The rush to regulate law firms
Allan Fineblit, former chief executive of the Manitoba Law Society, once noted that even those who make a living regulating the legal profession sometimes wonder why they regulate lawyers individually, but not law firms.
He’s absolutely right. Most Canadians have little interest in a seemingly mundane, l ow- stakes debate about regulating law firms or individual lawyers. But inside baseball or not, this is a point that should catch Canadians off-guard.
“I think most Canadians would be surprised to learn that law firms are not subject to any regulation,” says Adam Dodek, a professor at the University of Ottawa Law School.
That, however, is about to change. Over the past 12 months, there has been a rush to go “law firm” as law societies in British Columbia, Alberta, Saskatchewan, Manitoba a nd Ontario have all announced or commenced consultations on law firm regulation. In fact, B.C.’s Law Firm Regulation Task Force is on the road right now, consulting with lawyers in Castlegar on Wednesday, Abbotsford on Thursday and Kelowna on Friday.
It’s an important shift, says Iain Miller, a legal regulation expert in England.
“It’s difficult to overstate how radical a step entity regulation of law firms actually is,” he says. “It’s not only that the entire history of the regulation of Canadian lawyers has been based on the individual, but there are very few examples of entity regulation of lawyers worldwide.”
To date, England and Wales, and Australia, have been the only jurisdictions outside of Canada experimenting with law firm regulation.
“Law firms are at least as important as individual lawyers in the legal marketplace,” Dodek says. “They exert tremendous power and control over the lawyers and employees who work for them.”
Moreover, individual lawyers often don’t control all conduct within a law firm. Accounting systems, the training of staff, students and young lawyers, and the conflicts- checking system are beyond the control of individual lawyers, particu- larly in larger firms. This creates a gap in regulation.
“We felt it’s appropriate to place responsibility for that kind of activity on a firm,” says Herman Van Ommen, chair of the Law Society of British Columbia’s task force. “We also want law firms to ensure that their lawyers behave properly and to the highest standards, and hopefully prevent complaints.”
Despite t he apparent novelty of regulating Canadian law firms, Nova Scotia has been quietly doing so since 2005. Later this year, the province’s legal regulator, the Nova Scotia Barristers’ Society, may once again take the lead, as it considers how best to expand its regulatory authority to include “all entities” that provide legal services — not just law firms.
“Our obligation as regulators is to be out in front and not simply be responding to things that are happening in the profession,” says Darrel Pink, executive director of the Nova Scotia regulator. “Given the current rapid pace of change, a modern regulator has to be much more in touch with the environment in which legal services are being delivered.”
It has taken 10 years for regulators in the rest of Canada to catch up to Nova Scotia on law firm regulation. It may take far less time for them to follow Nova Scotia’s lead on expanding its regulatory authority to other entities in the legal services space. Van Ommen says that once a regulator develops the tools it needs to regulate law firms, it’s much easier to take the next step and move to regulate other entities, too.
In an era of national law firms, it will become harder and harder for provinces to justify a distinct set of regulatory requirements that are not in sync with Nova Scotia. Alberta, Saskatchewan and Manitoba are already acting in concert on this issue. As goes Nova Scotia, so might go the country.
Entity regulation might seem dull to outsiders. But this seemingly mundane discussion may very well set the course of a modern legal services industry in Canada.