Benchers approve ABS consultation

Posted: 02/28/2014

cta Alternative Business StructuresThe prospect of non-lawyers owning law firms is one that will be closely examined during a Convocation-approved consultative process.

Benchers yesterday officially adopted an initiative to further examine various alternative business structure (ABS) models, enhancing the Law Society’s ongoing commitment to facilitating access to justice.

“We want to engage the legal profession and other interested stakeholders in a thorough consultation about the concepts put forward by the Law Society’s ABS Working Group in its February report to Convocation,” Treasurer Thomas Conway said.

The Law Society is one of the first regulators in North America to undertake such a consultation. Re-orienting the ownership and management of law firms is one of many changes that will be looked at.

Structural and service models to be reviewed include:

  • legal services only, and allow non-licensees up to 49 per cent ownership
  • legal services only, with no restrictions on ownership by non-licensees
  • both legal and non-legal services, except those identified as posing a regulatory risk, where non-licensees would be permitted up to 49 per cent ownership
  • legal and non-legal services and any other services, except where there is sufficient regulatory risk, where non-licensees would be permitted unlimited ownership.

The goal in studying potential changes is to provide more options and choices for consumers, Treasurer Conway said.

“These alternative structures may also lead to more innovation for the profession. Investments in information technology, for example, could create more convenient public access to legal services — and at the same time help lawyers and paralegals develop efficiencies that would enable them to provide services at a lower cost,” he said.

“We need to hear from lawyers and paralegals and any other interested groups about these ideas, so we can determine how best to proceed.”

The Working Group was established in 2012 to explore various options available for the delivery of legal services, including structure, financing and the related regulatory processes — and to recommend specific models and arrangements suitable for Canada and Ontario.

The Working Group will prepare a report following its consultation, including recommendations, for Convocation’s consideration.

Convocation also approved the ABS Working Group’s recommendation that the Law Society further develop a framework for the regulation of law and paralegal firms and other business entities that provide legal services.

This would provide the Law Society with greater ability to engage in more proactive and preventive regulation that could increase public protection.

In addition, the governing board approved further exploration and consideration of a compliance-oriented regulatory regime.

Under such a framework, licensees and law firms would be required to have a process in place to respond to complaints.

The ABS Working Group will consider and propose potential revisions to Law Society rules and bylaws regarding fee-sharing, referral fees, direct supervision and ownership restrictions — to ensure they are proportionate to the risks they are designed to reduce.

“Amendments to our rules and bylaws could provide lawyers and paralegals with greater flexibility, enabling them to find more efficient ways to deliver their services to the public,” Treasurer Conway said.