The Law Society of Upper Canada is considering whether to allow Alternative Business Structures in the ownership and operation of law firms. The issue is receiving great attention from many of FOLA's members and we have been active participants in the discussion.
Click here for a link to the Law Society of Upper Canada website on the topic and click here for the Law Society's Discussion Paper on the topic.
FOLA has responded to this first discussion paper - the full response can be downloaded here - and we have expressed the following:
1) The vision for ABS in Ontario must be further clarified if true consultation is to occur. Further, a clearer answer on the rationale for alternative business structures needs to be offered. Will the vision lead to a successful outcome for both the profession and for legal consumers?
The mandate of the Law Society is to regulate the legal profession in the public interest, but we do not yet fully understand, or frankly accept, the connection between the public interest and ABS. Care must be taken in this examination that the protection of the public and the impact on the profession is realistic and not only theoretical.
2) In the Discussion Paper, technology and innovation emerge as themes and this is a welcome discussion. In our view, however, the Law Society should review and consider the use of technology in law to provide clearer guidance to the profession on the use of technology in practices, in particular to support solo and small firms as the predominant service providers to Ontarians. If more technology and innovation in the practice of law is a goal of the Law Society, guidance on the use of same should be provided first and outside the scope of a broader discussion on ABS. We believe that such a discussion could prove more fruitful, and carry much less risk, than a discussion about the current regulatory regime.
3) We recommend that the Law Society move the discussion away from "ABS" exclusively and into a more fruitful and less politically charged discussion about potential improvements and modernization of regulation. In one respect, "ABS" is a broad and far-ranging theoretical discussion about regulatory modernization, but at the same time focusing on ABS is also, in our view, limiting discussion about positive changes that can – and should - be made to the overall regulatory regime.
There are many interesting ideas arising from the discussion of regulatory modernization. There are also regulations that can be modernized to make more sense, better protect the public and help with our lawyers' interactions with key stakeholders. We agree it is time to get the regulator and the profession adapting to the realities of the current legal system, including "access to justice" issues, rapidly changing technologies and changes to the needs and wants of the 21st century client. However, moving the discussion to better opportunities around modernization that are not necessarily 'ABS', reframes the goal of this exercise to, what we believe to be, a more fruitful discussion.
Although it appears at first that the Law Society's process as it is currently structured has an inevitability to it, the Treasurer has assured the membership that this is an exploration at this point only and that no conclusions have been reached. However, it is clear that the supporters of ABS believe that many of the features of ABS are inevitable "innovations" in the legal marketplace and that these innovations could leave the Law Society without the right regulatory tools to oversee these entities. Regardless, the issue will remain of interest to CDLPA in the coming year.
We will continue to be actively involved in the ABS debate, and do our best to educate our members as the discussion continues.
Updates will be posted regularly to this space.
UPDATE! At the September, 2015 Convocation, the Professional Regulation Committee delivered an interim report outlining its initial assessment and the directions it will consider further.
The Working Group has decided not to continue to consider structures involving majority ownership, or control, of traditional law firms by non-licensees. Through its research and consultations, the Working Group considers that the experience to date in other jurisdictions does not show that the benefits of majority non-licensee ownership, or control, outweigh regulatory concerns.
The Working Group plans to focus its study on change with the potential to foster innovation or enhance access to justice. This includes minority ownership by non-licensees, franchise arrangements, ownership by civil society organizations such as charities and new forms of legal service delivery in areas not currently well served by traditional practices.
FOLA considers this to be great news and demonstrates that Convocation is listening to the concerns of the practicing bar, and in particular the real estate bar, who expressed great concern with this form of "Alternative Business Structures".