What will legal services in Ontario look like in 20 years? Can paralegals and lawyers change the way we deliver services, without compromising quality, and still protect the public?
Examining such questions, and developing responses to the changing face of legal service provision, is a task being undertaken by the Law Society of Upper Canada.
The first Alternative Business Structures (ABS) Working Group Report was presented to Convocation, June 27. Since last September, the group has conducted a review of emerging regulatory models in other jurisdictions, with a focus on business structures and alternative means of legal services delivery.
Non-traditional business structures and alternative legal services provision includes such concepts as non-licensee investment or ownership of legal services firms, equity financing, partnering with non-licensees and expanding services to include do-it-yourself legal forms.
ABS Innovations at Home and Abroad
This first report focuses on developments in Canada and abroad, on new and existing alternative legal service delivery models and structures, financing arrangements and the related regulatory processes. Working group members have met with experts from Australia, England & Wales, the United States, and other provinces, looking at legal services markets.
Both paralegals and lawyers are permitted the same limited types of business structures, including: sole proprietorships, Professional Corporations, Limited Liability Partnerships, Affiliations and — for the past several years — Multi-Disciplinary Partnerships (MDPs). These are not permitted in certain other jurisdictions. MDPs are created under By-Law 7, which permits licensees to form an MDP with certain types of professions, occupations and trades. Very few have been formed, Convocation heard.
The working group report notes that regulating the paralegal profession is itself a form of alternative business structure, in that we offer an additional means of providing legal services to the public. Licensing demonstrates one method of facilitating access to justice, while protecting consumers.
Several regulatory and other issues currently being examined by the Law Society are relevant to the ABS discussion. The report says these include:
- The fact that small and sole practitioners in Ontario at times struggle financially in an environment where there are also clients who are unable to afford legal help
- Increased awareness of the issues of access to justice faced by Ontarians
- An awareness of the problem of an increasing incidence of expanding unauthorized practice by non-licensees
- The growing trend of the provision of legal services over the Internet, and related risks to the public posed by unregulated service providers
- The emergence of websites offering legal forms, which may also include legal services for a public seeking self-help information
- Increasing incidence of Ontario lawyers in partnership within law firms located in foreign jurisdictions
- Addressing the regulatory challenges that arise when professional conduct issues are not confined to a single licensee, but concern the firm overall
Law firm ownership and financing options, in other jurisdictions and other professions, suggests changes may be possible — particularly for small and sole practitioners, the report notes.
“A review of existing constraints on business structures would be appropriate to determine whether they still serve their intended purpose, or whether they require amendment or deletion.”
Fee Sharing and Referral Fees Under Consideration
The working group will look at funding options, examining the effects on professionalism, ethical delivery of legal services and potential to support increased financial viability in practice.
“Over time, with the emergence of new issues and in a changing environment, Law Society regulation may become under-inclusive, by failing to address new or emerging circumstances requiring regulation,” the report states. “It can also be over-inclusive, by regulating to protect against a particular harm which may no longer be an issue.”
Mini-projects could be aligned with the main focus, developing options for graduated changes. Considerations could include: the absolute prohibitions on fee-sharing and referral fees with non-licensees; the requirements and restrictions for multi-discipline practices and affiliations; and the restrictions on licensees employed by non-licensees or corporate entities.
Among the extensive material reviewed, the working group looked at:
- Recent examples of innovation in the provision of legal services here and abroad
- Examples of unmet legal needs and “drivers for change” in the Ontario marketplace
- Reports by the Competition Bureau
- Regulatory constraints imposed by business structures of other regulated
professions in Ontario
- Other Canadian jurisdictions’ experiences with business structures and alternative forms of delivering services
- Country-specific developments in regulating legal services and ABSs
- Legal products and/or legal services being provided over the Internet and
consideration of the regulatory implications
- Articles and studies considering ABSs and access to justice
- Various publications by academics, regulators, and experts related to: business structures, law firm ownership, professionalism and legal ethics; regulatory barriers to innovation; the impacts of globalization and technology on licensee regulation; and risk-based, outcomes-focused regulation as a potential means of enhancing competency.
The report found that jurisdictions permitting ABSs have taken these steps to enhance access to justice. “To the extent that innovative forms of legal service delivery can enhance access for the consumer, provide lawyers and paralegals with new opportunities and permit new forms of regulation by the Law Society that remain robust and effective in the public interest, the Working Group believes this merits careful study.”
A report with options and recommendations for short and long-term action is to be presented next spring. The working group will use formal and informal ways to gather input from lawyers, paralegals and other interested groups. A symposium is planned for early fall, with further consultation likely.
The full report is available at the Law Society’s website.