The Canadian Bar Association came out with a bold set of recommendations with its Legal Futures report last week.
While the report focuses on innovation across the legal profession, the key aspect for many people was, of course, the proposed liberalization around alternative business structures. Among the suggestions was to allow such structures, including multidisciplinary partnerships, that could deliver both legal and non-legal services. As part of the reforms, the report suggests allowing for the payment of referral fees to non-lawyers.
The recommendations, which come amid growing pressure to shake up the profession, include several provisions to permit alternative business structures “but only on a carefully regulated basis.” The protections include subjecting such arrangements to law society entity regulation; applying the confidentiality, conflicts, and candour rules; and continuing to regulate lawyers working in alternative business structures as individuals. In addition, the proposals would see compliance-based regulation for law firms with a requirement to designate a lawyer responsible for overseeing regulatory compliance. The report includes a long list of other regulatory changes aimed at ensuring protection of the public under the proposed new framework in which non-lawyers would be able to invest in or own law firms.
Given the need to allow for greater innovation in the legal field, the recommendations are welcome. As outgoing CBA president Fred Headon noted last week, outside ownership and investment are key to making innovation more feasible and cost-effective. The barriers, of course, are many, including the fact that each province has its own legal regulator that would have to move on the proposals. There’s sure to be significant resistance, so it’s easy to see how we could face a patchwork situation where some legal regulators are willing to move on the reforms while others are saying no.
That will create some problems and barriers, but as we’ve seen with the political and legal wrangling around a national securities regulator, that’s the reality in Canada. Headon, meanwhile, hopes working with the Federation of Law Societies of Canada will help smooth out some of those issues. The CBA report, then, is a great contribution to the debate that should move the innovation and reform issues significantly forward.
— Glenn Kauth
For more, see "'Dramatic changes' on tap as CBA report touts outside ownership" and "Embracing reform."