Ch 12 Nova Scotia: The Road is Made By Walking*

Nova ScotiaThe Road is Made By Walking*

Conspicuously absent from the Policy Framework is any express reference to “alternative business structure” or the use of any comparable expression. This absence is not an oversight.

The Nova Scotia Barristers’ Society (NSBS) is a regulatory body. It is governed by a Council, made up of three “Officers,” thirteen elected lawyers, three appointed “public representatives,” a representative of the Attorney General of Nova Scotia and the Dean of Schulich School of Law.[1] The Council includes both a President (a practicing lawyer) as well as an Executive Director, who is employed full-time by the NSBS. As regards the 13 elected lawyers, the electorate is composed of all licensed lawyers from the relevant District.

The Council fixed two strategic priorities for 2013-16, and reaffirmed those priorities for 2016-19, at the same time adding a third: (i) transforming regulation and governance in the public interest, (ii) enhancing access to legal services and the justice system for all Nova Scotians, and (iii) promoting equity, diversity and inclusion in the legal profession. The Council has translated these priorities into nine strategic initiatives, including:

  • Implementing and adjusting as necessary legal services regulation,
  • Promoting increased access to legal services through regulatory initiatives and monitor their impact,
  • Implement a framework for enterprise risk management, and
  • Implement regulatory objectives (discussed further below).[2]

In 2014, the NSBS announced its “Transforming Regulation and Governance Project” with this explanation:

The legal profession is in the midst of a period of dramatic and profound change. For some it feels chaotic and destructive of traditional professional norms, while for others it is a time of great advancement and opportunity. It is clear that these changes are happening and will happen whether the [NSBS], as the regulator, leads or follows and whether lawyers embrace or try to avoid them.

Consider the following:

  1. The impact of technology on the profession—access to legal information and products online, virtual law practices, nonlawyer provision of legal information and services;
  2. Client empowerment arising from the unbundling of legal services, and demands for increased value from legal services at lower cost;
  3. Changes in law firm structures and ownership around the world, such as multidisciplinary practices and alternate business structures;
  4. Changes in the regulation of the legal profession around the world, which have shifted focus to risk based, proactive and appropriate management system-based regimes rather than one-size-fits-all, rules based models;
  5. Increasing numbers of corporate and in-house counsel as an alternative to outsourcing legal work;
  6. Globalization of the legal services market;
  7. Legal process outsourcing such as document production to firms outside the country in order to reduce costs;
  8. Significant focus on the crisis in access to justice and access to affordable legal services;
  9. Changing demographics and an aging population, including lawyers; and
  10. A likely change in legal education now made obvious by the decline in the number of law school applicants.

…In the face of change all around us, we haven’t really changed the way that we regulate lawyers … . In spite of much change in how and where lawyers practise and why people need lawyers, our method of regulation has not evolved on pace with the advancement of technology or of government, civil and commercial interactions….. Despite all these changes in the profession, we continue to regulate lawyers in essentially the same way as we have for many generations.[3]

In pursuing the project, the NSBS consulted extensively with the Australia-based consulting firm Creative Consequences. Not coincidentally, the two Directors of this firm are Steve Mark and Tahlia Gordon, both formerly with the New South Wales Legal Services Commission and both considered to have been instrumental in the development of “ethical infrastructure” and self-assessments in that pioneering state.[4]

A significant step in Nova Scotia’s journey has been the development of a 19-point Policy Framework, which the Council approved in November, 2015. Existing legislation having already granted to the NSBS a certain level of authority to regulate entities;[5] the Society is using that authority as a building block for the Framework. While the influence of Australia, and of Mark and Gordon, in particular, are evident throughout the Framework, their influence is especially evident in the Framework’s call for regulation requiring firms to implement and maintain ethical management systems and to complete and report upon self-assessments. Additional and equally remarkable elements of the Framework include:

—        The adoption of six regulatory objectives. The objectives include “protect those who use legal services,” “promote the rule of law and the public interest in the justice system,” “promote access to legal services and the justice system,” and “establish required standards for professional responsibility and competence,”[6]

—        A focus on the anticipated risks associated with each area of regulated activity and, in assessing risk, the Society “will always give priority to the protection of the public,”

—        The regulation of the delivery of legal services by lawyers as well as by legal entities, “which include lawyers, law firms, law corporations, law departments and other similar entities,”

—        Each such law firm and other legal entity will be required to designate an individual who will be responsible for the entity’s compliance with its regulatory requirements,

—        Legal services may be delivered by legal entities in combination with other services, “so long as all delivered services are subject to the same ethical and professional standards as are required of the legal services,”

—        Regulation that requires “each law firm and legal entity” to designate an individual who will be responsible for the entity’s compliance with its regulatory requirements, and to ensure that all persons associated with the entity who deliver or assist in the delivery of legal services comply with the applicable code of conduct,

—        Amendments to the applicable code of conduct to eliminate barriers to fee sharing with nonlawyers, and

—        A requirement that the Society develop the capacity to measure the impact of the regulatory changes on the public.[7]

From November, 2015 to January, 2016 the NSBS engaged in a consultation process with the members of the legal profession in Nova Scotia.[8] One of the outcomes of this process was the decision to implement a pilot project to test what the Society refers to as “Management Systems for Ethical Legal Practice” or “MSELP”[9] These terms that are highly reminiscent of Australia’s “appropriate management systems” and “AMS,” and, accordingly, the project is for a cross-section of Nova Scotia law firms and sole practitioners to test a proposed self-assessment form.[10] The self-assessment for the pilot project is composed of the following ten elements (which, predictably, are closely track the elements of the self-assessment form developed in New South Wales):

  1. Developing competent practices;
  2. Communicating in an effective, timely and civil manner;
  3. Ensuring confidentiality;
  4. Avoiding conflicts of interest;
  5. Maintaining appropriate file and records management systems;
  6. Ensuring effective management of the legal entity and staff;
  7. Charging appropriate fees and disbursements;
  8. Having appropriate systems in place to safeguard client trust money and property;
  9. Sustaining effective and respectful relationships with clients, colleagues, courts, regulators and the community; and
  10. Working to improve the administration of justice and access to legal services.[11]

Results of the pilot project were expected to be published in spring 2017.

Another outcome of the consultation process was the development of the legislative amendments that will be needed in order for the Society to be able to fully implement the Policy Framework. At the time this book went to press, several “packages” of proposed amendments had been submitted to the Department of Justice for review before submission to the Nova Scotia legislature, with the expectation that the amendments would be considered in the Fall 2017 legislative session.[12]

Conspicuously absent from the Policy Framework (as well as from the packages of legislative amendments) is any express reference to “alternative business structure” or the use of any comparable expression. This absence is not an oversight: it reflects an understanding on the part of the NSBS that the Policy Framework is the preliminary work that is necessary in order to allow alternative structures to operate. The elements necessary to regulate them are there: entity level regulation, ethical management systems and self-assessments, even multidisciplinary practices and fee-sharing with nonlawyers.

At the same time, however, the Policy Framework is an end in itself. In the words of the Society, once fully implemented, the Policy Framework will result in a new model of regulation that “is designed to be more responsive to a diverse and profoundly changing environment, to enhance the quality of legal services, to encourage ethical legal practice, to foster innovation in legal services and to increase access to justice.”[13] This will be the case regardless of whether Nova Scotia adopts alternative structures at a later time.

One of the “packages” of proposed legislative amendments addressed a topic that the Policy Framework adopted in November 2015 did not mention. That topic is the make-up of the NSBS’s Council (again, its governing body): The amendment in question seeks to eliminate the representative of the Attorney General of Nova Scotia and the Dean of Schulich School of Law from the Council, and to replace them by two additional appointed members to the Council, bringing the total number of appointed (as opposed to elected) members to five. However (and oddly, for the reasons explained below), this package also seeks to clarify that the appointed members may be either public representatives or lawyers.[14]

The motivation for this additional change appears to be a draft policy document circulated by the Executive Council of the province of Nova Scotia. Entitled “Policy Respecting Self-Regulated Professions,” this document contains a requirement that at least one-third of the members of the governing body of a self-regulated profession be “public representatives appointed by the government.”[15] In explaining to the Council the need for the legislative amendment changing the make-up of the Council, the NSBS Executive Director, Darrel Pink, stated that such a change not only is called for by the (admittedly still draft) policy document, but also is “widely accepted as elements of good governance.”[16]

While the draft policy document (and not the Policy Framework) does appear to be the motivating factor behind this additional proposed legislative amendment, certain questions nevertheless remain unanswered. For example, if the requirement of 33% public representation is a widely accepted element of good governance, then why not use the occasion of making legislative amendments to establish public representation on the Society’s Council at 33% instead of just 25%? Further, and especially oddly, if the purpose of appointed representation under the draft policy is to assure representation of the public on the governing body of a self-regulated profession, then why seek to have the possibility for one or more of those positions to instead be filled by members of that profession? The possibility to do so appears to defeat the very purpose of this requirement in the draft policy—the purpose to assure adequate public representation. (If the goal is to create a Council whose lawyer membership is more diverse than would other result from elections alone, then a separate category of appointed lawyers could be created in addition to a category for appointed public representatives).

In fact, while Pink cited the draft policy document only in connection with public representation on the NSBS Council, the document has potentially much wider significance. This is because it seeks to establish a number of additional policies and procedures with respect to self-regulating professions in Nova Scotia (which includes the legal profession as well as, for example, engineers, surveyors, certain health and medical professions), and it does so in a way that clearly communicates skepticism if not outright suspicion of self-regulation.

In its first lines, the document states “It is the policy of the Nova Scotia government to establish self-regulated professions only when self-regulation is determined to be in the best interests of the public.” To this end, the document continues, no legislative request to establish a new self-regulated profession may be submitted in the absence of a demonstration that: (i) the proposed self-regulation addresses risks that are real (“not remote”) and cannot be better addressed through other means, and (ii) the members of the profession have the capacity to self-regulate, and notably that they have the necessary resources (financial and human), have demonstrated a commitment to democratic principles, and have demonstrated they are able to act collectively in the best interests of clients and the general public. As for professions which are already self-regulating, the document states that no request to amend legislation in their regard may be submitted in the absence of a demonstration that, among other items, that: (i) (echoing the above) the amendments are needed to address substantial risks which are real and cannot be better addressed through other means, (ii) the anticipated benefits of the amendments outweigh any negative impacts, and (iii) the responsible government department has concluded that a more comprehensive review of the existing statute is not needed at that time.[17]

Further, both in the event of establishing a new self-regulated profession as well as of amending legislation with respect to an existing one, the proposed legislation must comply with certain additional requirements. These include not only the minimum public representation on governing bodies mentioned above, but also the following:

—        The legislation must clearly articulate that the primary duty of the profession is to regulate itself in the public interest. No mention is made of any other kind of interest, such as in the interest of the profession,

—        The legislation creates appropriate mechanisms for assuring “accountability reporting” to the members of the profession, the responsible Minister and the general public,

—        Matters that are of interest to those outside the profession (government, the general public, potential members, clients,…) are to be dealt with in legislation or regulation subject to government approval rather than handled internally by the profession (such as in its ‘by-laws”).[18]

Given that the draft policy document was, at the time this book went to press, nothing more than a draft, it is not yet clear what its full import will be. That is, it is not clear if the document will eventually undergo formal adoption and implementation, and, if so, it is not clear how it might be modified in the meantime. Further, it is not clear to what extent provinces other than Nova Scotia are considering the adoption of comparable policies and procedures. In the meantime, this draft policy document from Nova Scotia appears to reflect an increased interest on the part of the Nova Scotia government in self-regulating bodies (such as the NSBS) and an intention to more closely scrutinize them.

Stories

Darrel Pink, Executive Director, Nova Scotia Barristers’ Society: Pink describes the Society’s nearly two-decades long journey towards a regulatory system that is “proactive, principled and proportionate.” He explains why, in Nova Scotia, any debate around law firm ownership would be a false debate.

This chapter is an excerpt from Modernizing Legal Services in Common Law Countries: Will the US Be Left Behind? To learn more about the book, please click here.

Notes

*Quoted from a paper by Victoria Rees and Gabriela Quintanilla, “Nova Scotia Barristers’ Society: A Journey Towards a New Model of Regulation and Governance of Legal Services in the Public Interest,” June 24, 2015, http://nsbs.org/sites/default/files/ftp/ERU_Newsletter/2015-06-24-IBATransformingRegulation.pdf.

[1] “Council,” Nova Scotia Barristers’ Society, accessed December 5, 2016, http://nsbs.org/about_us/council.

[2] Nova Scotia Barristers’ Society, “2016-2019 Strategic Framework,” accessed March 20, 2017, http://cdn2.nsbs.org/sites/default/files/cms/menu-pdf/2016-2019_stratframework.pdf.

[3] Nova Scotia Barristers’ Society, “NSBS Seeks Your Assistance: Transforming Regulation – Consultation Document,” 2014, http://nsbs.org/sites/default/files/ftp/InForumPDFs/2014-02-03_TransformingRegulation_Consultation.pdf. For an in-depth discussion, see Victoria Rees, “Transforming Regulation and Governance in the Public Interest,” paper prepared for Council of the Nova Scotia Barristers’ Society, October 15, 2013, https://nsbs.org/sites/default/files/cms/news/2013-10-30transformingregulation.pdf.

[4] “Steve Mark,” Creative Consequences, accessed March 17, 2017, http://www.cc.lannix.com.au/about/steve/; “Tahlia Gordon,” Creative Consequences, accessed March 17, 2017, http://www.cc.lannix.com.au/about/tahlia/. Over the course of 2014 Creative Consequences issued four reports in connection with its consultation. The reports, under the heading “NSBS consultants’ reports,” can be accessed at: “Reports & Resources,” Nova Scotia Barristers’ Society, accessed March 17, 2016, http://nsbs.org/reports-resources.

[5]  Legal Profession Act. 2004, c. 28, as amended by S.N.S. 2010, c 56, http://nsbs.org/sites/default/files/cms/menu-pdf/legalprofessionact.pdf.

[6] The Society adopted these objectives on November 14, 2014: “NSBS Regulatory Objectives,” Nova Scotia Barristers’ Society, November 14, 2014, http://nsbs.org/nsbs-regulatory-objectives. For a detailed discussion of on the topic of regulatory objectives, see Laurel S. Terry, Steve Mark, and Tahlia Gordon, “Adopting Regulatory Objectives for the Legal Profession,” Fordham Law Review 80 (2012): 2685-2760, http://ssrn.com/abstract=2085003.

[7] “Legal Services Regulation: The Policy Framework,” Nova Scotia Barristers’ Society, accessed December 6, 2016, http://nsbs.org/legal-services-regulation-policy-framework.

[8] “Consultations,” Nova Scotia Barristers’ Society, accessed March 17, 2017, http://nsbs.org/consultations.

[9] “Management Systems for Ethical Legal Practice (MSELP),” Nova Scotia Barristers’ Society, accessed March 17, 2017, http://nsbs.org/management-systems-ethical-legal-practice-mselp.

[10] “Pilot Project Update: Management Self-Assessment Tool,” Nova Scotia Barristers’ Society, accessed March 17, 2017, http://nsbs.org/pilot-project-update-management-system-self-assessment-tool.

[11] The form can be accessed at this link: “Management System for Ethical Legal Practice,” Nova Scotia Barristers’ Society, accessed March 17, 2017, http://cdn2.nsbs.org/sites/default/files/cms/page/mselpselfassessment_1.pdf.

[12] Nova Scotia Barristers’ Society, “Council Highlights,” November 25, 2016, 1, http://nsbs.org/sites/default/files/ftp/CouncilMaterials/2016-11-25_CouncilHighlights.pdf. Amy Salyzyn explains that “although the Canadian legal profession is often described to be self-regulating, the law societies are still dependent on the approval of their respective legislatures if they wish to embark on significant regulatory reforms.” Salyzyn, “From Colleague to Cop to Coach,” 30.

[13] “Legal Services Regulation,” accessed March 17, 2017, http://nsbs.org/legal-services-regulation.

[14] Nova Scotia Barristers’ Society, Council Meeting Materials, November 25, 2016, 22-23, http://nsbs.org/sites/default/files/ftp/CouncilMaterials/2016-11-25_CouncilPkg.pdf.

[15] Ibid., 28.

[16] Ibid., 5, 22.

[17] Ibid., 25-26.

[18] Ibid., 28.

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