Darrel Pink, Executive Director, Nova Scotia Barristers’ Society

We are focused on what is in the public interest. We do not think about what we are doing in terms of what is good for the legal profession — we do not want to harm the legal profession because it plays a key role in our society, but our focus is on change for the benefit of the public.

The Nova Scotia Barristers’ Society is the governing body for the legal profession in Nova Scotia.

The Law Societies in Canada watched events unfold in England and Wales with great interest. Initially, we saw the establishment of the Legal Services Board and the Solicitors Regulatory Authority as a significant threat to the independence of lawyers, and that was the reason for our early interest. But as we watched what was happening there, and as we, regulators in Canada, established personal relationships with regulators in England, we realized that the sky hasn’t fallen, and that it likely won’t fall. We also realized that what they were doing made a lot of sense.

We also followed what was happening in Australia. Australia is more similar to Canada than England is. Like Canada, Australia is a federation of states, and geographically of a similar size. As we watched the evolution in Australia, from self-regulation to the creation of Legal Services Commissions and the establishment of co-regulation, we realized again that the sky hadn’t fallen.

And we realized that the practice of law has changed substantially. We realized that the premise upon which most lawyer regulation is based — the sole practitioner or small partnership practicing locally — does not reflect the way that many lawyers work — it’s a 19th century model and it’s an archaic way to regulate. Today we have many in-house corporate and government counsel, many very large law firms with hundreds if not thousands of lawyers, and many lawyers who practice regionally, nationally and internationally. Technology has had a profound impact on how lawyers work and communicate with clients.

All this led us, the Council of the Society, to ask the question: What is the right regulatory model for the 21st century?

Nova Scotia is a very small jurisdiction. We have about 2500 lawyers for a total population of just under one million people. Our size is an advantage — it enables us to know the members of the Bar and to work closely with them.

We have developed the concept of “Triple P” regulation: We think that regulation needs to be proactive, principled and proportionate.

The first change we are making is to move from reactive to proactive regulation. With the exception of the process of admission to the Bar, everything we do is reactive. To make this change, we have looked carefully at Australia. Its “appropriate management systems,” in particular, has had a strong influence on us.

We recognize that law firms dictate in many ways how law is practiced, as do government and corporate legal departments. These organizations prescribe the ethos and the mindset in which legal services are delivered. For that reason, we are also looking at how to better regulate entities.

By proportionate, we mean that we don’t need the same rules for every situation. For example, we have very detailed rules about how trust accounts are operated. We apply the same rules to every firm, regardless of its size. But the reality is that a 200-person firm presents much less risk than a 3-person firm. A 200-person firm does not need detailed rules from a regulator because they manage risk quite differently.

By principled, we mean that we need to have fewer directives regarding exactly how something should be done. We are good at creating rules, exceptions to rules, sub-rules, etc. Instead, we should be focused on principles about how to practice and behave rather than dictating specifics.

We need to be more focused on risks to the public as regards what lawyers do, and less focused on areas where there is little risk. For example, what is the risk to the public if a lawyer uses a non-traditional name? There is no risk, so this is not something we should focus on.

We are focused on what is in the public interest. We do not think about what we are doing in terms of what is good for the legal profession — we do not want to harm the legal profession because it plays a key role in our society, but our focus is on change for the benefit of the public.

We do not think that it is possible to discuss alternative structures without first addressing the regulation of entities in addition to the regulation of individuals. In addition, a system like the SRA’s — that requires a potential owner to go to the regulator and answer a bunch of the regulator’s questions and meet the regulator’s requirements before they can open the doors — is a system that is difficult to put in place.

We think that a more natural approach is simply to enable law firms and lawyers to expand the ways that they provide services. For a regulator, this is a much easier task because it can be done incrementally.

So, in Nova Scotia, we are changing the way that law firms are regulated and we are expanding the kinds, the nature and the means with which law firms may deliver legal services and with whom lawyers may share fees. We are doing it by prescribing that they must address certain standards in their practices, but they are free to determine how they do so — we will not dictate to them how they should do it.

Studies show that in Canada, only 17% of people who have a justiciable issue seek the assistance of a lawyer to resolve it. This means that 83% of justiciable issues are addressed either by others, or by no one. We know that people get legal advice from online legal providers every day. We know that accountants give legal advice every day. We know that human resource management firms, engineering firms, and consulting firms give legal advice every day. These firms do not harm the public and for the most part the public is quite happy with it. For example, if I am constructing a building and it has huge environmental law issues, I am probably better off getting my environmental law advice from the engineer rather than from a lawyer because the engineer pulls all the information together in order to help make the decision.

Of the fourteen provincial jurisdictions in Canada, seven are actively engaged in exercises that are at various stages of maturity, looking at significant regulatory reform. They all have two elements in common: (i) to move to a more proactive form of regulation, and (ii) to ensure law societies are able to regulate both individuals as well as legal entities. These processes involve every law society from British Columbia to Quebec, and include Nova Scotia. The seven provinces engaged in this work cover 90% of the lawyers in Canada.

Nova Scotia is among the most advanced in its work and its thinking, but the province is not alone by any means. Manitoba’s work is advancing quickly, as is the work of the other Prairie States (Alberta and Saskatchewan). In addition, we are in contact with regulators in a certain number of US states, such as Colorado, Illinois and the District of Columbia, all of whom are seriously studying proactive management and legal entity regulation. You can see a reflection of the work, for example, on the website of the National Organization of Bar Counsel, which has posted a set of FAQs on the topics.[1]

In Nova Scotia, our project was initially called “Transforming Regulation.” As we’ve worked, we’ve realized that the result of the project will be moving to a system that regulates not just lawyers, but legal services more generally, and accordingly we’ve changed the name of the project to “Legal Services Regulation.” Of course, this means that even the name of the Society is, and must be, up for grabs.

Ultimately, as a result of our project, the regulator’s job will be to have responsibility for the regulation of legal services in general. The regulator will exercise that responsibility in several ways:

  • By clearly regulating lawyers as well as legal entities,
  • By authorizing the delivery of legal services by others who will be exempt from our specific regulation. By “others,” I am referring to people like accountants, real estate brokers, insurance adjustors and a variety of others who offer legal services in the course of their regular work,
  • By creating a model that allows legal services to be delivered by not-for-profit organizations, with or without lawyers, in areas where there are significant access to justice or legal service needs,
  • By allowing lawyers to offer legal services in conjunction with other services (what are typically referred to as multidisciplinary practices, or MDPs), where the structure and all its professionals (psychologists, financial advisors,…) are subject to the ethical standards that apply to all law firms,
  • By seeking authority to create regulation for paralegals.

Our approach is this: all the work that lawyers do will be subject to a set of standards that we refer to as “Management Systems for Ethical Legal Practice” (MSELP). All lawyers and legal entities that offer legal services will be required to go through a self-assessment process which will require them to reflect on their adherence to the requirements of MSELP. They will be required to report to the Society on a periodic basis with respect to their compliance. The Society will then work with lawyers and legal entities towards compliance. That is, firms that don’t have the needed systems in place will be assisted in moving towards those systems that will make their practice better. This is a key element of the “proactive” approach to regulation.

Our process includes consultation with the profession and with other stakeholders with respect to MSELP. We will hold in-person consultation sessions where feedback can be provided, and additional feedback can be provided at later times after a detailed review of the document. [2]

We have published on our website a “Policy Framework,” approved by our Council, over several months, which consists of 19 distinct policies that drive our work.[3]

We are working to be in a position to go to government and say to them “here is the nature of the framework that we want to put in place, and here is the nature of the legislation that will be required in order to accomplish that.”

Our current legislation already allows us to do much of what we are planning to do, but we are working on the assumption that at least some new legislation will be required (for example, with respect to regulating paralegals). Our consultation process includes consultation with the government. Of course, when it comes time for a vote on the new legislation, we will not have control over what the government will do.

You may have noted that the 5-item list above does not include a reference to anything akin to an ILP or an ABS-type structure. This is not an oversight. To begin, it is nothing that a small province like Nova Scotia could ever influence because any framework for alternative business structures would need to be a national framework that comes from a federal approach. This is because so many of our companies as well as law firms operate across provinces and territories, and they need a single model of regulation. For example, banks are federally chartered in Canada — they could offer legal services under an ABS-type structure only under a national framework.

Further, we’ve known from the beginning of our project that the language of ABS is highly provocative and controversial. The topic is almost incendiary. When people hear the term, they often respond emotionally rather than rationally. So we took it off the table from the beginning. We are not talking about ABS.

I expect that the discussions that do occur on ABS will be driven by Ontario. More specifically, the Law Society of Upper Canada has recently stated that that they do not favor moving to that model that allows a law firm to be owned by anything more than 49%. This has set the tone and the basis for discussion in Canada. Whether we agree or not, we in Nova Scotia would never try to take it on as an issue because we are too small. We do not want to throw the baby out with the bathwater. We have come too far to allow the issue of law firm ownership to jeopardize the rest of our work.

Further, the issue of law firm ownership requires a federal approach. This is because we have so many multi-jurisdictional law firms in Canada. We could not abide by structures which in Nova Scotia, for example, could be owned by non lawyers but that in other provinces they could only be owned by lawyers. The result could be that lawyers of such a Nova Scotia firm could not practice in the other provinces. That result is unacceptable because much of our work is premised on the need to maintain and enhance the mobility of lawyers and law firms in order that they may offer legal services in multiple jurisdictions. We have a national mobility agreement in Canada, under the Constitution we have mandates that people can work in every place in the country, and there are now inter-provincial and federal agreements in place that support that constitutional protection. It’s now a given in discussions among law societies that mobility must be preserved at all costs. On the question of ABS, Ontario has set the benchmark.

All that being said, for Nova Scotia a debate around law firm ownership would be a false debate. This is because, for example, our new framework will allow accounting firms to provide legal services. Once an accounting firm decides to do this, and notably once they do this using lawyers, they will subject themselves to the regulatory jurisdiction of the Society. We will set the regulatory infrastructure for them, and they will comply. If not, they will fall under our sanctioning powers.

Another example: imagine an organization like the YWCA offering a range of assistance (housing, financial, welfare, legal) to victims of violence. I don’t believe anyone can seriously argue that any harm to the public will arise from a not-for-profit organization offering legal services, even if they are not owned by lawyers, and even if the services themselves are not provided by lawyers.

You could ask the question how/why has Nova Scotia been able to make the progress it has, in contrast to some other Canadian provinces? In my opinion, this is because in Nova Scotia we’ve done a significant amount of background work, beginning as far back as 2000. That work had the unintended consequence of allowing us to do the work we are doing today. That background work was not designed for that specific purpose, but now, in retrospect, we see that is has had that effect. The work encompassed two areas: (i) bringing clarity to the regulatory role, and (ii) improving the quality and the nature of our governance.

More specifically as regards bringing clarity to the regulatory role: the Society got out of the business of doing things that ostensibly are for the benefit of lawyers. In becoming a more rigorous regulator, we no longer do anything which is lawyer-centric. We used to have conferences and formal dinners and a variety of things like that — things that had as their motivation the desire to build collegiality and make lawyers feel good. We stopped doing all that, not because they are not important, but became we determined that as a public interest regulator we must focus on our purpose, which is to regulate in the public interest.

As regards governance, we spent a lot of time and energy creating a solid set of governance policies. In doing so, we created a framework where our Council understands its role to be exclusively that of policy maker, and, further, that as part of good governance, it will use only evidence-based decision making.

So, when the Council decided to undertake our current work (a decision that it made on the basis of what was happening in England and Wales and Australia), the Council looked only at the facts. They looked at our research papers,[4] they decided that the papers made sense, and they decided to use the evidence contained in those papers as the basis for moving in the direction that we are going.

In contrast, many of the other law societies in Canada are not as single-minded. While they say they are public interest regulators, they nevertheless hang on to a variety of activities that are designed to make lawyers feel good: receptions and black-tie dinners, awards… things that are about lawyers rather than about protection of the public.

Which begs the question: how did we do that? How did we bring about this background work? How did we make it happen? I think the answer to that is that over the 25 years that I have been the staff leader of the Society, I have worked with a tremendous group of people, both officers and staff. They have worked very hard to bring clarity to the work that we do. In addition, we have a very clear set of Council governance policies which make very clear the basis upon which we make decisions. While we did not swallow principles of corporate governance wholesale, we certainly learned from them, and merged it with the work of the regulator.

For example, we were the first law society in Canada to completely separate adjudication from policy making. We have an independent Hearing Committee that fulfills the adjudicative role in discipline cases. Before that we were like every other law society at that time, in that we had members of our Council sitting in both policy-making roles and playing roles in the disciplinary system, either with respect to investigation or adjudication. We went through a process which concluded that we should have a professional and independent adjudicative body, and that the sole purpose of that body should be to play a judicial role with respect to lawyer discipline. It took us some time to put this system into place, but we did put it into place, with no controversy. It’s a system that has now been adopted elsewhere in Canada, most notably in Ontario and Alberta. In Alberta, a survey of the Benchers revealed that they thought their most important role was to serve as adjudicators with respect to discipline matters, rather than act as policy makers. So meeting the challenge to change the nature of the work of bar governors in Alberta, as just one example, will represent a very large shift in culture.

Another significant change that we made in Nova Scotia was to move to skills-based committees across the organization. Today we’re not alone in that, of course. For example, the SRA has a skills-based board and the Australian Legal Services Commissioners are made up of skills-based decision makers. New Zealand has an interesting model: it has an elected council whose job is to appoint the professional regulatory bodies, so their key regulators are skills-based.

In sum, in Nova Scotia we had some really good leaders who understood what was needed and who knew how to use their time in office to make good progress.

When I reflect upon this, I worry about other jurisdictions. I wonder if they are able to do the work we are doing now in Nova Scotia, given that many other jurisdictions haven’t done the background work that we have done. In essence, we started 15 years ago, and we are now entering a “second generation” of our work.

I also wonder about what will happen when I finish my time here. How much of what we are doing in Nova Scotia is associated with Darrel Pink? Have our changes been sufficiently institutionalized such that when I leave, the Society will continue to follow the course it is on? Or, instead, will the ship change direction? I see in England’s SRA an example of insufficient institutionalization, such that when one leader leaves and another comes in, dramatic changes are the result. And I ask if the same thing is happening in Australia — are we seeing that the changes there will not survive the terms in office of the Legal Services Commissioners? The Legal Services Commissioners in New South Wales and Queensland spent years building something, yet it began to crumble as soon as they left their offices. This is a tremendous risk for us, too, and, indeed, for anyone trying to do what we are trying to do.

All that being said, and as transformative as much of what we are doing in Nova Scotia is, in many aspects it is merely iterative, and for that reason I am optimistic about the longevity of our work. For example, we have been asking lawyers survey questions in a mandatory way for several years. Notably, for the past ten years, every lawyer in Nova Scotia has filed an annual lawyer report with us. Law firms also file reports with us on a number of issues, including but not limited to trust accounts. Our new self-assessment tool is rigorous for sure, but it’s not at all the first time we’ve asked lawyers to answer questions. These foundations we’ve had in place for some time now, whereas they were not in place in Australia.

We do not want to fall into the traps we’ve seen in England and Wales or in Australia. For example, we want what we do to apply to all lawyers, not just a segment of the profession. All lawyers, regardless of the structure in which they practice (sole practitioner, law firm, in-house, governmental agency,…) will fall under the same regime.

We have several committees and working groups focused on the Legal Services Regulation project in Nova Scotia. The most important of these committees is the Steering Committee. It’s chaired by our President, who is joined by other members of Council. In order to assure national as well as international perspectives, a member of another Canadian law society (Alberta) is also on the Steering Committee, together with a former Director for Risk with the SRA. Finally, the Committee also includes two people who have been involved in transformative change. One, a lawyer, worked under Margaret Thatcher to privatize the British ship building industry, and later privatizing the British auto industry. The other is not a lawyer — his experience is with the evolution of securities regulation. In other words, we picked people with a strategic focus on skill sets and on the power to persuade at the Council level.

Here is something more we can learn from the experiences of England and Australia: It’s not about self-regulation or about self-governance, which are two words we have used as our mantra for generations. Instead, it is about independent and professional regulation. The SRA is nowhere close to a perfect regulator, but it shows us that when you professionalize regulation and you assure that that regulator acts independently, the quality of regulation improves. The Legal Services Commissioners of New South Wales, Queensland and Victoria have also shown this to be true.

Another key learning from England and Australia is the value of research. Regulators often act based upon their experience, but with little historic or prospective analysis of what the information we have means. We don’t do research. We don’t do much analysis of our experience. We know very little about what is happening in the legal profession. England and Australia show us that a small investment in terms of our overall budgets — an investment to better analyze and study — makes a huge difference. We cannot make the kind of changes that I am talking about based upon an analysis done on the back of a match box. It’s got to be done based upon valid research.

We are very conscious of making sure that what we are doing is complementary to the broad political philosophy of government. We are not beyond asking if this will be good for business, if it will support the province’s desire for economic development, if it will address issues of equity and diversity.

It’s easy to think that members of the public don’t care at all about how lawyers are regulated. But they do care about the impact of the regulation of legal services, and about the availability of legal services.

Notes

[1] See this link: http://www.nobc.org/docs/Global%20Resources/Entity%20Regulation/Entity.Regulation.Committee.FAQs.FINAL.07142015.(00000003).pdf.

[2] http://nsbs.org/draft-self-assessment-process-legal-entities

[3] http://nsbs.org/legal-services-regulation-policy-framework.

[4] These can be accessed at this link: http://nsbs.org/reports-resources.

This story is supplemental material for Democratizing Legal Services: Obstacles and Opportunities and Modernizing Legal Services in Common Law Countries: Will the US Be Left Behind? To learn more about these books, please click here and here.

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