ABS in Ontario Killed by the Foul Stench of Protectionism
It would be really easy to read last week’s report from the Law Society of Upper Canada’s Working Group on Alternative Business Structures as thoughtful and considered.
Afterall, it has all the hallmarks of a judicial decision – using all the right words and heck, even using numbered paragraphs; no surprise given that Convocation is over-weighted with litigators, many of whom aspire to be judges themselves.
But if you scratch beneath the surface of the report, one quickly finds that all the judicial language in the world cannot hide what really happened in the LSUC Star Chamber amid the fine dining and clinking of sturdy goblets of Port.
The Working Group determined that in order for it to recommend ABS to Convocation, ABS had to pass the following seven tests:
- Access to justice;
- Responsive to the public;
- Professionalism;
- Protection of Solicitor-Client Privilege;
- Promote Innovation;
- Orderly Transition; and
- Efficient and Proportionate
No weighting is assigned to any of these criteria, so we don’t know if the Working Group considered each of these criteria to be equally important or whether some are more important than others.
There are also no metrics within any of these criteria to indicate what a “pass” would look like.
However, it becomes clear from reading the report that ABS had to show itself to be demonstrably better than traditional law firm structures.
In other words, the Working Group granted – without explanation – a presumption in favour of traditional law firms.
Is that fair, logical or even reasonable?
I have written before that an objective and fair review of ABS would only ask one simple question:
Does ABS demonstrably create more mischief than the current structures?
But, let’s take a look at the criteria used by the Working Group.
Access to Justice – ABS passes yet still fails
The Working Group determined that “…based on the experience to date in other jurisdictions, the likely access to justice impact does not appear to be sufficient to justify majority non-licensee ownership or effective control, for practices generally.”
In other words, the Working Group acknowledges that ABS firms have increased access to justice – just not by a sufficient amount.
Huh?
What is the definition of “sufficient”?
In order for the Working Group to state that A2J is not sufficient, the Working Group must have a benchmark of what would be sufficient.
What is that benchmark?
In order to achieve consistency of decision-making, how can a future Working Group determine that overseas experience has now achieved that benchmark?
Responsive to the Public – ABS Passes
The Working Group determined – again without any criteria or benchmarks – that ABS passes the vague and undefined, “responsive to the public test.”
Professionalism – ABS Fails
The Working Group has heard concerns from some individuals that external ownership would necessarily emphasize profits over professionalism .… and the Working Group agrees that there is not yet sufficient evidence from other jurisdictions from which to make proper judgments about the effect of public ownership on professionalism. The Working Group is of the same view with respect to the effect of substantial market consolidation.
What is interesting about this decision is that the Working Group has weighed “concerns” raised by Ontario lawyers who have no experience with ABS and very little understanding of ABS, over actual experience in Australia and the UK.
Is it fair, reasonable and logical to weigh the opinions of those with no experience more highly than the actual experience and evidence of other jurisdictions?
The Working Group has no evidence that the “concerns” raised by inexperienced and unknowledgeable Ontario lawyers will actually come to fruition – so how could it reasonably give any weight to those concerns?
How is it that the Working Group demands ABS to provide evidence, while allowing naysayers to merely “issue spot”?
Is this good decision-making?
And what would constitute sufficient evidence?
Surely the Working Group must have a benchmark in order to come to its conclusion. Again, we don’t know.
The Working Group considers that the better course is to wait for further experience to develop in other jurisdictions before attempting to reach conclusions as to the effect of public ownership and consolidation on professionalism.
Again the Working Group does not state how long we should wait and what experience it is looking for in order to change its mind.
Protection of Solicitor-Client Privilege – ABS Passes
In a most bizarre turn of events, the Working Group has come up with a criteria that Solicitor-Client Privilege might be compromised by ABS. I’ve been studying ABS for some time and I must confess that this attack on ABS came out of left field for me.
In any event the Working Group confirms that it has no concerns over this.
Promote Innovation – ABS Passes, yet still Fails
Although ABSs appear to be innovating more than their non-ABS counterparts, [emphasis added] the Working Group is of the view that it is too early to determine whether the levels of innovation taking place in England and Wales support a shift to majority or controlling non-licensee ownership of traditional law firms in Ontario.
Why must ABS firms be proven to be more innovative than traditional firms?
Isn’t the better criteria: ABS firms should be shown to be at least as innovative as traditional firms?
But never mind those points, why doesn’t the Working Group follow its own test?
How can the Working Group acknowledge that ABS firms are more innovative and therefore clearly pass the test – but then state that ABS firms still fail the test because they are not innovative enough?
What on earth does “not innovative enough” mean?
What benchmarking was used?
What would enough innovation look like?
And if it’s too early to tell, then when is the proper time?
Again, in order to ensure consistency of decision-making, how does a future Working Group determine the correct timing and the “enoughness” of the innovation?
Orderly Transition – ABS Fails
The Working Group agrees that preferred ABS models would need to be introduced in a manner that is mindful of any disruption that a new scheme may cause. Permitting majority non-licensee ownership would represent a major change, requiring significant resources to implement, including legislative reform. The Working Group considers that this criterion militates against implementation of majority or controlling non-licensee ownership levels.
To whom would this be disruptive and costly? Lawyers? The Public?
We don’t know.
How costly? How disruptive? By what measure?
Again, we don’t know.
But shouldn’t we know whose pocket books and delicate psyches are being protected by the Working Group?
Shouldn’t we know how the disruption and costs were measured?
There is a better question however: is this even a valid consideration?
Is the, “Gosh, it’s just gonna be too hard to do” response something that we should tolerate from a disciplined, thoughtful body that claims to be a pillar of society?
Efficient and Proportionate Regulation – ABS Fails.
As described above, the Working Group is concerned that a shift to generally permitting non-licensee majority ownership or control likely creates disproportionate regulatory complexity and risk when weighed against the likely benefits as currently observed through the ABS experiences in Australia and England and Wales to date.
Splitting this criteria from the Orderly Transition criteria above is clearly disingenuous. The two are identical and there is no logical reason to split them into two separate and distinct criteria.
Again the, “Gosh this will create complexity” argument is trotted out without any metrics or explanation. The Working Group also throws in a thin and unsubstantiated cost/benefit analysis to further explain why ABS fails this criteria.
Conclusion
If one adds up the “yeas” and “nays” (as there is no weighting system), we see that, using the Working Group’s math, ABS only passes two out of seven criteria; hence its decision to not move forward.
However, we also see that that math is disingenuous.
ABS actually passes four out of seven criteria, which in an equally weighted framework means that the Working Group should have recommended ABS to Convocation. By its own words, the Working Group acknowledged that ABS passes the A2J test and the Innovation test – just not by an enough.
In all, the Working Group receives a failing grade for methodical, objective and transparent decision-making.
And one can now fully understand why it was democratically-elected governments – not lawyers – that brought ABS to Australia way back in 2001, and to the UK in 2011.
It wasn’t fair and objective decision-making that killed ABS in Ontario – it was the foul stench of protectionism.
Though I have greater concerns about ABS than you (I’m not a proponent), from what you write I do agree that the effective requirement that ABS be better than currently available structures is unfair. I think it should instead be, are ABS no worse than what we have now, a much fairer test (even if I’m more skeptical than you about ABS meeting this standard, I’m willing to be persuaded).
It’s only fair then that we apply the Working Group’s seven point test to our current model too:
1. Access to justice – FAIL – Everyone knows the current model has failed miserably in meeting the public’s basic legal needs at a reasonable cost.
2. Responsive to the public – FAIL – I don’t see how the current model can be considered responsive to the public’s needs – it has failed miserably in meeting them.
3. Professionalism – FAIL – The modern law firm partnership model is no less profit focused than the modern corporation; therefore it also risks putting profits before professionalism. If ABS fails the current model fails too.
Protection of Solicitor-Client Privilege – PASS – No issues here for the most part.
Promote Innovation – FAIL – The current model has had decades to innovate and has failed to do so in any meaningful way.
Orderly Transition – PASS – All the Ontario lawyers who abhor any change whatsoever get to continue on with their comfortable, predictable lives.
Efficient and Proportionate – FAIL – No change is surely efficient but don’t see it as a proportionate response to our current problems.
That’s only 2/7. Guess we should probably ditch this model too. Who’s with me?
David and John – right on. The tests must be fair . And to be fair, the current model should also past the same tests. As John mentioned, the current model would fail.
It is really hard for anyone to argue against setting up a fair and objective testing method.
Ken – Resorting to personal attacks is always the last resort of those without any credible response.
My post was not about whether or not ABS was acceptable for Ontario – it was about the lack of an objective and fair testing method.
It would be great if you could restrict your comments to the substance of the post instead of personally attacking me. Failing which I will ask the administrator to ban you from Slaw.
I was wondering when we would hear from Mr. Chasse on this post. I certainly did think he would disagree with Mr. Kowalski’s submissions. I know I did. What I did not expect: how spicy!
As for Mr. Smith’s slightly blander comment, I agree that our current system is also a failure. Time to bring back trial by combat.
1. Access to justice – PASS. Litigants may do combat or select a champion, who need not be member of any bar (but may be required to wield one).
2. Responsive to the public – PASS. For many litigants, trial by combat is what they really want anyway.
3. Professionalism – PASS. Trial by combat will allow a lowering of professional standards in the context of litigation, allowing more competitors to enter the marketplace.
4. Protection of solicitor-client privilege – PASS. Trial by combat requires no disclosure. Just plead your case, get in the ring, and the God guide the hand of the righteous contender.
5. Promote innovation – PASS. Human history has shown our species never to be more innovative than when devising ways to do combat with other members of the same.
6. Orderly transition – PASS. When trial by combat begins, we remove counsel’s tables and seating and convert the bar to a steel cage, ceiling-to-floor. With enough decent contractors at work, we can complete the work in a weekend.
7. Efficient and proportionate – PASS and FAIL. Trial by combat will take up far less courtroom time than conventional litigation, although it is inarguably out of proportion to most, if not all, of the disputes that we call upon our legal system to resolve.
That’s 6.5 out of 7 for trial by combat, a score of almost 93%!
Speaking of being ‘fair and objective’, I think it is a bit unfair of you, Mitch, to have failed to mention that the LSUC’s ABS Working Group report has only shelved one particular model of ABS and that it explicitly recommends further investigation of other ABS models and of associated business methods that may help achieve the same objectives — with the main objective being innovation to improve access to justice.
All that the ABS WG has taken off the table, for now, is the possibility of majority or controlling ownership, by for-profit non-licencees, of legal services entities. Still on the table is the possibility of minority for-profit non-licensee ownership, as well as the possibility of majority not-for-profit non-licensee ownership. Failing to acknowledge that this latter possibility is still very much alive is particularly problematic given that, in some of your previous SLAW blogposts in support of allowing ABS, you have highlighted the emergence of the not-for-profit ownership model of ABS, in the form of Salvos Legal in Australia, as proof that ABS can contribute to improving access to justice.
So, while it seems reasonable to debate whether the ABS WG’s report has left ABS half dead or half alive, it seems to me to be a bit unreasonable to claim that ABS has been killed.