Why Do We Regulate Lawyers?

This is my first legal ethics column for Slaw. I am delighted and honoured to be taking the place of my former colleague, mentor, and all-around legal ethics and regulation rock star, Malcolm Mercer, who recently assumed the role of Chair of Ontario’s Law Society Tribunal. In the coming months and beyond, I look forward to using this space to consider rules of professional conduct and discipline; governance issues in lawyer regulation; legal education and training; and the future of legal services provision. But before diving into these topics, I propose to take a step back and first consider a bigger question: Why do we regulate lawyers the way we do—or at all?

Lawyers, law students, and members of the public frequently voice complaints about law societies and lawyer regulation. Many of these complaints have merit. But our regulators play an important role, and they do not have an easy job. We would do well to consider that role when levelling complaints against them (even if only to develop a more principled line of criticism).

The fundamental purposes of lawyer regulation should form the basis for regulators’ decision-making on all manner of professional responsibility issues. I respectfully suggest that both regulators and their critics sometimes lose sight of the “why” of lawyer regulation when caught up in the details of how to regulate legal services and their providers. Below, I explore the rationales for legal regulation we often turn to—and those we too often forget.

I. “To protect the public interest”

Part of the answer to the question “why do we regulate lawyers” can be found in law societies’ enabling legislation. Ontario’s Law Society Act (“LSA”) provides at s. 4.1 that “It is a function of the Society to ensure that (a) all persons who practise law in Ontario or provide legal services in Ontario meet standards of learning, professional competence and professional conduct that are appropriate for the legal services they provide” [emphasis added].

Section 4.2 of the LSA sets out certain “principles” the Law Society “shall have regard to”, including:

  1. The Society has a duty to maintain and advance the cause of justice and the rule of law.
  2. The Society has a duty to act so as to facilitate access to justice for the people of Ontario.
  3. The Society has a duty to protect the public interest.

When Malcolm Mercer previously wrote about the mandate of the Law Society in this space, he stated “the purposes of Law Society regulation are mostly obvious… for example, the Law Society is charged with regulating in the public interest rather than in the interest of licensees”. That the raison d’être of law societies is “to protect the public interest” is a common refrain.

I agree, of course, that regulators are supposed to serve the interests of the public as opposed to those of their member licensees—even if many lawyers often appear to be under the misapprehension that law societies’ role is to advance lawyers’ interests.[1] But I do not accept that this provides a helpful explanation of the purposes of law society regulation.

“To protect the public interest” is the answer to the question of whose interests law societies should prioritize when they do regulate lawyers, but it does not shed light on why we regulate lawyers in the first place. The public interest is multi-faceted and amorphous. It is not difficult to use “the public interest” to justify just about any measure or policy (lawyers are unsurprisingly good at doing this). To say we regulate lawyers to protect an undefined interest provides little purpose at all. (To Malcolm’s credit, he helpfully clarified his statement in a footnote, adding: “This is not to say that determining what is in the public interest is always straightforward”. Therein lies the rub.)

The “functions” identified in s. 4.1(a) of the LSA provide a better answer to my question: we regulate lawyers to ensure those providing legal services meet standards of competence (including learning) and professional conduct. Regardless of my concerns of its vague meaning, I think it is uncontroversial to say that it is in the public interest to ensure that those who provide legal services to the public are sufficiently trained and competent to do so and will meet standards of professionalism.

Developing and enforcing standards of competence and professional conduct for licensees is at the core of what law societies do, and this promotes one aspect of the public interest. What else is there?

II. The public interest in legal services regulation

Academics have explored the public interest theory of professional regulation in more detail,[2] and there appears to be a consensus in the common-law world about why the public interest demands legal services regulation. I would summarize the public interest purposes of lawyer regulation as falling into two broad categories, as follows:

1. Consumer protection

Legal services are a “credence good”, meaning their utility and value are difficult for ordinary consumers to assess on their own. Where there is a marked information asymmetry between a service provider and client, it is all too easy for consumers to be taken advantage of with poor quality services whose value (or lack thereof) they are unable to ascertain.

Moreover, consumers seeking legal assistance often have a great deal at stake; the effect of poor-quality legal services can be significant. The severity of potential harm to Canadians’ legal interests—whether from contracts affecting their livelihood, settlements affecting custody of their children, or litigation in a criminal matter affecting their personal liberty—provides a strong rationale for taking steps to address the information asymmetry at play. The issue is not only that consumers struggle to assess the quality of the legal advice and representation that they receive, but also that the consequences of poor advice and representation can be catastrophic.

It is thus useful to address the potential for market failure and protect consumer welfare through regulation that seeks to ensure quality services are provided for such significant matters.

Although sometimes categorized separately, I would include under the “consumer protection” heading concerns for other members of the public who would be harmed by poor quality services (sometimes referred to as “negative externalities”). A poorly drafted will, for example, harms the interests of the beneficiaries to that will (not just the lawyer’s immediate client, the testator). Low quality family law services in a custody dispute would harm not only the interests of the parent client, but of the children.

The consumer protection rationale applies equally to other professional services markets, such as accountants, engineers, and health professionals.

I will elaborate further on the extent of the consumer protection rationale below.

2. Protecting the rule of law

This rationale is unique to legal services provision, and goes as follows: The rule of law is a public good of fundamental constitutional importance in a free and democratic society. Maintaining and promoting the rule of law requires public confidence that the administration of justice will be fair and effective. Legal service providers are the gatekeepers to the administration of justice; they can stand between the state and its citizens to prevent miscarriages of justice (e.g. in a criminal prosecution, tax dispute, or social benefits appeal), and more generally allow individuals to access their rights and enforce others’ legal responsibilities by serving not only as advocates but as guides to a complex (and, to many individuals, impenetrable) system of laws.

In short, lawyer regulation is necessary and appropriate to promote public confidence in the administration of justice and the rule of law because it aims to ensure that Canadians can effectively access their rights through practitioners who will uphold the law and act with integrity.

III. Lawyer regulation is legal services regulation

At this point, it is worth pausing to consider what we really mean when we talk about “lawyer regulation”.

Generally speaking, Canadian law societies have jurisdiction to license and regulate individual lawyers. (Two caveats: Ontario licenses and regulates paralegals as well as lawyers, and the regulators in some provinces have been moving towards regulating entities through which lawyers provide legal services (e.g. law firms) as well as the individual lawyers who practise through them.)

As noted above, law societies regulate lawyers by developing and enforcing standards of professional competence and conduct.

But that’s not all.

Law societies also prohibit anyone who is not a licensed lawyer (or, in Ontario, licensed paralegal) from providing legal services—and what it means to provide legal services is broadly defined.

In Ontario, s. 26.1 of the Law Society Act provides that no person other than a licensee shall provide legal services, and s. 1(5) of the Law Society Act provides that “a person provides legal services if the person engages in conduct that involves the application of legal principles and legal judgment with regard to the circumstances or objectives of a person” and that this includes, without limiting the generality of that definition:

  1. Giving a person advice with respect to the legal interests, rights or responsibilities of the person or of another person.
  2. Selecting, drafting, completing, or revising a document that affects the legal interests, rights or responsibilities of a person;
  3. Representing a person in a proceeding before an adjudicative body, including drafting, completing or revising a document for use before the adjudicative body; and
  4. Negotiating the legal interests, rights or responsibilities of a person.

British Columbia’s Legal Profession Act provides a similar, non-exhaustive definition of the “practice of law”, which includes “appearing as counsel or advocate”, “drawing, revising or settling” various documents, and “giving legal advice” (and similarly provides that “No person, other than a practising lawyer, is permitted to engage in the practice of law”—see ss. 1(5) and 15(1).

Other provinces have not defined what it means to provide legal services. In Alberta, for example, the Legal Profession Act provides at s. 106(1) that “No person shall, unless the person is an active member of the Society… practise as a barrister and solicitor”—leaving it to the courts to confirm that this prohibition includes, among other things, appearing in a court or tribunal and preparing or assisting in the preparation, issuance and filing of documents in relation to litigation.[3]

I would be remiss if I did not note that there are certain exceptions to law societies’ prohibitions on the unauthorized practice of law (or “UPL rules”), whether expressed in the law societies’ enabling legislation (e.g. s. 1(8) of Ontario’s Law Society Act) or in their By-Laws or Rules. The exceptions are narrow. For example, in Ontario there is an exemption permitting a person to perform the services permitted within the scope of a paralegal license only, for a friend or neighbour, if they do so without “fee, gain or reward, direct or indirect” and “in respect of not more than three matters per year” (see LSO By-Law 4, s. 30(4)).[4]

But my point here is that law societies do not merely regulate lawyers—the combination of a broad construction of what it means to “practise law” and UPL rules mean that, in effect, law societies regulate the provision of legal services to the public entirely.[5]

In other words, as currently practised, lawyer regulation is economic regulation. Subject to narrow exceptions, if Canadians want (or, more importantly, need) legal services, they either need to hire a member of the Law Society or try to muddle through the problem themselves—or do without.

IV. More to consumer protection: Quality vs. Access

In my summary of the consumer protection rationale above, I focused on the quality of legal services. I did so because this has traditionally been the focus of law societies’ consumer protection efforts; standards of competence and conduct seek to ensure that clients receive legal services that are of high quality, meaning that the provider is competent, honest, and reliable.

But such a construction of the consumer protection mandate is too narrow.

As lawyers, it is understandable that we focus on quality services—particularly given what is at stake in many legal matters, as noted above. But economists would be quick to point out that promoting quality is not the only value at issue when it comes to consumer protection—one must also consider price and consumer choice.

This requires a difficult balance, and it is here where I would suggest the nebulous idea of promoting the (multi-faceted) “public interest” can become a serious problem.

For instance, law societies impose standards of minimum competence for entry into the legal profession, which include requiring several years of expensive post-secondary education. Although not empirically proven, common sense would generally support the suggestion that requiring certain training is likely to promote quality service provision (there are good questions about the nature and extent of training that is necessary and appropriate, but that is for another column). But this comes at a cost; expensive barriers to entry into the profession contribute to high prices for legal services, whereby the cost of just a few hours of a lawyer’s time is out of reach for many Canadians. Put simply, entry-level competence standards are likely to serve consumers’ interests in quality but harm their interests in price and choice.

The difficult balance can also be considered from the perspective of the “rule of law” rationale for lawyer regulation. Public confidence in the administration of justice is served by ensuring lawyers abide by professional conduct rules and effectually permit clients to access and enforce their rights. But public confidence (and the rule of law) are undermined if consumers perceive lawyers as gatekeepers to the justice system in the worst way—serving the interests of the wealthy who can afford them, but effectively keeping the ordinary public out.

I suggest that lawyers’ and their regulators’ traditional focus on ensuring high-quality legal services has been at the expense of other aspects of the public interest, and that the balance needs to be re-calibrated to better achieve the underlying objectives of legal services regulation—protecting consumers’ (multi-faceted) interests and promoting public confidence in the administration of justice—more effectively.

Ensuring quality services is of little use if members of the public cannot access them.

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[1] Much of the time, the public interest and the profession’s interest are co-extensive (for example, it is both in the interests of lawyers and the interests of the public that law societies maintain high standards of learning, competence, and conduct). But sometimes the interests of lawyers diverge from “the public interest”—and this becomes more complicated when a Law Society regulates two professions, as Malcolm Mercer previously discussed in this space. I hope to discuss this potential for divergence between lawyers’ interest and the public interest further in a future column.

[2] See, e.g., Michael J. Trebilcock et al, Professional Regulation: A Staff Study of Accountancy, Architecture, Engineering and Law in Ontario Prepared for the Professional Organization Committee (Ministry of the Attorney General, 1979); Stephen Mayson, “Legal Services Regulation and ‘The Public Interest’”, Legal Services Institute, January 2013; Noel Semple, Legal Services Regulation at a Crossroads: Justicia’s Legions (Edward Elgar Publishing, Inc., 2015), ch. 2. This article also draws from the excellent writing and analysis of Alice Woolley and Gillian Hadfield, even though I have not cited any of their specific works here.

[3] See, e.g., Lameman v. Alberta, 2012 ABCA 59

[4] For more on this, Lisa Trabucco has written on the exceptions to UPL rules in her article, “Lawyers’ Monopoly? Think Again”, (2018) 96 Can Bar Rev 461.

[5] Moreover, where Canadian provinces have sought to license and regulate new classes of legal practitioners, such as paralegals, they have done so by amending law societies’ enabling legislation to permit existing lawyer regulators to regulate new classes of licensees, as Ontario did; see discussion of developments in B.C. and Saskatchewan here.

http://www.slaw.ca/2021/01/14/why-do-we-regulate-lawyers/

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