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As lawyers gather for the Canadian Bar Association annual meeting, concerns about the future of self-regulation will be near the top of the agenda. Given recent international developments, they should be.

England, Australia, and the United States all offer lessons for Canadian lawyers: the key to preserving some self-regulation by and for the legal profession lies in a broader conception of service in the public interest, separation of disciplinary from regulatory functions, openness to competition, and greater accountability and transparency.

In England, more than a decade of discussion and debate resulted in legislation adopted on October 30, 2007, effectively ending the authority of the legal profession’s self-regulatory bodies. The Legal Services Act, 2007 implemented structures more closely tied to government than ever before. A new Legal Services Board serves as a “single, independent and publicly accountable regulator with the power to enforce high standards in the legal sector.” An Office of Legal Complaints would “remove complaints handling from the legal professions and restore consumer confidence.” The Act also included an even more radical step: specific authorization for the establishment of “Alternative Business Structures” for the delivery of legal services by lawyers and nonlawyers together.

There were other important signals about the government’s priorities. Section 1 of the Act entrenches “protecting and promoting the interest of consumers” and “promoting competition in the provision of services” as specific “regulatory objectives”.

Over the years, the Law Society of England and Wales came to be seen by both Conservative and Labour MPs as having abandoned its mandate to regulate the public interest in favour of acting as a lobbying group for lawyers. During the Thatcher years, traditional practice fiefdoms like conveyancing and appearances in court were broken down in the name of greater competition and consumer protection. A 2001 report by the Office of Fair Trading, England’s Competition Bureau, concluded that many of the regulatory restrictions on the provision of legal services were not justified by professional rules but were essentially anti-competitive in nature. A July 2003 report concluded that the market needed to be opened to new business entities such as multidisciplinary practices, and that regulation needed to be changed to meet consumer expectations about complaints handling, accountability and transparency.

Together, the 2007 English reforms constituted nothing less than a radical overhaul of a regulatory model a 2003 Parliamentary report had labeled “outdated, inflexible, over-complex and insufficiently accountable or transparent.” While the structures themselves merit attention as possible templates for Canadian reform, the political deliberations leading up to the adoption of the Act are of equal if not greater importance. They confirm that government will and can step in to end self-regulation of the legal profession when it perceives that the legal profession no longer exercises self-regulatory authority to serve the public interest.

It’s no wonder that the former Treasurer of the Law Society of Upper Canada expressed concern in the fall of 2007 about legislative initiatives that “could encroach on our ability to regulate ourselves”, referring specifically to “incursions on the independence of the American bar through the Sarbanes-Oxley Act, and the loss of self-regulation in England and Wales, as well as in Australia.”

In Australia, it was a similar set of concerns – increasing public distrust of the legal profession and greater focus on the rights of the consumer in a market-based economy – that prompted significant change and far greater government involvement in regulating the legal profession. In Queensland, for example, a lawyer’s misappropriation of six million dollars from a client placed the Law Society’s indemnity fund in jeopardy. Around the same time, the Law Society badly mishandled complaints against a Brisbane law firm over suspect billing practices. Legislation appointing a legal ombudsman to monitor the work of the profession in answering complaints proved ineffective. By January 2004, the Queensland government removed complaints handling from the Law Society entirely. A new Legal Services Commissioner became the single entry point for complaints. This commissioner was independent from the Law Society, in an effort to ensure an unbiased proceeding in appearance and in fact. The Queensland Legal Profession Act of 2007, implemented last September, further refined these reforms.

New South Wales similarly implemented an independent Legal Services Commissioner in 2004. Like Queensland, its regime replaced pure self-regulation with co-regulatory systems involving government, the legal profession and the courts. The State of Victoria has gone even further, creating an independent Legal Services Board with ultimate authority for all aspects of regulating the legal profession.

While the Law Institute of Victoria is still engaged in setting standards and rules of practice, those standards and rules are subject to approval by the Legal Services Board.

In the U.S., Congress directed the Securities and Exchange Commission (SEC) in s. 307 of the Sarbanes-Oxley Act of 2002 to regulate the conduct of lawyers “appearing and practicing before the Commission” when it no longer had confidence in the ability of state bars’ disciplinary processes to do so. A series of measures proposed by SEC staff in late 2002, especially a proposal that lawyers be required to engage in “noisy withdrawal” and report on client misconduct directly to the SEC in certain circumstances, would have transformed the relationship even further. In March 2007, the SEC’s Director of Enforcement reported that since 2002 the SEC had “sued more than 125 lawyers, nearly half of whom were General Counsels.” The regulatory framework has changed dramatically.

Predictions of the demise of self-regulation in Canada may be premature, but the signs from elsewhere signal that change may well be in the offing. The English and Australian experiences, as well as the American one, confirm that when the self-regulating profession confuses the public interest with the self-interest of the profession, trust is lost. A legal profession that fails to respond runs the risk of having solutions imposed upon it by government. Thinking about disciplinary reform and opening greater competition are two good places to start.

Paul Paton, formerly at Queen’s University, is now associate professor and director of the Ethics Across the Professions Initiative at Pacific McGeorge Law in Sacramento, California. This article is drawn from a paper commissioned by the American Bar Association for the Centennial Celebration of the ABA Canons of Ethics to be published in The Professional Lawyer later this fall.