August 8, 2014 – Real Estate Liaison Group ABS and the Future of Legal Services

The Changing Face of Legal Services Society and business have changed radically in the last 20 years, aided by technology and globalization Many lawyers and paralegals have changed the way that they deliver legal services to clients to adapt to the new needs of clients and business realities Unregulated companies providing internet based legal services have multiplied

Changing Face of Legal Services There has also been a change in how the public responds to issues traditionally handled by lawyers: Clients and potential clients cite affordability of legal services as an issue Clients asking for convenient and easy access to legal services Increasing numbers of self-represented clients

The Law Society’s Role and ABS The Law Society is reviewing ABS because it may have a role in helping Ontario lawyers and paralegals to provide accessible and effective legal services to the public.

What is ABS? ABS can include: participation by non-licensees in the ownership of legal services; and provision of non-legal services along with legal services through the same firm or entity.

The ABS Consultation The Law Society’s ABS Working Group has studied various aspects of ABS and produced a report in which it recommends further study of 4 options. We are now consulting with the public, interested organizations and lawyers and paralegals to better understand whether any of these models might work in Ontario.

Outline of Presentation -The Ontario Landscape -Why do people seek legal services? -What do we know about unmet client needs? -What is the experience of other jurisdictions? -What might an Ontario ABS look like? -Closing Observations -What are the next steps for the Law Society?

The Ontario Landscape Other than in MDPs, only lawyers (and regulated paralegals) can be partners in law firms or shareholders in professional corporations Non-lawyers can be partners in MDPs if they provide services to clients that are controlled by lawyers and support or supplement to legal practice Fees cannot be shared with and referral fees cannot be paid to non-lawyers

The Ontario Landscape now The justifications for our current tight constraints on business structure seem to be: client protection risk to advice/judgment in the interests of the client risk to confidential and privileged information protection of the legal system and administration of justice

The Ontario Landscape Most individuals and small businesses are served by lawyers in sole practice and in small firms which are the face of the legal professions for the majority of the public. Individuals go to lawyers for Criminal law Family law Personal injury Real estate transactions Wills, estates and powers of attorney

The Ontario Landscape Lawyers serving individuals and small businesses are a critical part of access to legal services in Ontario Many lawyers are working within the traditional law firm model, offering legal services to clients based on an hourly rate Others are innovating, pushing the envelope, and sometimes running into regulatory constraints

Current Innovations The innovations in services include: -experienced in-house counsel services available to corporate clients on a fixed-fee basis, as well as in-house counsel services on an as-needed basis; -legal forms are available online for download. The available forms include a Statement of Claims, a Statement of Defence, a Power of Attorney, and Wills; -residential real estate services available almost around the clock by a large staff supervised by a real estate lawyer; and -legal services offered via the internet on a software platform developed for the lawyer.

Greater opportunity Could changes to regulatory requirements permit greater opportunity for innovation? New ways to service potential clients currently not accessing legal services Opportunities for small firms to structure their businesses more effectively Opportunities for lawyers and paralegals to offer legal services to clients in a way that meets the public’s needs and demands

“The Cost of Law” A law firm has $140,000 annual gross revenue Money and time spent on overhead, insurance, payroll, administration, CPD …. $70,000 take home? Maybe?

“The Cost of Law” $600 $200 $40 Big bizEveryone else $450

Professor Hadfield’s solution Let lawyers do law Reduce the cost of the non-law elements of legal services In the same way every other market does

Client Needs Since 1994, there have been at least 12 studies of unmet civil legal needs of individuals. In 2009, the Federal Department of Justice published The Legal Problems of Everyday Life showing that legal advice was sought for less than 15% of justiciable problems in Canada. In 2009, the Ontario Civil Legal Needs Project found that one- third of low and middle income Ontarians did not seek legal assistance for what they regarded as legal problems. Trebilcock, Duggan, and Sossin

Client Needs In England, the Legal Services Board reports that: Four out of five small and medium sized enterprises (SMEs) don’t get legal advice when they have a problem 87% of SMEs don’t think lawyers offer value for money even though 54% of those SMEs see law as very important for doing business There has been no comparable Canadian research into legal needs of small businesses.

ABS in Australia In Australia, non-lawyer ownership has been permitted for over a decade in incorporated legal practices (ILPs) 30% of Australian firms are now ILPs, the substantial majority of which are traditional small firms The complaint rate for ILPs is 1/3 of the complaint rate for non- ILPs

ABS in England In England, ABSs started to be licensed in ,590 solicitor firms as of March ABSs licensed by SRA to June 6, 2014 Like Australia, most ABSs are existing small firms

ABS in England The following graphs show that in England, most ABS: became an ABS to promote a non-lawyer to owner and/or to gain access to new sources of investment; see themselves as no different than a regular law firm, use ABS as a tool to respond to consumer and business demands

ABS in England

In England, ABS are only 1% of the proportion of legal organizations but account for 5% of the “turnover” Most ABS are in the area of personal injury, seconded by consumer problems and welfare and benefits – not what you would expect

ABS in England

What do ABSs look like? Mostly existing practices seeking greater flexibility but also the franchise the large firm the retail located practice the internet-based model the specialist

Innovation – outside the regulated space Corporations owned and financed by non-lawyers have sought to fill pockets of legal demand.

Legal Zoom Not regulated in the United States but 70% of U.S. citizens recognize their brand Legal Zoom currently enjoys 50% market share of the legal services needs of consumers and small business owners in the U.S. Legal Zoom has reduced the percentage of Americans without wills, together with other online providers, to 50% from 70%

What might an Ontario ABS look like? Working Group has established criteria for evaluating ABS Provision of legal services by the ABS would be subject to Law Society authority Conflicts, Candour, Confidentiality, Competence, Integrity etc. principles would remain Solicitor-client privilege must be safeguarded

A few closing observations Now is the time to consider ABS Changing legal landscape Unmet legal needs Greater opportunities for lawyers and paralegals to provide legal services in innovative ways, in the structure that suits them best Other law societies are also considering ABS and related issues

Law Society ABS/Future of Legal Services web page Please visit for more information and additional resources.

Discussion