Law Times - Newsmakers

14 December 2014 Ten years aFTer the report by David Clementi on the regulation of legal services shook the industry in England, Canadian law appears to be having a moment of its own. Peter Carayiannis, founder and president of Conduit Law PC, says while interest in the future of the profession is still low, more lawyers are starting to pay attention to issues such as alternative business structures in light of new reports this year. "Many more people are engaged in the discussion around ABS, engaged in the dis- cussion around the business of law, engaged in the discussion around what's next," he says. The issue gained renewed momentum with the Canadian Bar Association's release of its long-awaited Legal Futures report in August. The product of two years of research, the report set out a number of dramatic rec- ommendations that, if implemented, would upend Canada's legal establishment. At the top of the list was providing lawyers opportunities to practise outside of the part- nership and sole proprietorship models that have dominated the profession. The recom- mendations included entering into fee-sharing arrangements and allowing non-lawyers to invest in legal practices. "We need to find a way to balance the loosening of regulation on one side with new models of regulation that will help us facili- tate working with other professionals while maintaining those principles and values that are so important to what we do," said former CBA president Fred Headon at the release of the report during the organization's annual conference in August. The report also included recommen- dations for creating parallel tracks in legal education for specialists such as legal process analysts and legal knowledge engineers. But alternative business structures formed the heart of the recommendations, and they were also the subject of a recent paper from the Law Society of Upper Canada. In Febru- ary, law society benchers voted to consult the Ontario bar on alternative business structures after a working group concluded change is necessary. "The existing tight regulatory restrictions on business structures are not justifiable given the lack of evidence that liberalization will cause harm," said the working group's report. The report proposed four separate models for the future: • Allowing non-lawyers to own up to 49 per cent of a legal services provider. • Allowing non-lawyers to fully own legal service providers as long as they only offer legal services. • Allowing non-lawyers to own up to 49 per cent of an entity that provides both legal and non-legal services. • Allowing non-lawyers to fully own enti- ties that provide both legal and non-legal services. There has been pushback, however, especially from solicitors. They've been trying to boost their numbers among law society benchers at least in part to fight back against the prospect of alternative business structures. Some solicitors feel alternative business structures are solving problems faced primarily by barristers. "We don't feel our clients have an access to justice issue," said Nancy Johnson, chair- woman of the County of Carleton Law Association's real state lawyers committee. "We tend to give very good service to our clients at a pretty reasonable price." The law society put the working group paper out for consultations with the bar in September. But even before the regulatory wrangling has come to an end, non-lawyer entities are already making a splash. Deloitte, the account- ing firm, bought ATD Legal Services PC, a legal process outsourcer, earlier this year. "They [ATD] were service providers to law firms just like we are as part of our discovery practice, so it's basically adding a next stage or step we did not currently have in our practice," said Peter Dent, national leader of Deloitte's forensic services practice in Canada. Deloitte had already made forays into the legal world with Deloitte Tax Law LLP, an affiliated law firm. Other professional service firms aren't far behind. Greenburg Turner, an immigration firm, joined KPMG Law LLP in 2012, adding to what had been solely a tax practice. Ernst & Young maintains alliances with Egan LLP for immigration and Couzin Taylor LLP for tax. And even without alternative business structures, traditional models remain under pressure. Cognition LLP, the low-overhead legal services provider founded in Toronto, expanded into Calgary and Atlantic Canada. Even the full-service firms were getting in on the action. Torys LLP announced it was opening a Halifax office that would only do fixed-fee work such as due diligence, contract review, and corporate reorganizations. "I think it's part of the evolution of the practice of law," said Les Viner, Torys' manag- ing partner. "It's not a sudden transformational event but it's very much a part of being responsive to the continuing changes in the marketplace and serving clients better." The LSUC is accepting comments on the proposals until Dec. 31, 10 years to the day after the release of the Clementi report. Carayiannis hopes the law society will keep access to justice at the forefront during its consultations. "I'm not going to presuppose from the front end that there is one preferred, pre- ordained business structure that the law society should bless," he says. "We're trying to serve the needs of the public and ulti- mately whatever we do should enhance access to justice as broadly defined as that might be." top stories ABS, new models gain momentum as future of law debated Business upheaval By arshy mann

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