The controversial idea that non-lawyers could be allowed to take controlling ownership stakes in Ontario's law firms is being put on the back burner, according to a report to be discussed at the Law Society of Upper Canada this week.
The self-regulatory body of the province's legal profession is poised to reject further consideration of a revolutionary rule change that would have allowed non-lawyers to own more than 49 per cent of a law firm, after the idea sparked vehement opposition from some in the profession.
A report from the law society's working group on the reforms, due to be discussed on Thursday, recommends continuing to study other possible rule changes, including allowing non-lawyers to hold minority stakes in Ontario law firms. But it rejects majority ownership for now, saying the potential problems appear to outweigh the benefits.
Currently, most Canadian provincial legal regulators say law firms must be entirely owned by lawyers, although Quebec already allows professional corporations practising law to be partly owned by non-lawyers, provided that lawyers hold a majority stake.
Critics of the idea charge that allowing non-lawyer majority ownership would put the ethics and independence of the legal profession at risk, forcing lawyers to answer to non-lawyer shareholders, put profits ahead of clients' interests and potentially create thorny new conflicts of interest.
Proponents say opening up to non-lawyer ownership would give law firms access to new capital and allow them to invest in new technology and new business models, such as offering legal services on the Web, making law firms more accessible and affordable and shaking up a notoriously conservative profession. They argue that new rules could be drafted to ensure that concerns about ethical breaches and conflicts of interest are addressed.
The Canadian Bar Association has called for sweeping reforms to the ownership rules, and similar rule changes have been enacted in Australia and England and Wales, where shares in some law firms are now traded on stock exchanges.
The law society working group had issued a list of proposals last year, asking for the profession to comment on them. The concept of majority ownership faced a rough ride, as critics argued that it would see lawyers pressured to abandon pro bono initiatives, put client confidentiality at risk and do little to address the "access-to-justice" problem that sees many people in court but unable to afford a lawyer.
Many of the loudest critics in Ontario were those who practise at personal-injury law firms. Ownership reforms in Australia have allowed for Slater & Gordon Ltd., which became the first law firm to list on a stock exchange in 2007, to become a dominant player in the personal-injury law business in both Australia and Britain. Some fear that reforms that would allow Slaters and other massive firms like it to expand into Ontario would see them snap up many independent smaller law firms and result in what critics called "cookie-cutter law" for personal-injury clients.
The concept was an issue in law society elections earlier this year. The Ontario Trial Lawyers Association (OTLA), which represents the personal-injury bar, endorsed a list of candidates opposed to the idea. Twenty-seven of the 40 lawyers who won what are known as "bencher" seats on the law society's governing body were OTLA-approved.