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Debate over ABS must continue: Headon

|Written By Tali Folkins

A year after its release, the most controversial element of the Canadian Bar Association’s report, "Transforming the Delivery of Legal Services in Canada," remains its recommendation to allow alternative business structures, says the initiative’s chair.

‘I think if we were to forego ABS as we sit here today, that would be an unfortunate development,’ says Fred Headon.
“That is a recommendation that certainly attracted a lot of attention, a lot of good discussion. We’ve certainly heard a number of different voices come forward with a number of different perspectives on it,” says Fred Headon.

“It’s a question that I think we’re going to continue to grapple with in the coming weeks and months . . . there’s not a unanimous view out there in the profession.”

The report calls for allowing “non-lawyer investment in legal practices,” albeit on a carefully regulated basis, and for allowing businesses or not-for-profit corporations to register as ABSs providing legal services.

The recommendation has attracted considerable resistance, especially from personal injury firms. It became one of the most contentious issues in the Law Society of Upper Canada’s bencher elections this spring. Most of those voted in as benchers oppose the idea.

But Headon says he thinks the debate around ABSs will continue — and ought to.

“I think if we were to forego ABS as we sit here today, that would be an unfortunate development, at least as we see the equation today, because the rationale for our recommendation, of course, was that we thought that would be a helpful way to encourage innovation and help the profession adapt to change,” he says.

“If this were not to come to light it may be more difficult for the profession to integrate that kind of knowledge and expertise and skill into what we do.”

In a Globe and Mail article this week, Australian personal injury giant Slater & Gordon Ltd. — a publicly traded corporation — confirmed it is looking at expanding into Canada if regulations here change to allow it. According to the article, Slater & Gordon already serves an estimated one-quarter of Australia’s personal injury market.

The Canadian legal profession, Headon says, could learn a lot about innovation from looking at Slater & Gordon.

“They certainly have been a bit of a trailblazer, in a number of different ways in providing alternative career paths — it’s led to one of the most diverse firms in the marketplace,” says Headon.

“Certainly I think whatever their accounting troubles, we can look to what else they’ve done as a bit of an example to consider as to what opportunities are out there.”

Slater & Gordon, the article reports, is facing an investigation into its accounting practices after its acquisition last year of part of a British insurance claims processing company.

For now, the report’s recommendation on ABSs has the backing of the CBA’s Futures Initiative — but is not the official policy CBA as it has not yet been put to a vote before the association’s council. Nor is a vote likely to happen at next week’s annual meeting in Calgary, says Headon.

“It’s not on the agenda this time — we have a pretty heavy agenda already — and so we will continue to dialogue within CBA,” he says.

“We’ve talked about the hows and whens, but certainly had no particular timeline [for a vote]. . . . We’re comfortable that the work of the initiative is on track, is getting a good reception, and if and when resolutions are the way to go we certainly won’t be shy to bring them to council.”

  • Lawyer

    Bradley Wright
    Albin, you are quite right to raise those questions. ABS has not proven to do anything about the time and cost of litigation except maybe at the fringes. It is about high profits for ever smaller numbers of consolidating vultures who will not give a toss about the public interest. It is bad enough that many lawyers are beholden to the billing targets set by the largely remote members of the management committees of their firms. Billing targets are highly problematic and lead to all sorts of problems. The work should generate the legitimate fees of the particular file. No lawyer should feel compelled to churn work to satisfy employers' artificial targets. But at least they only have to satisfy other lawyers in their firms. The problems worsens exponentially if the ones who have to be satisfied are ever more remote, non-lawyer investors who know little about our ethos, and do not want to know (despite some early, soon to be forgotten, lip service).
  • A publicly traded entity

    Albin Foro
    has, by definition, a number of fiduciary obligations to investors and how those will square with a law firm's legal obligations to clients is not at all obvious. Left to itself, a lawyer or firm can freely choose to take on and/or make arguments for cases that are not currently legally certain, financially attractive, or politically popular, i.e. likely to win in court. What does a separate third-party duty to money-only investors in public markets do to clients looking for lawyer-client representation?
  • Independent Lawer Who Wants to Stay that Way

    Bradley Wright
    It appears that most boosters of ABS really do not understand the implications. The whole thing is about money, not public benefit. A few might reap a windfall, but everyone else would be worse off. Did the CBA not do a study which showed that the lawyers with the highest rates of depression were those who felt a lack of control over their practices? ABS would turn many more lawyers into minions, beholden to remote billing target setters - a recipe for more depression. ABS also does nothing at all about the real problem - the time and cost of litigation.

    Anything offered by ABS can be achieved without selling ownership of our profession. At least with borrowed money, you can get rid of the lender eventually, but you can never realistically get rid of equity holders. Do we want firm-swallowing behemoth vultures oozing into Canada? Surely not. If Canadian firms want to expand or join forces, let it happen organically and not as a result of the steroids of quick outside money.
  • Lawyer

    Bradley Wright
    I am sorry Mr. Headon, but, with respect, ABS is a terrible idea (and unnecessary). It is the slippery slope to the loss of the independence of the legal profession. No supposed walls will withstand for long the battering ram of big money. ABS does not lead to net benefits to the public as even the former Lord Chief Justice of England and Wales pointed out in January 2015. The English and Aussie experiences show, increasingly, that what ABS really does is allow access to outside money to fund consolidations in the marketplace. The costs of that are worse services at higher costs to the public (with the profits going to the investors, not the lawyers), loss of standing of the legal profession, and loss of our independence - hard-won over centuries. ABS would give that away in a generation (and you would be partly to blame). It is hard to resile from a position taken publicly but too early, but I urge you to do so on the basis of new information and observations.

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