Editorial: Report a breath of fresh air

With the collapse of Heenan Blaikie LLP sparking debates about the future of the legal profession, the Law Society of Upper Canada report on alternative business structures released last week was a breath of fresh air.

The report from the LSUC’s alternative business structures working group proposed four models that represent a major change to how firms operate:
  • Permitting up to 49-per-cent ownership by non-licensees in entities only providing legal services.
  • Restricting firms to providing legal services but with unrestricted ownership.
  • Allowing up to 49-per-cent non-licensee ownership and permitting firms to provide legal and non-legal services except those identified as posing a regulatory risk.
  • Permitting unlimited non-licensee ownership and the provision of legal and any other services except where there’s a sufficient regulatory risk identified.

They’re only proposals and the law society will, of course, take its time in reviewing and consulting on them. And while it’s unclear what the best option is right now, the report is at least forthright in asserting that the status quo isn’t an option.

“The existing right regulatory restrictions on business structures are not justifiable given the lack of evidence that liberalization will cause harm,” the report states.

“This is coupled with substantial evidence that business structure liberalization combined with entity regulation is likely to provide greater flexibility and more options for both licensees and the public.”

Among the benefits of the proposed changes are greater access to capital, innovation, and more efficient operations through economies of scale. Other countries have already tried aspects of these reforms, so it will be important to apply the lessons learned in implementing any changes here.

With Heenan Blaikie’s demise renewing discussions about the need for firms to adapt or die, the report is timely. And with the Canadian Bar Association looking at similar issues with its Legal Futures Initiative, the prospects for reform happening sooner rather than later appear to be growing.
Glenn Kauth

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