always said that, if you want to be sure that your will is done right, you need to see a trained and insured lawyer (and that has meant in person for all the above reasons). The reason for this law is not because the government wants to feather the nests of wills lawyers. On the contrary, it is because the government wants to minimize the number of estates that end up in the costly court system. Minimizing present and future costs is a large part of what solicitors do for their clients. Solicitors have little desire to drag a matter out for three years at a cost of $30,000.00 and up (often way up). It is the barristers who benefit from that. Solicitors do prevention law. Barristers work when problems were not prevented but now have to be battled over. The less prevention there is, the more litigation there is. Imagine the mess if less prevention law is done; the courts are already clogged.
I have seen some pretty bad will kit products and holograph wills. They ended up costing the family far more than if the testator had seen a lawyer. (It would be helpful if people who do not do wills law would stop referring to “simple wills.” Yes, some wills are more straightforward than others, but it cannot be known with certainty which ones are which until the lawyer has had a good discussion with the client. They are also extremely easy documents to screw up whether as to syntax, grammar, meaning or even punctuation.) Often, a client will call me and say that all they need is a simple will because their estate is simple. Most of the time they are quite mistaken, and are amazed by the things I bring to their attention.
The ultra-dubious so-called benefits of the online will scheme do not justify taking away from local, mostly small-firm lawyers a major aspect of their practices – an area in which the costs to the public are among the lowest-cost, most cost-effective legal services available. I reckon properly done wills and powers of attorney are the best bargain, value for money, that the public gets from the legal profession. Real estate fees are second. Fees for setting up a corporation or business are third. What is no bargain at all is having to enter the litigation maelstrom. The public should be encouraged to meet with these low-cost local providers, not encouraged to bypass them in a scheme that will cause more harm than it solves.
In exchange for about $200 (half of which is overhead paid mostly to local staff and landlords) paid to an attentive, on-the-spot, keen-to-please-the-client lawyer for a well-drafted, airtight will, the client gets the peace of mind that their family will have a straight-forward estate to administer at modest or no legal cost. Many of our beneficiary clients are able to handle the administration almost entirely, and often entirely, by themselves, thanks to how well the will was drafted.
In exchange for an average of about $75 per power of attorney (again half to overhead circulating locally), our clients get, from the skilled, fully attentive lawyer, their property and personal care arranged or arrangeable by a trusted attorney, thereby almost always avoiding far more costly problems. They also get the virtual certainty that these documents will not be overturned because of some claim regarding influence or other bogus claims. They also get a thorough explanation of the ramifications of the document, what to be alert for, and so on.
This online wills scheme, far from being the boon to the public its backers think it is, would cause no end of problems. An ABS that would allow it is simply not worth the trouble caused by confusing the public and jumbling up the system.
One ABS supporter suggested that the laws should be changed to dispense with witnesses and affidavits of execution for wills (supporters like him say things like that because, instead of admitting that the ABS scheme was hare-brained to begin with, they struggle to find ways to do end runs around the sensible objections). As he is a lawyer who has never done wills, he was seemingly unaware that the rules surrounding witnessing wills and affidavits of execution are designed to reduce frauds and other skullduggery. Removing those protections would quickly engender far greater mischief that would outweigh the dubious benefits of the ABS wills he touts.
I have spent a lot of time describing this scheme because it is typical of how little many of the supporters of ABS understand the practice environment of small firm solicitors and how willing they are to make a mess of it to the detriment of the public (but, to the extent more estates end up in litigation, to the benefit of those who wish to see ever increasing rates of litigation).
So far, in all these Slaw exchanges, my central points remain unchallenged. To wit:
(1) ABS is not needed to achieve its supposed benefits (we can do it ourselves or cherry-pick from other jurisdictions).
(2) ABS is certain to compromise our independence increasingly over time as money is too powerful (history, human nature and the observable phenomenon of generational shifts of attitude prove this).
(3) ABS is certain to lead to anti-competitive corporate concentrations (current ABS types candidly say so and gleefully admit to be working toward it).
(4) Such cartelization is certain to lead to higher prices to the public (see, to cite only one example among many, many, what happened when a handful of US title insurers replaced 100,000 US real estate lawyers – a “dysfunctional” per the State of California and “invidious” per the Supreme Court of Iowa industry “in which the public pays too much” per the State of California (about four times more than what the lawyers used to charge) while delivering services that are “shit” per an employee of a US title insurer who used to be an independent lawyer until she and all the other real estate lawyers in her city in Florida were put out of business by predatory pricing that lasted only as long as it took to kill the lawyers).
(5) Most if not all of the arguments in favour of ABS that lie outside those first four points are little more than clutching at straws by people incapable of resiling from a stance they have taken publically, not matter how increasing foolish the stance is (get rid of witnesses and affidavits for wills).
(6) It is not enough to say that Australia and the UK have ABS. The US does not, and the US legal world is ten times larger than the Aus and UK worlds combined, and is opposed to it.
(7) It is not enough to criticize Harvard Law Professor Nick Robinson’s study warning of the dangers of ABS by focusing on the propriety or otherwise of calling it a Harvard Study while simultaneously saying nothing about the contents of his paper.
(8) It is manifestly wrong to say that ABS opposers have to prove that ABS will cause harm. On the contrary, the onus is on those who would make an irreversible Seven Oceans Change to the practice of law to show that ABS will be beneficial and not harmful – at best a 1 in 3 throw of the dice – and to show it in the face of very sound and compelling reasons against it.
Verna, that’s a pretty lame counter-argument. After all, the purpose of the law society regulations (and tax regulations) is to protect consumers of legal (tax) services, not their suppliers (a point sometimes lost on the LSUC, and clearly lost on taxi regulators).
Surely the question – the only question that should matter to the LSUC – is whether clients get better or cheaper or more convenient service. That’s what Uber has provided to taxi consumers, and that’s what we should be asking about ABS.