Law Times

Page 4 May 4, 2015 • Law Times www.lawtimesnews.com entities other than law firms. In terms of the advantages of moving to- wards such a change, regulating firms may allow the law society to better respond to complaints, according to the LSUC report, which suggested firms could designate an individual in charge of dealing with com- pliance matters. This individual — or "a legal director," according to the report — would also be responsible for trust account matters and ensuring the firm's record keeping is current. That process would allow the law society to provide notification to the firm if one of its lawyers is under a misconduct investiga- tion. The law society may also require the designated legal director to address the is- sue on "a firm level" in areas such as lack of supervision, advertising or conf lict of inter- est issues, the report noted. "Jurisdictions that have adopted compli- ance-based regulation have used different tools to build an ethical infrastructure for firms. One area of focus has been to adopt outcomes-focused principles applicable to firms — firms are required to comply but the regulator does not prescribe how to achieve compliance." For example, firms would have to avoid conf licts of interest, and one way to comply would be to implement a conf licts-check system. The law society, however, wouldn't necessarily require such a system. "The key principle is that the responsibility is that of the firm to determine how to achieve compliance," according to the report. "The regulator would assist firms to achieve compliance by providing tools and tem- plates and working with firms if they are non-compliant." Malcolm Mercer, the chairman of the committee overseeing the issue, says it's unclear at this point whether staff would present a single framework for entity regulation or several options for consid- eration by Convocation. And in light of the bencher elections and the potential changes to the committee's composition, Mercer couldn't say when the committee would bring a final report to Convocation. The discussion in Ontario comes as Nova Scotia is making its own moves on the issue. In that province, the current focus on individual lawyers will shift to the firms, government departments, and other organizations they work for. "We plan to dramatically change how we operate," said Nova Scotia Barristers' Society executive director Darrel Pink in a letter to lawyers across the province. The Nova Scotia regulator already has an entity regulation steering committee up and running to provide hands-on co-or- dination of the project and has earmarked $90,000 for the effort in the next fiscal year. The status quo is no longer accept- able or effective, says Pink. Technological advances, changing demographics, in- creased mobility, and the arrival of the global marketplace have combined to create a new legal landscape, he notes. Under entity regulation as envisioned by the Nova Scotia regulator, there will be fewer rules and requirements. In their stead are 10 principles to which it will hold entities accountable. They include developing competent practices to avoid negligence; charging appropriate fees and disbursements; and sustaining effective relationships with clients and others. The principled approach will give legal entities greater freedom and f lexibility in determining how they meet the regula- tor's requirements such as mandatory continuing professional development. The f lexibility will be good for lawyers, their organizations, and their business, says Tilly Pillay, president of the Nova Scotia regulator. "We are freeing up lawyers to provide more services to clients by reducing the burden of red tape." Pillay believes entity regulation will also enhance access to justice, the regula- tor's second strategic priority. In addition to requiring fewer hours for regulatory compliance and related paperwork, the hope is that entity regulation will spark innovation. At present, the Nova Scotia regulator is working with the Canadian Bar Association's Nova Scotia branch to discuss where its report on the future of the legal profession and its own work on the issue are in alignment. The factors driving the need for entity regulation are global, says Pink. "There is a level of co-operation and collaboration that is unprecedented." The composition of the entity regu- lation steering committee ref lects the interest in and support for the work the Nova Scotia regulator is doing. Sitting around the table with local lawyers are Andrew Garbutt, director for risk with the Solicitors Regulation Authority for England and Wales, and Don Thomp- son, executive director of the Law Society of Alberta. The bar council also passed a motion that described at a high level what the regulations would require of each legal entity. Among the five requirements are the need to designate an individual who will be responsible for compliance; estab- lish and maintain a management system that promotes competent and ethical legal practice; and undertake self-assess- ment and report to the regulator on the management system. "You will see that we are at the early stages of our work, but we have a clear path forward and are very excited by what the future may bring," said Pillay in her first report to lawyers as chairwoman of the entity regulation steering committee. LT NEWS CANADIAN LAW LIST 2015 This is more than a phone book. It is your instant connection to Canada's legal network. 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Call 1.800.387.5164 or visit www.carswell.com Untitled-7 1 2015-03-02 11:07 AM Continued from page 1 Nova Scotia moving forward on entity regulation initial merger negotiations collapsed in 2013 Chris Pinnington, chief executive officer of Dentons Canada, is looking forward to the relationship when the firms merge later this year. "McKenna Long has a particular understanding of Can- ada in all of its dimensions and of how to move things across the border seamlessly," he says. The merger also gives Dentons a presence in Denver, a leading mining and energy hub. "Denver is a good geographic, client, and industry match with the Canadian practice," says Joe Andrew, the London, England-based global chairman of Dentons. Still, there's a bit of a cloud hanging over the McKenna Long & Aldridge combination, which followed less than three months after Dentons announced a merger with Chi- nese firm Dacheng in January. The issue is that McKenna has suffered a raft of departures in the last 18 months. The most recent to leave is Mark Lange, head of the Atlanta- based firm's national tax practice, who decamped in late April for Holland & Knight LLP. When Dentons announced the Dacheng merger, the firm claimed a global total of 6,550 lawyers. At the time of the merger with the U.S. firm, McKenna Long & Aldridge's web site took credit for "500 attorneys and public policy advisors." At the time of the announcement of the merger with the U.S. firm, Dentons' global count was "6,600 lawyers and professionals," an increase of less than 100. In a new release, Dentons explained the anomaly: "Den- tons has gained lawyers since the . . . [Dacheng] announce- ment. The way the category of 'lawyers and professionals' is counted differs from region-to-region. Through the integra- tion process with [Dacheng] . . . we have decided to take the most conservative figure approach on a go-forward basis, which does not include a category of several hundred law- yers in China who are awaiting final certification. That cat- egory accounts for the difference in the number announced in January and the current 6600 lawyers and professionals — including the outstanding 1100 lawyers and professionals in the US — that we will have once both the combination and the merger are effective later this year." In a further statement, Dentons said: "The num- bers, which are always estimates until launch, are more than 6200 lawyers and professionals for Dentons and [Dacheng] . . . and more than 400 lawyers and profession- als for McKenna Long." What's interesting about the last statement is the lan- guage: the original claim from Dentons after the Dacheng merger was 6,550 "lawyers." The current count, including the Chinese lawyers awaiting final certification, is 6,600 "lawyers and professionals." Following an initial interview that broached the sub- ject, Law Times asked Dentons to clarify the difference between lawyers and professionals but didn't receive an answer. The failure to do so may ref lect continuing un- certainty about the number of lawyers who will remain at McKenna Long & Aldridge after the merger is complete. There's no doubt that the merger with Dentons has been problematic for McKenna Long & Aldridge since it sur- faced. The initial negotiations collapsed in November 2013 after the U.S. firm made a last-minute decision not to merge. In the year following, gross revenue plunged 10.6 per cent. Although revenue per lawyer rose by 1.5 per cent, prof- its per partner fell 8.3 percent. The number of lawyers fell from 530 at the beginning of 2014 to about 425 at the end of the year. During the first four months of this year, the count declined even further to about 400, but that included "professionals." When interviewed by Law Times, Giffin's assessment was that "at least 75 per cent" of the lawyers who were at McKenna Long & Aldridge would remain there, a num- ber he calls a "huge percentage of colleagues." LT Continued from page 1

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