Category: Legal Services Regulation

Dispatches From the Front Lines of Canadian Legal Ethics

Noel Semple

Slaw.ca Legal Ethics Column, December 16, 2019.

Found online at: http://www.slaw.ca/2019/12/16/dispatches-from-the-front-lines-of-canadian-legal-ethics/

On October 25 & 26, Windsor Law proudly hosted the 2019 conference of the Canadian Association for Legal Ethics. The presentations touched on many of the most important issues confronting the legal profession today. Check out the brief summaries below to stay up to date. Continue reading “Dispatches From the Front Lines of Canadian Legal Ethics” →

Get It in Writing: Legal Fees, Retainer Contracts and Newell v. Sax

Noel Semple

Slaw.ca Legal Ethics Column, October 3, 2019.

Found online at: http://www.slaw.ca/2019/10/03/get-it-in-writing-legal-fees-retainer-contracts-and-newell-v-sax/

Should a lawyer decide how much his client should pay him, and then write himself a cheque for that amount, without the client’s agreement? Is a discretionary judicial decision about the value of a legal service an adequate substitute for an agreement between lawyer and client? In Newell v. Sax, the Ontario Court of Appeal effectively answered “yes” to both of these questions. In my view, arbitrary fees invented by lawyers, or judges, are a grave and unnecessary threat to legal ethics. The law should insist on upfront disclosure and clear contractual agreements about legal fees, absent very exceptional circumstances. Continue reading “Get It in Writing: Legal Fees, Retainer Contracts and Newell v. Sax” →

The Absent Ethics of Legal Fees : Putting Profit-Seeking in Its Place

Noel Semple

Slaw.ca Legal Ethics Column, August 14, 2019.

Found online at: http://www.slaw.ca/2019/08/14/the-absent-ethics-of-legal-fees-putting-profit-seeking-in-its-place/

A lawyer should be a loyal ally for a person with a legal need. This loyalty is at the core of our profession’s value proposition to society. Thus, legal ethics strives to guarantee devoted service to clients. Conflict of interest rules prohibit all situations creating “substantial risk” that the lawyer’s loyalty to a client “would be materially and adversely affected by the lawyer’s own interest.” Lawyers, as fiduciaries, must be “concerned solely for the beneficiary [client]’s interests, never the fiduciary [lawyer]’s own.”

There is, however, a glaring exception to the duty of selfless loyalty to clients. Lawyers are allowed to pursue their own pecuniary interests in collecting fees, at the expense of the clients who pay them. When a lawyer acts to obtain fees from a client, (s)he is clearly not acting as a fiduciary who puts the beneficiary’s interest first.

Everyone deserves to be paid for their work, and without the profit motive very few legal services would be made available to anyone. However, legal ethics must reconcile lawyers’ self-interested pursuit of fees with the general prohibition of conflicts of interest, and with the generally fiduciary nature of the lawyer-client relationship. Continue reading “The Absent Ethics of Legal Fees : Putting Profit-Seeking in Its Place” →

Why We Can’t Ban Legal Advertising

Noel Semple

Slaw.ca Legal Ethics Column, December 14, 2018.

Found online at: http://www.slaw.ca/2018/12/14/why-we-cant-ban-legal-advertising/

Whenever I see billboard or TV advertising for law firms, I worry. I don’t worry about the “dignity” of the legal profession; I worry about the people at whom these ads are targeted. Choosing the best possible firm can make a major difference in the long-term happiness and financial security of a person with a serious personal plight legal need (e.g. a personal injury, a divorce, or a criminal charge). Mass media ads almost never provide any useful information that would help someone in this position make an intelligent choice. The airbrushed photos, empty boasts, and gleaming boardrooms in these ads are meant to promote emotional resonance and brand recognition, not reasoned decision-making.

Advertising for normal goods and services — which most consumers can understand and evaluate — may foster healthy competition, which in turn improves quality and reduces price. By contrast, mass market advertising for opaque professional services such as law is more likely to promote unhealthy and consumer-hostile competition. It encourages a struggle between firms to achieve name recognition by deploying expensive campaigns, which are ultimately paid for by clients through higher fees. Clients are better off when they choose law firms by relying on knowledgeable and unbiased referrals, or comparing objective information about the available options. In such a market, financial incentives are aligned with professionalism: firms’ profits will depend on the real value that they offer to clients, not on their marketing budgets.

With these thoughts in mind, I started writing this column to argue that most or all mass-market law firm advertising should simply be banned — as it was before roughly 1980. However in researching this piece, I’ve come across some compelling reasons to think otherwise. Continue reading “Why We Can’t Ban Legal Advertising” →

Bridges over the Chasm: Licensing Design and the Abolition of Articling

Noel Semple

Slaw.ca Legal Ethics Column, July 27, 2018.

Found online at: http://www.slaw.ca/2018/07/27/bridges-over-the-chasm-licensing-design-and-the-abolition-of-articling/

What should people who want to practice law have to do before they are licensed? This perennial debate has bloomed once again. The Law Society of Ontario (LSO) is seeking feedback on its Options for Lawyer Licensing consultation paper (Slaw summary here). Two of the LSO’s four options would abolish articling. Candidates would instead have to pass exams covering both legal skills and substantive knowledge. There would also be a law practice program, either required for all candidates (LSO’s Option 4) or only for those practicing in smaller firms (Option 3).

Thinking of licensing in terms of footbridges over a chasm may help clarify what is at stake, and why the LSO should in fact abolish the articling requirement. Continue reading “Bridges over the Chasm: Licensing Design and the Abolition of Articling” →

Measuring Legal Service Value

Noel Semple

(2019) University of British Columbia Law Review, Vol. 52, No. 3.

This article proposes a theoretical foundation for measuring legal service value. It aims to support efforts to compare the value of offerings from different law firms, as well as alternative legal service providers.

The value of any legal service depends on (i) its effectiveness, (ii) its affordability, (iii) the experience it creates for its clients, and (iv) third party effects (the impact the service-provider has on people other than the client).

These four elements of value can be quantified through various metrics applied to firms or entities that provide a given service. Output metrics evaluate either the actual real-world impact of a legal service, or the written and oral work products of the firm. Internal metrics check for processes or structures within a firm that demonstrably support high value outputs. Input metrics focus on the attributes and credentials of the individuals who provide the service.

This article concludes that measuring legal service value is challenging, and may be dangerous if done poorly. Nevertheless, the rewards justify the challenge. Higher quality legal professionalism, more effective and less burdensome regulation, and consumer empowerment are among the payoffs if we can find better ways to measure legal service value.

Full text: https://ssrn.com/abstract=3144771

Mystery Shopping: Demand-Side Phenomena in Markets for Personal Plight Legal Services

Noel Semple

International Journal of the Legal Profession, Vol. 25.

“Personal plight” is the sector of the legal services industry in which the clients are individuals, and the legal needs arise from disputes. This article proposes that competition among personal plight law firms is suppressed by three demand-side phenomena. First, consumers confront high search costs. Identifying competing law firms willing and able to provide the needed services often requires significant expenditure of temporal and psychological resources. Second, comparable price and quality information about firms is scarce for consumers. Both of these factors impede comparison shopping and reduce competitive pressure on firms. A third competition-suppressing factor is observed in tort legal service markets, where offerings are typically priced on a contingency basis. Contingency fees have relatively low salience to consumers, and this reduces consumers’ willingness to negotiate and comparison-shop on the basis of price. This analysis is supported by the author’s empirical research with Ontario personal plight lawyers as well as the existing literature. The article concludes by suggesting possible consequences of this analysis for regulatory policy.

Full text: https://www.tandfonline.com/doi/abs/10.1080/09695958.2018.1490292?journalCode=cijl20

Measuring Legal Service Value, Part 2

Noel Semple

Slaw.ca Legal Ethics Column, Tuesday June 1, 2018.

Online: http://www.slaw.ca/2018/06/01/measuring-legal-service-value-part-2/.

What makes a great law firm? How can one quantify just how great a firm is, and compare it to its competitors? Last time in this space I suggested that legal service value has four elements (full paper here):

  • To the extent that a firm gets good legal results for its clients, it has effectiveness value.
  • To the extent that the firm’s fees are low and easy to pay, it has affordability value.
  • The more the firm’s practices minimize clients’ time and stress costs, the more client experience value it has.
  • Finally, if the firm’s work has many benefits and few costs for people other than its clients, it has high third party value.

In principle, a firm’s performance on these four elements of value can be quantified. If we could actually create accurate charts like these for legal services providers, we would have more empowered consumers, better self-awareness of strengths and weaknesses within law firms, and more evidence-based regulation. This project can also move us toward a more meritocratic legal profession, in which individual success is less dependent on racial and socioeconomic privilege.

An accurate quantification of value will require multiple metrics, and the array of metrics will depend on the legal niche in question. This column outlines three basic types of metric for quantifying legal service value: output metrics, internal metrics, and input metrics. Output metrics measure what comes out of the legal service provider. Internal metrics examine what happens inside the firm. Finally, input metrics analyze the people who walk in (or log in) to the firm each morning. Continue reading “Measuring Legal Service Value, Part 2” →

Measuring Legal Service Value, Part 1

Noel Semple

Slaw.ca Legal Ethics Column, Tuesday April 5, 2018.

Online: http://www.slaw.ca/2018/04/05/measuring-legal-service-value-part-1/.

If you work at a law firm, how good is that firm? If you’re a client or potential client, how good are the different legal services providers that you might choose to patronize?

It’s too difficult, at present, to answer these questions in an objective and reliable way. This is most obviously true for individual people with legal needs. They generally confront a mysterious landscape populated with apparently indistinguishable law firms, as well as proliferating alternative sources of legal services.

However, even experienced corporate clients, and lawyers themselves, lack solid information about the respective merits of different legal service providers. To evaluate quality, they must often rely on opaque, methodologically suspect rankings or else anecdotal impressions of firms.

We need better ways to quantify and compare the value propositions offered by different providers of legal services. This column proposes a definition of legal service value, and next time in this space I’ll propose and categorize metrics for quantifying it. A detailed paper on these topics is available here. Continue reading “Measuring Legal Service Value, Part 1” →

Contingency Fee Arrangements: Comments on to Law Society of Upper Canada Advertising and Fee Arrangements Working Group.

Noel Semple

With Jenna Wright, September 29, 2017.

This is a submission to the Law Society of Upper Canada’s Contingency Fee Arrangements Consultation. In this document, we provide several recommendations in response to the Fifth Report of the Advertising & Fee Arrangements Issues Working Group. The premise behind these recommendations is that contingency fee regulation should seek to maximize consumer welfare. In other words, regulation should advance the interests of clients in (i) low price, (ii) high quality, (iii) fairness and predictability, and (iv) choice. This Submission considers seven issues:
1. Introduce Mandatory Retainer Contract 2
2. Avoid Excessively Low Fee Caps 3
3. Calculation of Contingency Fees 4
4. Regulate Disbursements 6
5. Firm Responsibility for Financial Risk Arising in Civil Litigation 7
6. Advertising 8
7. Moving from “Heavy Hand” to “Light Touch” Regulation 8

Can be found online at: https://ssrn.com/abstract=3045503

Shady Billing: Closing the Hall of Shame

Noel Semple

Slaw.ca Legal Ethics Column, Jan. 30 2018

Shady Billing: Closing the Hall of Shame

Only “fair and reasonable” fees and disbursements can be charged by lawyers to their clients. This rule is uncontroversial, and applies across the country. Nevertheless, the following billing practices are used by some Canadian firms, and not clearly forbidden by regulation:[1]

Continue reading “Shady Billing: Closing the Hall of Shame” →

Access to Justice Levies for Lawyers: Putting Our Money Where Our Mouths Are

Noel Semple

Slaw.ca Legal Ethics Column, Dec. 12 2017

Online: http://www.slaw.ca/2017/12/12/access-to-justice-levies-for-lawyers-putting-our-money-where-our-mouths-are/

Tyrell Moodie, accused of drug offences and facing several years in prison, was denied a Legal Aid Ontario certificate because his income of $16,211 per year exceeded the cut-off threshold. Legal aid services for refugees in B.C. and Ontario were threatened with drastic cuts in 2017. Self-represented litigants are now the majority in many family courts, mostly because people cannot afford the legal assistance that they would love to have, and legal aid won’t pay for it.

Every media story about a legal aid shortfall includes a quote from a lawyer, pointing the finger at the government for inadequate funding. However, every time the legal profession points its finger at the state, three fingers are pointing back at the legal profession. As trustees and beneficiaries of the legal system, lawyers should make a more tangible contribution to ensuring its accessibility.

I suggest that our law societies should collect mandatory “access to justice levies” from all licensees, and use the money to fund access to justice for people of modest means. These levies should be progressive (calculated based on the income of each licensee). The clinics and programs receiving the funds should be selected by the licensees themselves, through participatory democracy processes. Continue reading “Access to Justice Levies for Lawyers: Putting Our Money Where Our Mouths Are” →

Legal Services Regulation in Canada: Plus ça change?

Noel Semple

In Andy Boon, ed., International Perspectives on the Regulation of Lawyers and Legal Services, (Oxford: Hart Publishing, 2017).

In common law Northern Europe and in Australasia, a wave of reform has been transforming legal services regulation since roughly 1980. Old structures and approaches, based on the principles of professionalism and lawyer independence, are being replaced in these jurisdictions by new ones that prioritize competition and consumer interests. In the United States this has conspicuously not happened, leaving intact a regulatory approach whose broad outlines have changed little in the past 100 years.

Thus, I have argued that the legal services regulatory regimes of the common law world today are bifurcated into (i) a competitive-consumerist paradigm apparent in the UK, in Australia, and in their smaller neighbours, and (ii) a professionalist-independent mode which survives in the United States and a few other places.

Where does Canada fit into this picture? With a view to locating the author’s home and native land on the spectrum between the competitive-consumerist and professionalist-independent traditions, this Chapter reviews key characteristics and important recent developments in Canadian legal services regulation. After providing an overview of the Canadian legal profession, the Chapter proceeds in four sections: (i) Governance and the Role of the State; (ii) Professional Organization and Occupational Unity; (iii) Firm Insulation and Alternative Business Structures, and (iv) Regulatory Focus. I conclude that, in Canada’s common law provinces, legal services regulation remains firmly in the professionalist-independent tradition.

Full text online, SSRN: http://ssrn.com/abstract=2833336.

Regulating Contingency Fees: A Consumer Welfare Perspective

Noel Semple

Invited contribution to Trevor Farrow & Les Jacobs eds., The Cost and Value of Justice (Vancouver: University of British Columbia Press, forthcoming 2020).

How can we preserve and extend what’s good about contingency fees, while minimizing the bad and the ugly? In order to identify the regulatory tools best suited to this challenging task, this Chapter proposes a consumer welfare analysis.

The consumers of contingency fee legal services are the individual clients, and the members of classes, represented by law firms working on this basis. These consumers, like other consumers, have interests in:

(i) quality,

(ii) price,

(iii) fairness, and

(iv) choice.

Part 2 of this Chapter will analyze these four sets of consumer interests, all of which are affected by the regulation of contingent fees. Part 3 scrutinizes various regulatory approaches to contingency fees against the consumer welfare criterion. I argue that heavy-handed interventions, such as fee caps and retrospective price review, can do as much harm as good for consumers. “Light touch” alternatives such as disclosure and standardized contracts, and fostering the “invisible hand” of the market, are preferable approaches for a regulators interested in maximizing consumer welfare.

Early draft online: https://ssrn.com/abstract=2959477.