In September the Law Society of Upper Canada released a discussion paper on Alternative Business Structures (or ABS) and the Legal Profession in Ontario, and sought input from the public, the legal community and other interested parties on allowing ABS as a means of delivering legal services in Ontario. The possibility of ABS coming to Canada or Ontario has sparked a heated debate amongst legal professionals, with many taking hard positions either for or against (just look at the comment section for this SLAW post). In early December I attended the CBA Program ABS Abroad Key Insights from the United Kingdom and Australia. The program provided a helpful overview of how ABS has been implemented in the UK and Australia and the types of ABS that have become successful. The program did not however address any potential downsides to ABS. This post will briefly review ABS in general and highlight a few arguments that have been made for and against allowing ABS in the legal profession in Ontario.
What is ABS?
Currently lawyers and paralegals in Ontario can only provide legal services through limited forms of business structures including sole proprietorships, partnerships, and professional corporations. "Alternative Business Structures" is a broad term (others prefer the term "liberalization of legal services") that includes alternative means of delivering legal services, including (according to the Discussion Paper): 1) non-lawyer investment or ownership of law firms, including equity financing (perhaps a non-lawyer spouse would hold an equity interest in the firm), 2) firms offering legal services together with other professionals offering other types of services (a social worker and a family lawyer owning and operating a business together) and 3) firms offering an expanded range of products and services, such as do-it-yourself automated legal forms, as well as more advanced applications of technology and business processes.
Why Should We Allow ABS in Ontario?
There are many articles and blog posts dedicated to why ABS in Ontario would be beneficial to the public and the legal profession (see posts by Mitch Kowalski for example). The following is a sample of some of the arguments made for allowing ABS in Ontario:
- ABS will open the door to legal services, and broaden access to justice especially to those who cannot afford representation.
- ABS may encourage technological innovation that would reduce the cost of services and permit greater access.
- Increased capital through equity financing may lead to better technology which in turn leads to innovation.
- ABS could increase competition amongst law firms and introduce new entrants to the benefit of the consumer.
- Allowing non-lawyers to own a part of a law firm could introduce management expertise that lawyers do not have.
Why Should We Not Allow ABS in Ontario?
In December, the Ontario Trial Lawyers Association caused a bit of a stir by submitting its response to the Discussion Paper and declaring that there was not enough empirical evidence to endorse an ABS model in Ontario. They also stated that they were "unequivocally opposed to unrestricted non-lawyer ownership and particularly to any change that would allow publicly-traded law firms in Ontario". Their reasons against allowing ABS in Ontario include:
- ABS may cause less access to lawyers if non-lawyer ownership is permitted: "A focus on a return on investment will cause lawyers to avoid taking certain meritorious cases all together, or will substantially reduce the amount of time spent on these files."
- ABS firms may target profitable segments of the legal market that do not traditionally have access problems and ignore areas of law that may be less lucrative and where access problems are more prevalent.
- ABS may provide capital but that does not necessarily translate to technological innovation.
- There are economic and business concerns such as the monopolization of legal services, the absence of empirical evidence showing savings to the consumer, negative impact on local law associations, law students, young lawyers and on the quality of services.
- Possible erosion of the LSUC's ability to ensure that ethical and professionalism standards are maintained.
- ABS could lead to compromising our independence.
What Next?
Just this week U.S. online legal services provider LegalZoom was granted its ABS licence in the UK. While our profession tends to be slow on change - change is coming. Comments were due on the Discussion Paper on December 31, 2014. We will have to wait and see what the outcome of the Discussion Paper and the public feedback will be. The LSUC will have to make a decision soon, one way or the other. If we choose not to allow ABS in Ontario, would we be missing out on an opportunity to improve access to justice or would we be preventing potential harm to our profession? Are the concerns for ABS 'fear-mongering' or are they legitimate concerns? For those interested in more information on ABS see the recently released research paper by Nick Robinson "When Lawyers Don't Get All the Profits", the many posts on ABS on Slaw, or complete a search for ABS on the Legal Feeds website.
What is ABS?
Currently lawyers and paralegals in Ontario can only provide legal services through limited forms of business structures including sole proprietorships, partnerships, and professional corporations. "Alternative Business Structures" is a broad term (others prefer the term "liberalization of legal services") that includes alternative means of delivering legal services, including (according to the Discussion Paper): 1) non-lawyer investment or ownership of law firms, including equity financing (perhaps a non-lawyer spouse would hold an equity interest in the firm), 2) firms offering legal services together with other professionals offering other types of services (a social worker and a family lawyer owning and operating a business together) and 3) firms offering an expanded range of products and services, such as do-it-yourself automated legal forms, as well as more advanced applications of technology and business processes.
Why Should We Allow ABS in Ontario?
There are many articles and blog posts dedicated to why ABS in Ontario would be beneficial to the public and the legal profession (see posts by Mitch Kowalski for example). The following is a sample of some of the arguments made for allowing ABS in Ontario:
- ABS will open the door to legal services, and broaden access to justice especially to those who cannot afford representation.
- ABS may encourage technological innovation that would reduce the cost of services and permit greater access.
- Increased capital through equity financing may lead to better technology which in turn leads to innovation.
- ABS could increase competition amongst law firms and introduce new entrants to the benefit of the consumer.
- Allowing non-lawyers to own a part of a law firm could introduce management expertise that lawyers do not have.
Why Should We Not Allow ABS in Ontario?
In December, the Ontario Trial Lawyers Association caused a bit of a stir by submitting its response to the Discussion Paper and declaring that there was not enough empirical evidence to endorse an ABS model in Ontario. They also stated that they were "unequivocally opposed to unrestricted non-lawyer ownership and particularly to any change that would allow publicly-traded law firms in Ontario". Their reasons against allowing ABS in Ontario include:
- ABS may cause less access to lawyers if non-lawyer ownership is permitted: "A focus on a return on investment will cause lawyers to avoid taking certain meritorious cases all together, or will substantially reduce the amount of time spent on these files."
- ABS firms may target profitable segments of the legal market that do not traditionally have access problems and ignore areas of law that may be less lucrative and where access problems are more prevalent.
- ABS may provide capital but that does not necessarily translate to technological innovation.
- There are economic and business concerns such as the monopolization of legal services, the absence of empirical evidence showing savings to the consumer, negative impact on local law associations, law students, young lawyers and on the quality of services.
- Possible erosion of the LSUC's ability to ensure that ethical and professionalism standards are maintained.
- ABS could lead to compromising our independence.
What Next?
Just this week U.S. online legal services provider LegalZoom was granted its ABS licence in the UK. While our profession tends to be slow on change - change is coming. Comments were due on the Discussion Paper on December 31, 2014. We will have to wait and see what the outcome of the Discussion Paper and the public feedback will be. The LSUC will have to make a decision soon, one way or the other. If we choose not to allow ABS in Ontario, would we be missing out on an opportunity to improve access to justice or would we be preventing potential harm to our profession? Are the concerns for ABS 'fear-mongering' or are they legitimate concerns? For those interested in more information on ABS see the recently released research paper by Nick Robinson "When Lawyers Don't Get All the Profits", the many posts on ABS on Slaw, or complete a search for ABS on the Legal Feeds website.
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