Law Society of Ontario to vote on regulatory sandbox pilot for innovative legal tech development

Regulatory approach is too restrictive, LSO should ‘get out of the way,’ says Chris Bentley

Law Society of Ontario to vote on regulatory sandbox pilot for innovative legal tech development
Jordan Furlong, Chris Bentley

On Thursday, the Law Society of Ontario Convocation will vote on whether to approve a five-year regulatory sandbox pilot, intended to drive innovative technological legal service development. 

The regulatory sandbox is a recommendation from the Law Society’s technology task force. If approved, participants will have permission to serve consumers with new tools without having to worry about being offside professional conduct rules. Participants will be monitored and will have to report to the Law Society. During the sandbox, the Law Society will gain information about the operation of innovative technological legal services, which will inform policy and regulatory decisions, said the task force.

After their time in the sandbox has ended, the Law Society will determine whether the participants will be permitted to continue in their service delivery.

“It’s like a laboratory,” says Jordan Furlong, a legal sector analyst. “But the premise is that the Law Society recognizes that there are significant problems with access justice in Ontario. And there is a broad recognition, as well, that there's only so much that licensed lawyers and paralegals can do to fill that gap. There is a need to look for solutions or pathways towards other types of legal remedies.”

The technology task force points to three “key factors” pushing the Law Society to take action on innovative technological legal services: their proliferation and demand, the accelerated adoption caused by the pandemic and the emergence of regulatory sandboxes in other jurisdictions.

In its report, the Law Society’s technology task force said the regulatory sandbox will help facilitate access to justice by removing barriers to technological development that will serve areas of high unmet legal need. It will also ensure consumers of innovative technological tools have the same safeguards as clients of lawyers, said the task force.

Rather than facilitating a regulatory sandbox, legal tech innovation would be better served if the Law Society were to simply “get out of the way,” says Chris Bentley, managing director of the Legal Innovation Zone and Law Practice Program at Ryerson University and former Attorney General of Ontario.

“We have a justice crisis in Canada that long predates the pandemic,” says Bentley. “And out of desperation, people are looking everywhere, and some courageous entrepreneurs are stepping up. But those entrepreneurs are inhibited by regulators attempting to bury them in regulation or challenging their right to do anything.”

“Our regulatory approach has been one of denial to the consumer, where it should be one of facilitating access to justice,” he says.

The current regulatory framework, where non-lawyers cannot invest in or partner with legal service providers, produces a situation in which 80 per cent of legal needs are go unmet, says Bentley.

“You need to free lawyers to compete and develop and follow the market, because the legal profession as lost most of the market.”

A regulatory sandbox is a moderate approach, midway between “slamming the door shut” on anyone other than lawyers delivering legal services – which is the current situation in Ontario – and the “wild west” of permitting anything and everything, says Furlong.

“Short of outright prohibition, which we've been doing for a long time, and I think has kind of run its course, this is the next sensible, moderate step in the direction of reforming and increasing the effectiveness of the legal services market,” he says.

As the legal community has long been debating the features and pitfalls of allowing non-lawyers into the market, the Law Society’s regulatory sandbox will provide crucial data for that conversation, says Furlong.

“This sandbox is proposed to be a five-year pilot. I think in the next 12 months, we're going to see massive change,” says Bentley. “And my concern for my colleagues is, rather than trying to regulate the future – which you can't do – we should be training, educating, arming lawyers to take advantage of the future.”

Formed in 2018, the technology task force is mandated to consider the role of technology in legal service delivery and the Law Society’s tole in regulating it.

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