Anna Fung Click here to see full sized version.

Reaction to the federal competition watchdog’s report on self-regulated professions from the legal community has been luke warm.

The competition bureau’s study released on Dec. 11, 2007 targeted five groups of self-regulated professionals, including lawyers, with the aim of flagging barriers to entry in each profession and removing obstacles which might unnecessarily restrict competition.

Gavin MacKenzie, the treasurer of Ontario’s law society was dismissive of the report, criticizing the competition bureau’s approach for reflecting “a disappointingly narrow view of the public interest.” MacKenzie sniped that the competition bureaus’ focus on “increasing the productivity of the legal services industry” runs counter to the law societies objectives of upholding “high standards of competence and ethics in the interests of protecting the public.”

Slightly more favourably disposed, the president of the B.C. law society, Anna Fung called the report “fairly balanced” and said that there were some recommendations that are “worthy of further review, consideration and possibly even adoption.” However, she criticized some of the recommendations for not taking into “account the specific nature of legal services.”

In contrast, Paul Paton, a law professor at Queen’s University and a member of the Canadian Bar Association committee on National Ethics & Professional Issues praised the report for raising the interests of consumers, which he says is “welcome, necessary and overdue.” Still, he thinks the report is too timid. “It pushes in the right direction, but it is not as bold as it could be.”

Key recommendations in the section of the study dealing with the legal profession include removing restrictions on comparative advertising for price and other verifiable factors; establishing self-regulation for paralegals; removing unjustified prohibitions on other legal service providers; allowing non-lawyers to be compensated for referrals and allowing for multidisciplinary practices in provinces other than Ontario and Quebec.

Restrictions on advertising
The study recommends that law societies lift the restrictions on comparative advertising for price and other verifiable factors.
Chris Busuttil, a representative from the Competition Bureau said that of all the recommendations in the study “removing restrictions on advertising is really paramount...  Someone can go to Best Buy and learn more about the flat screen TV they are thinking of purchasing than they can right now when they go and try to pick a lawyer.”

Currently, Ontario is the only province that permits even lawyers to advertise prices. MacKenzie said the restrictions in Ontario on comparative advertising are designed to protect the public from misrepresentations. “In talking about legal advice and legal representations we are not talking about fungible commodities. If we were to allow lawyers to compare fees and services there would be a serious concern about the public being misled.”

Paton from the Queen’s University is in favour of allowing lawyers to compare fees and services but cautions that posted prices can be deceptive. “I think it is misleading to post pricing as loss leaders and than up-sell. That doesn’t do the public or the profession any good.”

Regulation of paralegals
The study argues that law societies should not have a role in regulating paralegals since it restricts the public’s alternatives for legal services and places law societies in a conflict of interest situation.

Ontario will be the first jurisdiction in North America to regulate paralegals when it issues its first paralegal licenses on May 1. At present 2,200 experienced paralegals and graduates of paralegal post graduate courses have applied to write the licensing examination in Ontario.

Speaking for the Competition Bureau, Busuttil said that having the Ontario law society regulate paralegals creates an inherent conflict of interest since lawyers compete against paralegals for certain legal work. “The bottom line is that paralegals in many instances can offer products that compete with what lawyers offer.”

MacKenzie argued that the Ontario government mandated the law society to regulate paralegals and that the law society is the ideal body for the task. “In other jurisdictions where they have had multiple regulators of legal services, such as England most prominently, where they have one body to regulate barristers, a second for solicitors a third for law clerks, a fourth to regulate legal executives etc.... it has led to great public confusion, a lack of accountability and inevitable inconsistencies in regulation.”

In Ontario, paralegals can offer services directly to the public, whereas in all other common law provinces, paralegals operate under the supervision of lawyers. Christine Uhrmann, the director of the B.C. Paralegal Association said her group would be interested in working with the B.C. law society on the path towards self-regulation, but objects to having the law society serve as the regulatory body on the grounds that it creates a conflict of interest.

Prohibitions on legal service providers
The study argues that law societies should not prohibit related service providers such as paralegals and title insurers, from performing certain tasks unless the re is “compelling evidence of demonstrable harm to the public.”
Speaking for the B.C. law society, Fung complained that the threshold to show “demonstrable harm is way too high.”

“Sometimes there is harm in the erosion of the integrity of the legal system and peoples’ faith in the adequacy of the legal advice they are receiving. The public can’t judge the quality of legal advice they get from providers in general,” Fung argued. “If you did not have the assurance that the people providing the advice are actually qualified to do so, there can be long term affects on the integrity of the legal system.”

Compensation for referrals
The competition study recommends allowing non-lawyers to be compensated for referrals. Busuttil said under the current rules there is “not much of an incentive for a non-lawyer to recommend a lawyer,” and he does not see any justification for prohibiting compensating non-lawyers for referrals.

Jim Peacock, president of the Alberta law society objected to this recommendation arguing that it places lawyers in a potential conflict of interest. “A lawyer owes a duty of loyalty and good faith to a client and should not be involved in a relationship where they are paying people to refer clients to them.”

In contrast, MacKenzie said that the Ontario law society will be willing to consider this recommendation.

Speaking for the B.C. law society, Fung said “lawyers need to be charging fees based on the services they provide. If lawyers were to pay fees to non-lawyers for referrals, those costs would wind up being passed on to clients.” However, Fung noted that in other countries immigration consultants routinely refer work to lawyers and receive fees for referrals and their have been calls from members to relax the rules on compensating non-lawyers for referrals.

Multidisciplinary practices
The study recommends allowing multi-disciplinary practices between lawyers and non-lawyers. At present only Ontario and Quebec permit multidisciplinary practices. The Ontario law society opened the door to multidisciplinary practices in November 2000, provided that all partners in the multidisciplinary practice abide by the law society’s rules.

Only a handful of multidisciplinary practices have taken advantage of the opportunity according to MacKenzie. “Our experience has been that the changes have been far from revolutionary. We’ve had surprisingly few firms register as multi-disciplinary practices.”
Fung said that the issue of amending their rules in B.C. to permit multi-disciplinary practices was debated five years ago and that it might be time to reopen the issue.

Next steps
Other recommendations in the report include decreasing the duration of legal training and articling, facilitating the mobility of lawyers from and to Quebec,  removing restrictions barring foreign lawyers to practice as foreign legal consultants in Quebec and the territories and removing the residency requirements for foreign legal consultants, encouraging law societies to adopt specialist certifications similar to Ontario and eliminating the maximum percentage to which lawyers are entitled under contingency fee agreements in B.C. and New Brunswick.

The Competition Bureau plans to assess in two years time how the five professions reviewed in the study have addressed the recommendations.

Paton advised law societies and legislators to take this report seriously. “If there isn’t implementation of a number of recommendations, than I’m hoping that the law societies will come up with a well thought out, well articulated case which makes out why it is in the public interest and not the professions interest.”