Canadian Lawyer

w w w . C A N A D I A N L a w y e r m a g . c o m O C T O B E R 2 0 1 5 21 was "some merit" to Aviva's question and was taken aback by the law society's response. "I am surprised they took no position," said the judge in his ruling. "I don't think self-governance should be kick-started only by a complaint." Part of the idea behind entity regulation is precisely that: Law societies should be more proactive, instead of just reactive. The goal is that more proactive regulation could curb lawyerly transgressions the same way preventive medicine avoids illnesses altogether. Indeed, Janet Minor, treasurer of the Law Society of Upper Canada, says it is considering entity regulation along with com- pliance-based regulation to ensure entities have systems in place that would "hopefully reduce complaints and improve services." A logical way forward In its 2014 report "Futures: Transforming the Delivery of Legal Services in Canada," the Canadian Bar Association cited evidence from Australia that shows the country's regulatory approach, which places great regulatory obligations on incor- porated legal practices or alternative business structures, has resulted in a two-third drop in complaints against legal service providers in New South Wales. That, the CBA said, is "perhaps the most persuasive argument" for compliance-based entity regulation. But in his 2012 paper "Regulating Law Firms in Canada," University of Ottawa law professor Adam Dodek writes that when it comes to entity regulation, "the proper question is not 'Why should law firms be regulated?' but 'Why do they largely escape law society regulation?'" "If you were just an outsider looking at the practice of law today, what you would see is that law firms are an essential fea- ture of the practice of law in Canada in the 21st century," Dodek tells Canadian Lawyer. "If you look at advertising, if you look at media coverage, if you look at contributions to the economy, [in] all of those sorts of things, law firms are front and centre. They're the dominant way lawyers now organize and structure the practice of law — in firms of 10 lawyers or more." Regulating firms is the most logical thing to do, according to Dodek, especially given the fact virtually all other professional service firms — such as accounting, architecture, engineer- ing, banking, and medical entities — are regulated extensively. Dodek says not regulating law firms, in fact, threatens the law profession's claim to self-governance. "The most powerful ele- ments in the legal profession are law firms, and if they're com- pletely escaping regulation, that could lead [the public] to seek government intervention," he says. Law firms generally have policies around ethical issues such as conflicts of interest. For a firm not to have a conflict check system in place is considered extremely reckless, Dodek says, and yet, in Canada, a firm that does not have one will face no consequences. Kevin Latimer, the managing partner at Cox & Palmer in Halifax, says entity regulation wouldn't be an entirely new con- cept for his firm. "In principle, the concept of holding the legal services entity — the law firm — responsible for the activities of its members, and expecting the law firm to regulate those members, is fine. Firms like ours have always done this, and the change of regulatory model should provide efficiencies," he says. His firm, for example, regulates its members through a firm-wide system of identifying conflicts of interest, programs for continuing professional education, mentorship of young lawyers, and through specialty practice groups that foster legal knowledge and "lawyering skills," says Latimer. But what will entity regulation mean for solo and small prac- titioners? While there has been talk about the disappearance of the small and solo practitioner for the last several decades, that prediction has not materialized and small and solo practitioners continue to be important members of the legal profession in Canada. "We're going to be careful, and I say this repeatedly, this cannot be about making life more difficult for small firms or those in rural areas," says Perry. "That's where the society would be able to play that more supportive role." When it comes to regulating solo and small firms, Perry highlights another important component of the plan underway in Nova Scotia: proportionality. "You don't get everybody to where you need them to be if you treat all people or groups the same because they're not the same," she says. "Different forms of practices carry with them different forms of risk, so it's about looking at where the risk is [and] having rules or plans in place that are proportionate to that risk." Take, for example, a requirement for regular and detailed reports on trust accounts. According to Perry, it makes little sense to make legal aid organizations, whose trust accounts handle maybe a few hundred dollars per year, jump through the same hoops as firms whose trust accounts move millions of dollars annually. According to Dodek, part of the argument for entity regula- tion is it will counter the perception that members of large law firms receive favourable treatment from regulators. Law societ- ies in Canada have focused so much of their energies into the disciplining of lawyers, and statistics show that lawyers from large firms rarely get disciplined, says Dodek. He adds this has created a perception that the elite in the profession lie outside of regulation. "Ultimately, law societies should regulate law firms because of the fundamental rule of law idea that no one is above the law and that the law applies equally to the most powerful as well as to the weakest in society," Dodek writes in "Regulating Law Firms in Canada." Lawyer Roger Oatley, a personal injury lawyer at Oatley Vigmond LLP in Barrie, Ont., has practised in small law firms throughout his career. To him, law firm regulation is the only way to put a stop to what he calls "disgraceful" legal advertis- ing in his portion of the bar. "People are advertising in a very misrepresentative way; some law firms are actually going into [Y]OU TELL PEOPLE WHERE YOU WANT THEM TO GET . . . BUT YOU DON'T SPELL OUT THE PATH BY WHICH PEOPLE HAVE TO GET THERE. SO THAT LEAVES ROOM FOR PEOPLE TO REACH THE PRINCIPLE, OR THE GOAL, BY WHATEVER PATH IS BEST SUITED TO THEM AND THEIR UNIQUE SITUATION. JILL PERRY, PRESIDENT, NOVA SCOTIA BARRISTERS SOCIETY

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