Canadian Lawyer

54 M a y 2 0 1 4 w w w . C A N A D I A N L a w y e r m a g . c o m by jiM MiddleMiSS BaCk pagE O P I N I O N Let the turf wars begin (again) i n late February, the Law Society of Upper Canada announced it had become one of the first North American legal regulator to begin formal consultations on the estab- lishment of alternative business structures in the practice of law, which would include — gasp — non-lawyer ownership of firms. Gadzooks, the British are coming! The British are coming! For those who live under a rock or practise law on some remote island, that's a reference to how the U.K. has liberalized its legal profession and now allows a range of legal service providers to be owned by non-lawyers. The U.K.'s goal was to introduce more competition and choice for consumers. In the two years since the law was changed, 250 ABSs have been licensed, according to the Solicitors Regulation Authority. They include Acorn Law LLP, which puts the "personal" back into personal injury, Just Costs Ltd., which focuses on cost bud- geting and management of cases in mercantile and construction courts, and The Co-operative Legal Services, part of a large U.K. conglomerate in food stores, banking, insurance, pharmacy, and funeral services. In February, PricewaterhouseCoopers Legal LLP obtained an ABS license permitting its accounting cousin, PwC, to have a formal ownership interest in the legal practice. Hey, remember the great 1990s debate over multi-disciplin- ary partnerships? The LSUC adopted a limited form of MDP to beat back the accounting firms. If it had gone all the way, we might not be having this ABS debate today. The ABS model is allowing U.K. law firms to attract outside investment, innovate, adopt technology, and expand their offer- ings. By the same token, some U.K. firms have closed, merged, or sought creditor protection since the advent of ABSs. The LSUC working group report found: • ABSs could mean improvements in access to legal services; • complaints might be reduced because firms are regulated to ensure adherence with professional values; • ABSs have a better ability to resolve service complaints; and • ABSs allow lawyers to spend more time practising law and less time on management issues. In analyzing the economics of ABSs, University of Toronto law professors Edward Iacobucci and Michael Trebilcock wrote there is already "robust competition among firms" in Ontario, with hourly rates ranging from $100 for basics to $1,000 per hour for special- ized advice. They believe ABSs will allow law firms to innovate, compete more effectively, and pass those benefits on to consumers. The working group has proposed four models for discussion: • ABSs be restricted to providing only legal services with up to 49-per-cent ownership by non-lawyers. • ABSs be restricted to only legal services with no ownership restrictions. • ABSs be allowed to provide both legal and non-legal services (except those that pose a regulatory risk) with up to 49-per-cent ownership by non-lawyers. • ABSs be allowed to provide legal and non-legal services (except those that pose a regulatory risk) with no owner- ship restrictions. I suspect this debate will have over- tones similar to the MDP fight of the late 1990s and many lawyers will fear for their survival at the hands of others. What's different this time is improving access to justice is a main theme behind the ABS debate. That was absent during the MDP turf war. If the LSUC doesn't find a way to ease this burden, it's plausible the govern- ment could step in and remove the self-regulation authority the profession enjoys. Access to justice is really about money, and not necessarily about structure. If legal services were less expensive, more people could afford to hire lawyers. Fix the problem of open-ended bill- ings, improve client satisfaction and affordability, and then maybe you don't need ABSs. Since the Competition Bureau looks askance at the LSUC setting fees, the regulator has to look at other options. The problem is lawyers operate within a regulatory framework that's been in place since time immemorial. Yes, many lawyers are entrepreneurs, but not every lawyer is necessarily entrepre- neurial. Most own their firms, are good at delivering legal advice and developing creative arguments, but aren't at the forefront of innovation when it comes to delivery of service, creating legal products, or pricing. In fact, the bulk of legal services are delivered by small shops, which are crying out for the consolidation many other industries have experienced. When it comes to main street law, the level of investment into firms is relatively minimal. Most lawyers rely on hourly billing and draw out most revenues, rather than reinvest into the firm. Until lawyers change their mindset, which I don't think they can or will, then ABSs are the best alternative for regulators to shape the system and tackle greater problems, such as access to justice and innovation. A sea change is upon the profession. Working under the banner of a bank or a grocery store is not such a bad thing. Jim Middlemiss blogs about the legal profession at WebNewsManagement.com. You can follow him on Twitter @JimMiddlemiss. sara tyson Untitled-4 1 14-02-06 1:25 PM

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