Law Times

Law Times • December 7, 2015 Page 3 www.lawtimesnews.com Law society takes wait-and-see approach U.K. moving further ahead on legal deregulation BY JULIUS MELNITZER For Law Times espite their mutual common law traditions, the Law Society of Upper Canada and the Unit- ed Kingdom seem headed in opposite directions on the issue of the legal profession's deregulation. In the U.K., the government has prom- ised deregulatory amendments to the 2007 Legal Services Act "in the near future," and civil servants have already begun the groundwork through talks with regulators and other existing groups. For its part, LSUC's working group on alternative business structures recom- mended in September that non-licensee majority ownership "should not be further examined at this time." The group left the issue of "more limited non-licensee owner- ship models for traditional law firms" open for further study. "There are certain ABS models which should be considered in depth," the group added. Peter Carayiannis, president of Con- duit Law Professional Corporation in Toronto, says the U.K. initiatives may be motivated by the fact that legal services are now governed by a number of regulators. Indeed, Lord Chancellor Michael Gove has acknowledged that the current system creates a "danger of regulators falling over each other's feet." "There may be some element of trying to get different regulators together, but we don't have that problem in Ontario where there's only one regula- tor," Carayiannis says. Still, Gove made it clear that deregulation of the profession was as much on the table as was regulatory consolida- tion. His comments in this regard followed joint letters from the Le- gal Services Board and other regulators asking why ABS are assumed to present a greater risk to the public and, there- fore, face a greater bur- den of deregulation. Malcolm Mercer, co- chairman of the LSUC's ABS working group, is careful to point out that the September recommendations did not foreclose further study of the non- licensee majority ownership issue. "Our point was that information and experience on that issue was still developing in both the U.K. and Australia, and that it would be worthwhile to watch and wait for the time being," he says. In this regard, it's of some interest that the Canadian Bar Association's Legal Fu- tures report, which recommended a more liberal approach than the Ontario work- ing group has to date, was released a year earlier. "The CBA didn't have the advantage of watching the English experience for as long as our working group did," Mercer says. Mercer does note that in both the U.K. and Australia, ABS rep- resents more of an evo- lution than a revolution to date. "Although there has certainly been innova- tion, it hasn't been trans- formative of the market in general," he says. The greatest impact in England, of course, has been in the personal injury market, where Australian firm Slater & Gordon has raised funds publicly to acquire some 30 per cent of the market. "The implications of that aren't clear yet," Mercer says. "Our working group did observe that it's hard to conclude whether the consolidation is good, bad, or neither." Mercer also believes that a scandal ear- lier this year involving Slater & Gordon will not unduly inf luence the fate of ABS in Canada. The Ontario Trial Lawyers Association in particular did point to the scandals as indicative of what's wrong with ABS. The scandal arose after Slater & Gordon spent more than $1 billion last April to buy publicly listed Quindell Legal Services, an ABS. Subsequently, the U.K.'s Financial Conduct Authority required Quindell to restate reported profit in 2013 as a loss. The Serious Fraud Office also launched its own investigation. Mercer says the sheer size and high pro- file of Slater & Gordon's acquisition should not be regarded disproportionately. "When larger organizations fail, they make more noise," Mercer says. "And the reality is that traditional law firms, large and small, have also failed." As Mercer sees it, pointing to the Slater affair as an argument against ABS, then, is f lawed reasoning. "It's a classic example of the risk involved in using anecdotal evidence, instead of thinking seriously about the positive and negative effects of change," he says. "To be sure, situations like the Quindell affair are useful in throwing up hypothetical issues worthy of hard thought, but it's quite a dif- ferent thing to arrive at conclusions from these situations alone." LT NEWS Together with our partners Pro Bono Law Ontario is set to serve 20,000 clients this year We couldn't do it without the generous support of our sponsors and core funders : Charitable No. 877524512 RR0001 www.pblo.org Untitled-1 1 2015-12-01 9:18 AM D 'In the U.K., change came from the outside . . . I think the same will happen here,' says Peter Carayiannis. CORRECTION A photo last week misidentified Ryan Murray, and an incorrect pho- to ran with a caption about a cata- strophic injury case. A story last week on class actions incorrectly quoted Rob Gain. His actual quote was: "Transparency with the representa- tive plaintiff, transparency with the court on these issues are not best practices, they are requirements and hallmarks that must be scrupulously enforced," Gain says. Law Times regrets the errors.

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