Regulating Contingency Fees: A Consumer Welfare Perspective

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.

Personal Plight: Mending the Market

Slaw.ca Legal Ethics Column, Aug. 11 2017.

http://www.slaw.ca/2017/08/11/personal-plight-mending-the-market/

“Personal plight” legal services are those provided to individual clients whose legal needs arise from disputes. Personal plight areas such as family law, refugee law, and human rights are the site of Canada’s worst access to justice problems.

The market for personal plight legal services functions poorly, as Malcolm Mercer and Amy Salyzyn have shown in this space. A key problem, I suggest here, is that it is too difficult for consumers to shop intelligently. This undermines healthy competition and legal professionalism, in addition to access to justice. Regulators can and should mend the market for personal legal services.

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Attorney on Amazon? Online Marketplaces for Legal Services

Law and Technology at Windsor Law Blog, 2017.

Online: http://www.lteclab.com/blog-post/attorneys-on-amazon-online-marketplaces-for-legal-services/.

For an individual with a legal need, shopping intelligently for a law firm can be a frustrating experience. It is difficult to get any objective information about price or quality, and comparison-shopping is arduous. Are online marketplaces, which play an increasingly central role in the consumer economy, part of the solution to this access to justice problem?

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Male, Pale, and Stale? Diversity in Lawyers’ Regulatory Leadership

(2016) Canadian Journal of Law and Society, Vol. 31, Issue 3, p. 405.  (Peer-reviewed). Online: Cambridge University Press.

When lawyers elect the leaders of their self-regulatory organizations, what sort of people do they vote for?  How does electoral system design affect the ability of law societies and bar associations to understand and regulate a diverse legal profession? This article quantitatively assesses the demographic and professional diversity of leadership in the Law Society of Upper Canada.  After many years of underrepresentation, in 2015 non-white members and women were elected in numbers proportionate to their shares of Ontario lawyers. Regression analysis suggests that being non-white was not a disadvantage in the 2015 election, and being female actually conferred an advantage in attracting lawyers’ votes. The diverse employment contexts of the province’s lawyers were also represented in the elected group.  However early career lawyers were completely unrepresented.  This is largely a consequence of electoral system design choices, and can be remedied through the implementation of career stage constituencies.

Can be found online at: https://doi.org/10.1017/cls.2016.33

This research was also the subject of an article in the Law Times newspaper: https://www.lawtimesnews.com/news/general/prof-calls-for-reforms-to-boost-youth-presence-at-convocation/261812

Our Nostradamus

Review of Richard Susskind, Tomorrow’s Lawyers: An Introduction to Your Future (Oxford, UK: Oxford University Press, 2013) and Richard Susskind and Daniel Susskind, The Future of the Professions: How Technology Will Transform the Work of Human Experts (New York: Oxford, 2015).

Windsor Review of Legal and Social Issues, Volume 37, p. 126-131.

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Access to Justice: After the Machines Take Over

Slaw.ca (January 27, 2016)

Full text: http://www.slaw.ca/2016/01/27/access-to-justice-after-the-machines-take-over-2/. Reprinted in Obiter Dicta (Osgoode Hall Law School), February 24 2016. Online: http://obiter-dicta.ca/2016/02/24/access-to-justice-after-the-machines-take-over/.

“The traditional professions will be dismantled, leaving most (but not all) professionals to be replaced by less expert people and high-performing systems.” This is the central message of The Future of Professionsa new book from Richard and Daniel Susskind. Machines, they argue, will take over much professional work. Even when the machines cannot do so alone, the Susskinds expect that they will allow laypeople, paraprofessionals, and the clients themselves do the necessary work.

One way or the other, highly-trained and expensive human professionals will be mostly cut out of the value chain. The future of the professions, in this view, doesn’t seem like much of a future at all. Richard Susskind’s previous books make it very clear that lawyers are included in this troubling prediction.

This prophecy can be disputed, or resisted on moral grounds. Let’s assume, however, that machines will in fact make steady incursions into lawyer work. What does this mean for access to justice in the future?

The Susskinds offer one reason for A2J optimism: machines will themselves soon provide mass, affordable access to justice. I believe there is another good news story for access to justice: by taking over much of lawyers’ current work, machines may allow the Bar to refocus on meeting other sorts of unmet legal needs, which demand the human touch. Continue reading

Three Routes to Justice for All

Lawyers Weekly, October 30, 2015.

Full text: https://www.thelawyersdaily.ca/articles/2204/the-three-routes-to-justice-for-all

The LSUC needs to expand the scope of paralegals, online information and ABS.

A statutory mandate was given to the Law Society of Upper Canada almost ten years ago: “Act so as to facilitate access to justice for the people of Ontario.” How effectively has it been carried out?

Undeniably, access to justice is now taken seriously at Osgoode Hall. Recent initiatives such as the treasurer’s action group on access to justice are encouraging to those who want all Ontarians to enjoy the law’s benefits.

While great strides have been made, a great distance remains to be travelled. Three policy areas — paralegal practice, online information, and alternative business structures — illustrate both how far the law society has come and how far it must still go.
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ABS: What Horrors Within?

Canadian Bar Association National Magazine, December 4, 2014.

“Professor, I was wondering if you could tell us anything about the Chamber of Secrets,” said Hermione in a clear voice… “What exactly do you mean by the ‘horror within’ the Chamber?”

“That is believed to be some sort of monster…” said Professor Binns in his dry, reedy voice.

-J.K. Rowling, Harry Potter and the Chamber of Secrets

An alternative business structure (ABS) is a law firm that includes non-lawyers as investors, managers, or partners. Such arrangements are effectively forbidden throughout Canada today. However prominent voices, such as the CBA Legal Futures Initiative, are now calling for regulators to roll back these rules and welcome ABS firms to our legal landscape.

A future with ABS is a chamber of secrets, rumoured to contain both glittering treasures and savage monsters. The treasures may include enhanced access to justice for clients,and new innovation and flexibility for legal professionals. The value of these treasures cannot be known unless and until we roll back the regulation currently blocking the entrance to the chamber.

However many are reluctant to do so, because two monsters are also said to reside in the chamber. One of these beasts, it is said, eats legal ethics by corrupting lawyers. The other allegedly eats lawyers themselves, by stealing their clients.

While the treasures in the chamber are uncertain, the two monsters are entirely figmentary. Our regulators therefore have nothing to lose–and possibly a great deal to gain—from opening the door to alternative business structures

Full text here.

 

The Cost of Seeking Civil Justice in Canada

(2016) Canadian Bar Review, Vol. 93.3, pp. 639-673.

How much does it cost individual Canadians to seek civil justice? This article compiles empirical data about the monetary, temporal, and psychological costs confronting individual justice-seekers in this country. The article then suggests that analysis of private costs can improve access to justice in two ways. First, it can help public sector policy-makers to reduce these costs. Second, it can help lawyers and entrepreneurs to identify new, affordable ways to reduce the costs that are most onerous to individuals with different types of civil legal need.

Online: https://cbr.cba.org/index.php/cbr/article/view/4358

This research was the subject of an article in the Canadian Bar Association National Magazine. Online: CBA National Magazine. Link here.

Legal Services Regulation At The Crossroads: Justitia’s Legions

(2015) Edward Elgar Press, 308 pages.

Available now Edward Elgar Press in hardcover and as an affordable e-book .

A must read for everyone in North America who is making decisions on regulatory change to the legal services industry.” (Mitch Kowalski’s review in the Financial Post)

Through a comparative study of English-speaking jurisdictions, this book seeks to illuminate the policy choices involved in legal services regulation as well as the important consequences of those choices. Regulation can protect the interests of clients and the public, and reinforce the rule of law. On the other hand, legal services regulation can also undermine access to justice and suppress innovation, while failing to accomplish any of its lofty ambitions. The book seeks a path forward to increasing regulation’s benefits and reducing its burdens for clients and for the public. It proposes a client-centric approach to enhance access to justice and service quality, while revitalizing legal professionalism, self-regulation, and independence.

Personal Plight Legal Practice and Tomorrow’s Lawyers

(2014) Journal of the Legal Profession, Vol. 39, pp. 25-47.

Commentators have predicted that computerization and off-shoring will steadily undermine demand for lawyers in North America and Europe. This essay argues that this prediction is not equally valid for all types of legal practice. Personal plight practice — in which lawyers help individuals and small businesses involved in legal disputes — is largely sheltered from both computerization and off-shoring. The article calls for the profession and legal educators to open doors between tomorrow’s lawyers and personal plight legal practice. Doing so will not only address the economic insecurity confronting tomorrow’s lawyers, but also enhance access to justice.

This article was the basis of a December 12, 2014 post at the Canadian Association of Law Teachers blog.

Full article found online here.

Dealing with Climate Change “Losers.”

The Windsor Star, July 15, 2014.

Full text: http://blogs.windsorstar.com/opinion/dealing-with-climate-change-losers

How can politicians move climate policy forward?  “Dealing with losers” is a big part of the answer.

Last month, Stephen Harper joined the other G7 leaders in calling for “urgent and concrete action” to address climate change. We should expect our Prime Minister to take climate change seriously, because it’s probably the gravest long-term threat to Canada’s security and prosperity. Here in Windsor, heat waves and declining water levels are among the serious problems partially attributable to global warming.
President Barack Obama has mandated significant reductions from the leading sources of greenhouse gas emissions in his country. Will Prime Minister Harper be able to do likewise with Canada’s oil and gas sector, and with consumers’ transportation and home energy emissions?

A new book from Professor Michael Trebilcock, of the University of Toronto, can help our Prime Minister do so.  In Dealing with Losers: the Political Economy of Policy Transitions, Trebilcock shows that even the wisest policy changes create “losers.”  The key message of the book is that leaders must mitigate the opposition of those who stand to lose from policy change. Trebilcock proves this with examples from fields like public pension reform and agricultural supply management, in addition to carbon pollution control.

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A Taxonomy of Lawyer Regulation

by Noel Semple, Russell Pearce, and Renee Knake

Legal Ethics, Vol. 16, No. 2, pp. 258-283(2013) (published 2014).

Full text: http://ssrn.com/abstract=2396041

What explains the dramatic contrast between legal services regulation in the United States and anglophone Canada, on one hand, and England/Wales and Australia, on the other? In order to help explain these divergent regulatory choices, and to further comparative analysis, this Essay proposes a taxonomy of theories of legal services regulation drawn from these common-law jurisdictions.

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Depending on the Kindness of Strangers: Access to Civil Justice in Canada

(2013) Legal Ethics, Vol. 16, No. 2, pp. 373-376.

‘Abysmal’ was the word used to describe the accessibility of Canadian civil justice in a recent major report. Access to justice is simultaneously a social problem, a professional obligation for the legal profession, and a market opportunity for law firms. Are there any signs of significant progress on any of these fronts? This short Correspondent’s report will review recent Canadian efforts to connect people of modest means with the expert legal services they urgently need.

Full text: http://ssrn.com/abstract=2385989