Alternative Business Structures' 'Charity Step' to Ending the General Practitioner

68 Pages Posted: 21 Aug 2017 Last revised: 30 Sep 2018

Date Written: October 5, 2017

Abstract

Alternative Business Structures (ABS investors owning law firms), could hasten the end of the general practitioner throughout Canada. Investors, not being lawyers, would have to be granted an exception to law society bylaws in regard to the offence of “unauthorized practice of law,” (UPL). If so, so should the commercial producers of legal services — producers such as, LegalZoom, RocketLawyer, and LegalX. In the U.S., they have shown that they can rapidly eat into the market of the general practitioner. And they have begun to have a presence in Canada; see: LegalZoom.ca; and, MaRS launches LegalX.

But because law societies in Canada have done nothing to try to solve the unaffordable legal services problem (“the problem”), they have undercut their ability to prosecute them for the UPL offence. And, ABSs cannot solve or lessen the problem because any improvement they might finance cannot produce affordable legal services for middle and lower income people because the method of producing legal services is very obsolete. Law societies’ refusal to try to solve the problem, will remain as an obstacle to UPL prosecutions of the commercial producers who can serve middle and lower income people with their legal services, particularly so when they have a large clientele of many thousands of customers.

In September 2017, the law society in the province of Ontario (the Law Society of Ontario (LSO)), approved in principle the “charity ABSs,” i.e., to allow lawyers and paralegals to deliver legal services through various non-profit civil society organizations (CSOs), to clients of such organizations, allegedly to facilitate access to justice.

It has reactivated a long existing debate between those lawyers whose clients can be ABS investors, and those whose clients are “of the people and small business and institutions,” i.e., the clients of the general practitioner, the solo practitioner, and the small unspecialized law office. It is feared that allowing such ABSs will definitely lead to all other forms of ABSs being allowed. The purpose of such investors is to “corner the market” for routine legal services — services readily automated or that can be substantially assisted by automation. That is a large threat to general practitioners and to “personal injury” lawyers. However, the experience had in England and Australia has shown that ABSs cannot have significant impact upon the problem of unaffordable legal services.

Law firms who have such investor-clients, particularly so the large corporate-commercial law firms, can potentially earn millions of dollars in legal fees representing such investors in hundreds of negotiations with individual law firms. Because the unaffordable legal services problem has left middle and lower income people able to afford only routine legal services at most, and as a result, the majority of law firms very short of clients, this is a particularly opportune time to be ready to represent such investors who offer to finance automation facilities for such financially-stressed law firms. Therefore benchers (the elected law society lawyer-managers) whose law firms can represent such investors wish to secure the necessary changes to law society bylaws for the full approval (legalization) of all types of ABSs, thus exempting them from UPL prosecution.

LegalZoom, etc., will fill a legal services economic vacuum — a vacuum that the law societies refuse to try to fill themselves by solving the problem, at a time when, because of the volume and complexity of laws, people have never needed lawyers more. It contradicts and defeats what the Canadian Charter of Rights and Freedoms and Canada’s law societies are supposed to guarantee, i.e., rights, freedoms, the rule of law, and adequate access to justice by way of affordable lawyers. If law societies won’t try, other sources should not be barred by such law society prosecutions. Although ABSs can finance the automation of routine legal services for individual law offices, they cannot tailor the development and use of such automation, and progress along with its development from the simple to complex legal services, the way that the large, well financed organizations that provide commercially-produced legal services can.

The legal profession needs its own management structure that will enable it to escape being owned by ABS investors, and not be at the mercy of the commercial producers—a law society structure that can bring the benefits of automation and the progress of electronic technology to the population as effectively as any other management structure. That requires a civil service to serve all of Canada’s law societies. The necessary components for such a management structure already exist, which include the precedent set for such a “law societies’ civil service” by Ryerson University in Toronto and the University of Ottawa by establishing LSUC’s bilingual, LPP (Law Practice Program), an alternative to articling to be qualified to be called to the bar. (Because of the problem, articling jobs for graduate law students to gain experience by working in law firms have disappeared.) Whether to make legal, ABS investors’ buying-into law firms in whole or in part ownership, whether as charities or commercial investors, has to be decided within this wider context, including, it is said, ”lawyers and law professors are particularly ill-suited to address a post-LegalZoom world.”

This article devotes considerable space to the solution to the unaffordable legal service problem, because: (1) it is a problem that law societies can solve, which would render ownership of law firms by ABSs unnecessary, and irrelevant to the delivery of legal services; and, (2) electronic technology will create many more such problems. Therefore, law societies should first solve the unaffordable legal services problem. That should be accepted as an ethical imperative before law societies sponsor: (1) ABSs; and, (2) “alternative legal services” such as clinics providing legal information; and, (3) hoping without proof or any analysis, that “apps” (the application of electronic technology to the provision of legal services), can somehow adequately deal with the problem. They are very inadequate substitutes for a person’s “own lawyer” providing affordable legal services and dedicated to each client within the solicitor/attorney-client relationship — a law society disciplined relationship with advantages beyond those of the buyer-seller relationships with the providers of “apps.” And which dedication and duty may often conflict with the profit-duty imposed by investment contracts with ABS investors.

Keywords: Alternative business structures, access to justice, alternative legal services, apps, LegalZoom, LegalX, general practitioner, unauthorized practice of law, Canadian Charter of Rights and Freedoms, legal services

Suggested Citation

Chasse, Ken, Alternative Business Structures' 'Charity Step' to Ending the General Practitioner (October 5, 2017). Available at SSRN: https://ssrn.com/abstract=3020489 or http://dx.doi.org/10.2139/ssrn.3020489

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