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Competition Bureau Canada
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Self-regulated professions

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4. Lawyers

Overview

Role and function

Among other things, lawyers advise clients on legal matters, represent clients before bodies such as administrative boards and tribunals, draft legal documents such as contracts and wills, plead cases and conduct prosecutions in court.

In Quebec, notaries may perform all the same functions as lawyers except for litigation and advocacy. Notaries' traditional activities are in areas in which the law requires notarial deeds and instruments (such as mortgages and marriage contracts) prepared in prescribed ways. As with lawyers, Quebec notaries may give legal advice. 1

Many lawyers work in law firms (or notarial offices for Quebec notaries), while other lawyers and notaries are employed in the offices of private companies, associations, non-governmental organizations, and federal, provincial and municipal governments; many others are self-employed. 2

How the profession is regulated

Provincial and territorial law societies regulate the legal profession in Canada. For example, the Law Society of Manitoba, empowered by the Legal Profession Act , establishes standards for education, professional responsibility and competence, disciplines members and regulates the practice of law in that province. 3 There are 14 law societies in Canada: one for each province (two in Quebec) and territory. 4

Although not a regulatory body, the Federation of Law Societies of Canada (FLSC) is a national body representing lawyers in Canada. The FLSC has representatives from each of the 14 law societies and has historically functioned as a “clearing house facilitating the exchange of views and information of member law societies.” 5 The FLSC's mission is to research matters of importance to the legal profession in Canada, further co-operation and uniformity among the provincial governing bodies, improve the public's understanding of the legal profession in Canada, and express the views of the provincial governing bodies on national and international issues. 6

The Canadian Bar Association (CBA) is a voluntary professional organization, formed in 1896 and incorporated by a Special Act of Parliament on April 15, 1921. The CBA represents lawyers, judges, Quebec notaries, law professors and law students from all Canadian provinces and territories. Approximately half of all practising lawyers in Canada are members of the CBA. The objectives of the CBA include improving the law and the administration of justice, promoting fair justice systems and effective law reform, and protecting and promoting the rule of law and the independence of the legal profession. 7

Overlapping services

There are a number of other service providers whose services may complement or be substitutes for the services lawyers offer. For instance, paralegals may perform various legal duties under the guidance of lawyers, such as preparing legal documents (including wills, real estate papers and affidavits), maintaining records and files, conducting legal research and interviewing clients. Paralegals may not, however, give legal advice. Generally, paralegals obtain their qualifications through education, experience or both.

Notaries public provide services such as certifying real estate papers, legalizing documents and swearing declarations. 8

Mediators substitute for lawyers when the parties to a legal proceeding or transaction choose dispute resolution through mediation instead of litigation. The mediator is neutral and helps the parties reach a conclusion without a trial. Apart from lawyers, mediators may be social workers, psychologists or other professionals trained in dispute resolution. 9

Arbitrators may also offer services that substitute for the services of lawyers. Arbitrators help the parties to a legal proceeding or transaction avoid litigation and reach a settlement. Unlike mediators, arbitrators hear the facts of the case and legal issues and make a decision the parties must follow. 10

Entering the profession

Individuals seeking to be lawyers must have a common law degree or, in Quebec, a civil law degree. Following university, prospective lawyers must complete a provincial bar admission course and pass the accompanying examination(s). All law societies require prospective lawyers to complete an articling period, as well as register with a society in order to practise law. The requirements for registering with a law society typically include the educational requirements listed above and paying an annual membership fee.

Market

Demand

The demand for legal advice and representation comes from the general public, businesses and governments.

Members of the public use lawyers for a variety of legal matters, including estate planning, divorce, real estate transactions, and civil and criminal court cases.

Some businesses exclusively employ lawyers to provide legal services, such as drawing up contracts or acting in mergers, court cases and other legal matters.

The federal government employs approximately 1,800 lawyers at the Department of Justice in various fields, such as criminal litigation, civil litigation, tax litigation, public law, civil law, criminal and social policy, and legislative services. 11

The geographic market for legal services likely depends on the client and the service requested. The market is likely fairly local for individuals and small firms, whereas it is provincial, national or international for large firms.

Generally, rising caseloads and continued regulation drive the need for lawyers, although demand is difficult to predict. 12 The demand for lawyers is also influenced by the state of the economy and the business cycle, since a change in the volume of business activity affects the demand for lawyers, particularly those involved with real estate transactions, mergers and acquisitions, bankruptcies, contract preparation and other legal proceedings particular to commercial activity.

A decrease in the use of lawyers' services may result from an increased use of dispute-resolution services in which a lawyer's services are not mandatory. 13

Supply

In 2006, there were approximately 72,000 lawyers in Canada's 10 provinces, 90 percent of whom practised in Ontario, Quebec, Alberta and British Columbia. Further, there were 23,559 law offices across the provinces and territories. 14 In 2006, approximately 50 percent of lawyers in Canada were self-employed. Table 1 shows the number of lawyers by province that year.

Table 1: Number of lawyers by province, 2006
  Employment type
Province Total employed Self-employed Firm-employed Firm-employed,
full time
Alberta 8,200 4,200 4,000 3,700
British Columbia 9,300 4,600 4,600 4,200
Manitoba 1,300 600 800 700
New Brunswick 1,100 500 600 600
Newfoundland and Labrador 900 500 n/a n/a
Nova Scotia 2,000 1,100 900 800
Ontario 29,800 15,300 14,500 14,000
Prince Edward Island 200 n/a n/a n/a
Quebec 17,400 8,900 8,500 8,300
Saskatchewan 1,700 800 1,000 1,000
Canada
(excluding
the territories)
72,000 36,600 35,400 33,900

Source : Statistics Canada, “Employee Statistics for NOCS E012—Attorneys,” custom request, 2006.

From 2001 to 2006, the number of lawyers increased 13 percent, from 63,600 to 72,000.

In 2005, 2,778 lawyers in Canada practised in provinces in which they did not reside. Ontario had the largest number of non-resident practising lawyers, with 769; Newfoundland and Labrador, with 13, had the fewest. 15 That year, there were also 297 lawyers with occasional appearance certificates across all provinces, as well as 321 transfers between jurisdictions (see “Mobility,” below). 16

In 2005, there were more than 3,100 articling students, more than 3,300 students admitted to the bar admission course, and slightly more than 3,000 students called to the bar across all provinces. 17

Restrictions and recommendations

Market entry restrictions

Entering the profession

To become a lawyer in Canada, individuals must possess an LL.B from a recognized Canadian university. 18 Applicants to law school most likely hold an undergraduate degree, although some law schools accept applicants who have only completed two years of an undergraduate degree . 19 In Quebec, lawyers and notaries must have a three-year civil law degree instead of a common law degree. Students wishing to become notaries must take an additional year of schooling to obtain a diploma in notarial law. Civil law schools require applicants to have completed a two-year CEGEP (college) diploma.

All provincial and territorial law societies require prospective lawyers to complete a professional legal training course, known as the bar admission course, which includes the bar examinations. 20 Across the country, the course varies significantly in length, as the following examples show:

  • British Columbia: 10-week Professional Legal Training Course and examinations;
  • Alberta: six-month Canadian Centre for Professional Legal Education Program and assessments and examinations;
  • Saskatchewan: eight-week Bar Admission Course and examinations delivered by the Saskatchewan Legal Education Society Inc.; and
  • Nova Scotia: five-week Skills Training Course and an examination. 21

All law societies also require prospective lawyers to complete an articling period, either before or after the bar admission course. The minimum length of articling varies by jurisdiction, ranging from six months for lawyers in Quebec and nine months in British Columbia, to a year in Alberta, Yukon and several other provinces and territories. 22

The noted variations in the length of the professional legal training course and articling suggest that the entry requirements may have been set, in some instances, at a higher than necessary level, thereby increasing the requirements prospective lawyers have to meet to enter into the profession. In its consultation submission, the FLSC did not provide the Bureau with a rationale for the dissimilarities across the country. 23 Furthermore, given the National Mobility Agreement (see below), which allows lawyers to move freely among jurisdictions regardless of the legal training course or articling period required by their home jurisdictions, the reason for the discrepancies is not apparent. 24


Recommendation

Law societies should justify the duration of the professional legal training course and articling as the minimum necessary to properly and effectively practise law while protecting the public interest. When reviewing the duration of education and training lawyers require, law societies should look at other law societies that have maintained the quality of legal services while requiring shorter periods for training and articling.


Mobility
Interprovincial mobility

For lawyers wishing to move between jurisdictions, nine provinces (British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Prince Edward Island, Nova Scotia, and Newfoundland and Labrador) have fully implemented the National Mobility Agreement (NMA). The NMA sets out principles that govern temporary and permanent mobility among signatory provinces. Under this agreement, practising lawyers in provinces that have implemented the NMA, who have liability insurance and defalcation coverage, and who “have no outstanding criminal or disciplinary proceedings, no discipline record, and no restrictions or limitations on the right to practise may provide legal services [on a temporary basis] in or with respect to the law of a reciprocating jurisdiction for up to 100 days in a calendar year without a permit.” 25 Lawyers do not have to inform other law societies that they are doing so. 26

Lawyers practising for more than 100 days, or who otherwise develop an “economic nexus” (by opening an office from which to serve the public, opening and operating a trust account or becoming a resident in the jurisdiction) are ineligible for temporary mobility but may apply to transfer to the desired jurisdiction (permanent mobility). 27 Lawyers transferring permanently, who are entitled to practice in a signatory jurisdiction that has implemented the NMA and who are of good character, are excused from writing transfer examinations or any other examinations; however, they “must still meet any qualifications that ordinarily apply for lawyers to be entitled to practise law in the jurisdiction in question. They must also certify that they have reviewed and understood reading materials required by the jurisdiction.” 28

The NMA eases the mobility of lawyers between jurisdictions, which effectively serves to reduce barriers to entry and increase the supply of lawyers by allowing them to practise their profession outside their home jurisdiction. Although not full members of the NMA, Quebec and the three territories have allowed for some mobility.

Although Quebec has signed the NMA, it has not yet implemented it. Nonetheless, the Bâtonnier of Quebec—the head of the Quebec Bar (the Barreau du Québec )—may, under section 33 of the province's Professional Code and upon fulfilling certain conditions, issue special authorizations allowing Canadian or foreign lawyers to practise law in Quebec for specific cases. Special authorizations are valid for up to 12 months and may be renewed. The Barreau du Québec may require that counsel who are members of the Barreau help lawyers seeking special authorizations because of the differences in legal regimes between Quebec and other jurisdictions, in Canada and abroad. Special authorizations do not fall within the scope of the rules of temporary mobility under the NMA. 29

On November 3, 2006 Northwest Territories, Nunavut and Yukon signed the Territorial Mobility Agreement with the 10 provinces. This means the territories now “participate in national mobility as reciprocating governing bodies with respect to the permanent (transfer) mobility provisions of the NMA.” 30 The territories do not seem to have established guidelines for temporary mobility, although in Northwest Territories and Nunavut lawyers may apply for restricted appearance certificates for a single matter or for a number of matters over a limited period of time. 31

From a competition standpoint, complete mobility of lawyers across Canada is optimal and could be increased if all jurisdictions signed and implemented the NMA with respect to both temporary and permanent mobility.


Recommendation

Law societies should facilitate the movement of lawyers between jurisdictions to ensure complete temporary and permanent mobility throughout Canada. To do so, the Quebec Bar should implement, and the territories should sign and implement, the National Mobility Agreement.


International mobility

Instead of each law society establishing its own committee to assess and recognize foreign legal education and experience, the Council of Canadian Law Deans and the FLSC created the National Committee on Accreditation (NCA) to evaluate the credentials of foreign lawyers applying for admission to a Canadian common law society from either outside of Canada or from Quebec. The N CA does not evaluate foreign lawyers for acceptance into the Quebec law societies. 32 Those wishing to become a member of the Quebec Bar must apply to the equivalencies committee to have any training or diploma they received outside Quebec recognized as equivalent. 33 Following the evaluations, the NCA sets out the educational and practice requirements that applicants must meet to qualify for admission and issues successful candidates with certificates of qualification to practise in Canada. Foreign lawyers may still need to take the bar admission course and write the provincial or territorial bar examination, do other coursework or gain work experience before being accepted into a law society. 34

Members of the Law Society of Alberta, the Law Society of Saskatchewan, the Law Society of Upper Canada (Ontario) and the Law Society of Prince Edward Island must be either Canadian citizens or permanent residents. The Law Society of Newfoundland and Labrador requires that members be residents of Canada. 35

The necessity of residency restrictions is questionable, since other law societies have not deemed residency or citizenship requirements to be essential. The law societies that have such restrictions provided the Bureau with no rationale for them. From a competition standpoint, such restrictions limit the supply of lawyers by imposing an additional requirement that lawyers must meet before becoming members of a law society that has such a restriction.


Recommendation

The law societies that require their members to be residents or Canadian citizens should consider following the example of law societies that have not considered it necessary to include such requirements and eliminate these restrictions.

In most jurisdictions, foreign lawyers have the option of practising as foreign legal consultants, providing advice on the law of their home jurisdictions and on international law; however, Quebec, Northwest Territories, Yukon and Nunavut do not currently allow this. 36 Allowing foreign lawyers to act as legal consultants would provide for greater competition in this important area of the law.


Recommendation

The law societies of Quebec, Northwest Territories, Yukon and Nunavut should adopt rules enabling foreign lawyers to act as foreign legal consultants.

Foreign lawyers applying for permission to practise as foreign legal consultants must, in some instances, be residents of the jurisdiction in which they wish to practice, as is the case in Ontario, for example. 37 Such a requirement effectively limits the extent to which foreign lawyers who are not residents may practise as foreign legal consultants, which in turn limits competition for these services.


Recommendation

Law societies should remove the residency requirements for foreign legal consultants. Local presence should not be necessary.


Overlapping services and scope of practice

Members of provincial and territorial law societies have the exclusive right to practise law. 38 The statutes of the various law societies each include a similar definition of the term practice of law . Generally, it encompasses a variety of tasks, such as giving legal advice, making representations and drafting legal documents.

Included in the statutes are exceptions to the general rule of exclusivity, whereby certain people—namely students-at-law, individuals acting on their own behalf, public officers, insurers, court agents and legal assistants (also called paralegals)—are allowed to do certain legal tasks. In the case of paralegals, the statutes often contain a section listing the specific tasks that lawyers may delegate to them. 39 These tasks are generally limited to matters of routine administration and often require constant supervision of lawyers, as is the case in, for example, British Columbia, and Newfoundland and Labrador, where no independent paralegal practice is allowed. 40

In certain jurisdictions, members of the public may hire independent paralegals to appear and represent them in small claims court and before most tribunals, boards and agencies. Paralegals may also deal with simple wills, uncontested divorces, incorporations and pardons. In addition, paralegals may undertake work in other fields: for example, paralegals may practise as immigration consultants when properly registered with the Canadian Society of Immigration Consultants.

In Ontario, however, the independence of paralegals may be compromised under Bill 14, which was passed by the Ontario Legislature on October 19, 2006, and came into effect on May 1, 2007. 41 Bill 14 amended the Law Society Act and, as a result, the Law Society of Upper Canada became responsible for regulating paralegals. Independent paralegals are now subject to licensing requirements set by the Law Society and are only allowed to engage in permitted activities that do not fall under the definition of legal services . Under the legislation, “a person provides legal services if the person engages in conduct that involves the application of legal principles and legal judgment with regard to the circumstances or objectives of a person.” Paralegals are allowed to continue to work independently on matters before small claims court, provincial boards and agencies, and on Provincial Offences Act matters before the Ontario Court of Justice, such as highway traffic cases. However, Bill 14 outlaws non-advocacy work by paralegals, such as simple incorporations, wills, uncontested divorces and powers of attorney.

The Law Society of Upper Canada will not have the authority to regulate paralegals until it issues the first paralegal licence, which is expected to be in early 2008. In the meantime, the Law Society will continue to receive, investigate and act on complaints that paralegals are providing legal services that only lawyers may provide. 42

The legislative changes in Ontario restrict the set of suppliers to whom consumers may turn for certain legal services, thereby curtailing the option of working with paralegals and increasing the costs of legal services to consumers. Furthermore, a conflict of interest arises from having the Law Society of Upper Canada regulate paralegals, given that they have an incentive to restrain the range of legal activities paralegals may offer.


Recommendation

To the extent that paralegals need to be regulated, the proper avenue for this is not through the law societies, given the obvious conflict of interest that arises from having one competitor regulate another. Alternative means of regulatory oversight should be explored.

Another example of an area that has been affected by the wide scope of practice of lawyers is that of title insurance. Title insurance is an insurance policy covering the condition of title or ownership of real property at the time the policy is issued. This type of insurance protects property owners against losses or damages suffered as a result of title and off-title defects. It can be purchased as a substitute for a solicitor's report or the coverage a land title assurance fund provides. It is designed to streamline the conveyancing process and to enable real estate professionals to close transactions in a timely fashion.

Certain laws and regulations currently prevent title insurance companies from fully conducting their business. In some jurisdictions, laws and regulations give exclusive authority on certain aspects of real estate conveyancing to lawyers and notaries, which impedes title insurers' ability to offer their services. For instance, members of the Law Society of Upper Canada have the exclusive mandate to certify title on behalf of title insurers. Recent amendments to Ontario's Land Titles Act have had the effect of allowing only lawyers to transfer titles. 43 Proposed professional rules would require two lawyers to work on title transfers, a requirement that consumers would have no right to waive. In British Columbia, the law society allows only a lawyer or notary, and a limited number of other people, to witness the borrower's signature on mortgage documents. In addition, the Director of Land Registration in British Columbia has designated lawyers and notaries public as the only people under the Land Title Act who are allowed to affix digital signatures to documents to be filed at the Land Title Office. 44 The Law Society of New Brunswick has a practice standard that prevents an Application of First Registration for property to be registered unless the property owner has met with a lawyer. Through the Act to Amend the Land Titles Act (Bill 17), New Brunswick has given lawyers a monopoly on the electronic submission of documents.

The range of activities that is reserved for lawyers must be justified by a clear social benefit. An overly broad scope of practice for lawyers only raises costs for consumers by prohibiting alternative low-cost providers (such as paralegals and title insurers) from offering certain legal services. The FLSC stated in its consultation submission that “the underlying rationale for [providing lawyers with an exclusive right to practise law] is to protect the public.” 45 The Bureau acknowledges that this is valid but is of the view that it can be achieved without affording lawyers complete exclusivity on all legal tasks.


Recommendation

Law societies should neither prohibit related service providers (such as paralegals and title insurers) from performing legal tasks, nor limit their ability to do so, unless there is compelling evidence of demonstrable harm to the public.


Market conduct restrictions

Advertising

Typically, lawyers are permitted to advertise their services and fees, provided that the advertising claims are not false or misleading and are in good taste, so as not to bring the profession or the administration of justice into disrepute. The Bureau recognizes the need for such restrictions; however, some of those currently in place go beyond simply preventing false or misleading advertising and, as a result, raise competition concerns in light of the numerous benefits advertising brings to consumers.

Size, style and content of advertising

In Newfoundland and Labrador, and Ontario, lawyers may only advertise fees charged for their services when the advertisements do not use words or expressions such as from... , minimum, ...and up or the like, when referring to the fees to be charged. 46 Similarly, in Nova Scotia, an advertisement may not contain the words simple or complicated, or words of like import, in addition to the words previously mentioned. 47 The Law Society of Newfoundland and Labrador, besides forbidding the use of certain words, also prohibits members from indicating in advertisements that prices are discounted, reduced or special rates. 48

In advertisements in Yukon, lawyers may only convey information about their places and hours of business, the identity of lawyers in their firms, the identity of representative clients, the fields of law to which they restrict their practices and the types of services they provide. 49 Contrary to other law societies, Yukon's does not permit lawyers to use photographs, logos or symbols in their advertisements. 50

The Law Society of Alberta recently amended its Code of Professional Conduct to remove the restriction on advertising by former judges and to allow them to refer to their former status. 51 In contrast, the law societies of Nova Scotia, Prince Edward Island, Saskatchewan and Yukon have maintained their restrictions on such advertising. 52

The law societies of Yukon and Nova Scotia are the only ones to restrict the size of advertisements. Both require advertisements to be of a size commensurate with the amount of information being given. 53 In Yukon, lawyers may only place one listing in each of the white pages and yellow pages, no bigger than a double quarter column. 54

Certain law societies, such as those in Newfoundland and Labrador, and Quebec, prohibit their members from using statements of gratitude in their advertisements. 55

Referral fees

Lawyers are also prohibited from compensating non-lawyers for recommending their services or referring clients to them. In Newfoundland and Labrador, the law society rules state that lawyers may not provide to or receive from real estate brokers or title insurers any reward for directing or receiving clients. 56

The FLSC stated in its consultation submission that advertising is regulated to “protect public interest and confidence in the legal system.” 57 From the Bureau's perspective, the restrictions currently in place on advertising go outside of what is necessary to guarantee this, since the public needs only to be protected against advertising that is false or misleading. The elimination of the superfluous restrictions would allow for more innovative and informative advertising and, as a result, increase competition and lower consumers' search and information-gathering costs.


Recommendation

Generally, law societies should lift any unnecessary restrictions on advertising—that is, any restriction above and beyond the prohibitions on false, misleading and deceptive advertising—unless they can justify their existence. In particular, law societies should remove restrictions on the size, style and content of advertisements and allow non-lawyers to be compensated for referring services or clients.

Of particular concern to the Bureau are restrictions on claiming to be a specialist or expert in a field of law as well as on comparative advertising, as set out below.


Specialist and expert certification

Although most law societies allow members to list preferred areas of practice, they prohibit members from claiming to be specialists or experts in given fields. For example, lawyers in British Columbia may state a preference for practising in certain fields when they have devoted at least 20 percent of their time to it in the past three years. 58 At the same time, they are strictly prohibited from using the title of specialist. 59 Manitoba lawyers “may advertise a preferred area or areas of practice provided the advertisement does not contain a claim, either directly or indirectly, that the advertising lawyer is a specialist or expert.” 60 In Newfoundland and Labrador, lawyers may advertise preferred areas of practice so long as they do not claim to be specialists, experts, leaders or established or experienced practitioners in any field. 61 In Prince Edward Island, lawyers may only advertise preferred areas of practice that are approved under regulation. 62

Interestingly, although Saskatchewan does not permit lawyers to use the titles specialist, expert and leader, or any similar designation, members of the law society may be identified as leading practitioners in any publication that relies on input from independent parties approved by the ethics committee. 63

The Law Society of Upper Canada is the only law society to have implemented a program for lawyers to obtain specialist certification in a given practice area when they can show they meet the following qualifications:

  • that they practised for a minimum of seven years prior to the date of the application;
  • that they had substantial involvement in the specialty area during five of the seven years;
  • that they complied with the professional development requirements; and
  • that they complied with the professional standards requirements. 64

Although the laws and regulations of certain law societies allow lawyers to state that they are specialists or experts when certified, no means for obtaining certification have been put in place. This is the case in Alberta and Quebec. 65 In New Brunswick, although the Law Society Act specifies that the law society rules may designate specialized areas of practice and set out how and under what conditions members may present themselves as preferring or limiting their practice to one area, no such rules have been adopted. 66

The FLSC stated in its consultation submission that the constraints on members of the legal profession from presenting themselves as specialists are “intended to ensure that potential clients are accurately informed about the skills and knowledge of a particular practitioner.” 67 However, such restrictions also reduce the quantity and quality of information available to the public and prevent consumers from being able to identify the most competent lawyers in a given field. The Bureau is of the view that allowing the designation of specialists through a recognized certification program, similar to that offered by the Law Society of Upper Canada, will ensure information about lawyers' skills and knowledge is accurate. Such a designation may help members of the public choose lawyers that best suit their needs and assure that the public has access to a certain calibre of lawyers who meet specific requirements. Such a designation contrasts favourably with lawyers simply stating preferred areas of practice, which provides no indication of the quality of their services.


Recommendation

Law societies should evaluate the possibility of adopting a specialist certification program similar to that in Ontario. Alternatively, law societies could consider allowing members to be identified as leading practitioners in publications that rely on data from independent parties approved by the law societies' ethics committee, as is the case in Saskatchewan.


Comparative advertising

Lawyers in Alberta, British Columbia, New Brunswick, Ontario and Saskatchewan may not , in their advertisements , compare their fees to those of other lawyers. 68 In addition, lawyers in Alberta, British Columbia, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island and Saskatchewan are not permitted , in advertisements , to compare the quality of their services to those of other lawyers. 69

In most instances, lawyers may not state or imply any qualitative superiority over other lawyers, although the regulations do not explicitly state that lawyers are proscribed from using comparative advertising (in Manitoba and Nova Scotia, for example). 70 In its chapter on advertising, the Law Society of Alberta's Code of Professional Conduct states that lawyers' advertisements must, among other things, be verifiable: “an advertisement that states or implies qualitative superiority to another firm or lawyer is generally unacceptable, because it cannot be verified according to any objective, widely-held standard.” 71

In Yukon, the regulation takes a more general form, prohibiting lawyers from referring to the quality of the services they provide, regardless of whether the advertisements are comparative or claiming superiority. 72

Comparative advertising fosters price competition by allowing prospective clients to compare fees. When consumers cannot compare the prices for legal services, there is little or no incentive for lawyers to compete on price, thereby raising the costs to consumers. Additionally, such restrictions hinder competition between lawyers and make it particularly difficult for new lawyers to advertise their entry and distinguish their services from those of their competitors.


Recommendation

Law societies should abolish prohibitions on comparative advertising of verifiable factors, such as price.


Pricing and compensation

Every provincial and territorial law society has a section in its code of professional conduct that describes the rules concerning fees. Some have adopted the Canadian Bar Association's code in its entirety; others have adopted it with slight variations.

Lawyers may not charge or accept any fee that is not fully disclosed, fair and reasonable. The CBA code lists several factors to consider when determining a fair and reasonable fee, namely the time, effort and skill required, customary charges for similar work, the exposure and risk to the client in criminal cases, and any prior relevant agreements made between the client and lawyer. Disciplinary action may be taken against lawyers who cannot justify their fees as being fair and reasonable. 73 New Brunswick's code further clarifies that fees should not entirely depend on the outcome of the case or the hours spent on the case. 74 Clients who do not believe their lawyers' fees to be reasonable can request an independent review of them by the courts.

The restrictions appear reasonable and do not raise any competition concerns. However, there are some that seem overly restrictive, as follows.

According to the FLSC, none of the law societies has adopted suggested fee schedules. 75 However, under Quebec's Professional Code , the General Council of the Barreau du Québec , which governs the Quebec Bar, “ may, in particular, by resolution […] suggest a tariff of professional fees that the members of the order may apply in respect of the professional services they render.” 76

The presence of suggested fees may create an opportunity for price fixing, which is contrary to the principles of competition. As a result of the suggested fees, lawyers may set prices higher than they otherwise would. The quality of legal services may decrease, since professionals who have fixed prices likely have little or no incentive to improve the quality of their services.


Recommendation

The Quebec legislature should consider repealing the provision of the Professional Code that gives professions the right to suggest a tariff of professional fees that the members may apply.

Contingency fee agreements are generally acceptable as long as they remain fair and reasonable, and respect any other condition the law societies have established. 77 Some jurisdictions have restricted the areas of practice in which contingency fees may be used. For example, Yukon prohibits lawyers from entering into contingency fee agreements when the services provided relate to matrimonial causes, the property of people under legal disability or the distribution of estates. 78 In Ontario, lawyers may not enter into contingency fee agreements for criminal or quasi-criminal proceedings or for family law matters. 79 Other law societies void agreements in certain areas of the law unless the courts approve the agreements: this is the case, for instance, in British Columbia, New Brunswick and Saskatchewan. 80

Since contingency fee agreements attach a lawyer's remuneration to the outcome of a case, they may provide lawyers with incentive to act in their clients' best interests. Furthermore, contingency fee agreements render the justice system more accessible for those who are unable to access it due to financial limitations.


Recommendation

Law societies should identify the goals of the restrictions on contingency fees in certain practice areas, and then determine whether the restrictions are the best means of achieving the desired goals, considering that other law societies have not deemed such restrictions necessary.

Two law societies have set maximums for the remuneration lawyers are entitled to receive under contingency fee agreements. In British Columbia, this maximum is 33.3 percent of the amount the plaintiff recovers for a claim for personal injury or wrongful death arising out of the operation of a motor vehicle. The maximum remuneration for any other type of claim for personal injury or wrongful death is 40 percent. 81 In New Brunswick, a reviewing officer must approve agreements that set the contingency fees at more than 25 percent of the amount recovered. 82

The Bureau recognizes that restrictions on the maximum percentage that lawyers may demand under contingency fee agreements have been put into place to protect consumers. However, a maximum percentage has the potential to be anti-competitive when it is set at a supra-competitive level and serves as a focal point towards which lawyers will move, creating an inviting opportunity for tacit collusion.


Recommendation

The law societies of British Columbia and New Brunswick should consider eliminating the maximum percentage to which lawyers are entitled under contingency fee agreements. The appropriate fee structure should be left to market forces to determine.


Business structure

All law societies, apart from the Law Society of Upper Canada and the Barreau du Québec , have made multidisciplinary practices unfeasible by prohibiting lawyers from splitting, sharing or dividing clients' fee with anyone other than other lawyers. 83 Furthermore, lawyers are not allowed to enter into any arrangement whereby non-lawyers share in the fees or revenues generated by the practice of law. 84

In Ontario, upon receiving approval from the Law Society of Upper Canada, lawyers may form multidisciplinary practices with individuals who are not members of the Law Society. The individuals must be of good character and practise professions, trades or occupations that support or supplement the practice of law. Lawyers must maintain effective control over the individuals' practice by ensuring, in particular, that they comply with the law society's regulations and practise with the appropriate level of skill, judgment and competence. 85 A member of the Law Society must maintain professional liability insurance coverage for the individual. 86 In Quebec, lawyers may only share fees with members of the bar, other professional orders or professions listed in Schedule A of the Regulation respecting the practice of the profession of advocate within a limited liability partnership or joint-stock company and in multidisciplinarity or persons that are a partnership or joint-stock company within which they are authorized to engage in their professional activities . 87

Many law societies specify that law corporations must not carry on any activities other than providing legal services or services directly associated with providing legal services (see, for example, British Columbia, Manitoba, New Brunswick). 88

In Saskatchewan, lawyers “may share premises, facilities and staff with a person who is not a member of the Society, provided that the non-member's reputation or activities do not jeopardize the integrity of the profession, that the business of the member and non-member are kept entirely separate, and that clients of the member are not confused as to the person with whom they are dealing.” 89

Multidisciplinary practices translate into cost efficiencies and increased consumer choice and convenience. Restricting this form of business structure may cause harm to consumers, since they cannot take advantage of the numerous benefits of a one-stop-shop. The Law Society of Upper Canada and the Barreau du Québec , by allowing multidisciplinary practices, have demonstrated the feasibility of such structures. That they do allow multidisciplinary practices is evidence in itself that other law societies should reconsider the cost-benefit analysis of their restrictions on multidisciplinary practices.


Recommendation

Law societies should consider less intrusive mechanisms than prohibiting multidisciplinary practices to circumvent possible conflicts of interests. Examples to follow are those of the Law Society of Upper Canada and the Barreau du Québec , both of which allow lawyers to form partnerships with non-lawyers, under certain conditions and appropriate regulation.


Recommendation

In order to allow for multidisciplinary practices, law societies will have to remove restrictions that currently prohibit or discourage lawyers from working in multidisciplinary arrangements with other professionals. Instead, they should allow the following:

  • lawyers to split, share or divide clients' fees with non-lawyers;
  • lawyers to enter into arrangements with non-lawyers regarding sharing fees or revenues generated by the practice of law; and
  • law corporations to carry on activities other than providing legal services or services directly associated with providing legal services.

Recommendation

Law societies wishing to take a more conservative approach should consider allowing lawyers, under specific conditions, to share premises, facilities and staff with non-lawyers, as is the case in Saskatchewan.


Conclusion

Law societies must assess , from a competition standpoint , the costs and benefits of the various types of restrictions they impose. Many of the restrictions currently in place have the effect of raising costs to consumers.

The most evident of these restrictions are those on overlapping services and scope of practice, which prohibit low-cost providers from offering certain legal services. However, costs to consumers may also be increased indirectly though restrictions on conduct. For example, many existing advertising restrictions go above and beyond simple prohibitions of false, misleading and deceptive advertising. This effectively limits the innovative means by which lawyers may advertise and reduces the information advertisements contain.

Maximum pricing restrictions on contingency fee agreements may also raise costs for consumers, since they potentially create an inviting opportunity for tacit collusion. When restrictions set maximum prices higher than the competitive level, they serve as a focal point for lawyers when pricing their services.

As for multidisciplinary practices, their prohibition deprives consumers of the cost efficiencies and convenience of purchasing a number of services from one firm.

With increasing legal fees, access to justice in Canada is a genuine concern. Escalating legal costs will mean that only the very wealthy will be able to afford legal assistance. As the Right Honourable Beverley McLachlin, Chief Justice of the Supreme Court, said in a speech she gave to the Empire Club of Canada on March 8, 2007,

Many Canadian men and women find themselves unable, mainly for financial reasons, to access the Canadian justice system. Some of them decide to become their own lawyer. Our courtrooms today are filled with litigants who are not represented by counsel, trying to navigate the sometime complex demands of law and procedure. Others simply give up.

Although legal aid may offer a solution to some, qualifying for it is very difficult, which leaves a large group of people without the financial means to seek legal assistance. Because of the inaccessibility of the legal system, it is of vital importance that consumers not incur avoidable costs resulting from overly restrictive regulation.




1 Chambre des notaires du Québec, “Areas of notarial practices,” www.cdnq.org/en/notariesInQuebec/areas.html .

2 Human Resources and Skills Development Canada, “About the NOC 2006 Update,” www23.hrdc-drhc.gc.ca/2001/e/groups/4112.shtml ; Service Canada, “Judges, Lawyers and Quebec Notaries,” www.jobfutures.ca/noc/411p1.shtml .

3 Legal Profession Act , C.C.S.M. c. L107.

4 For a complete list of the provincial and territorial law societies, go to Federation of Law Societies of Canada (FLSC), “The Practice of Law in Canada,” www.flsc.ca/en/lawSocieties/lawSocieties.asp#list . In Quebec, there is one law society for lawyers, the Barreau du Québec , and one for notaries, the Chambre des notaires du Québec .

5 FLSC, “History of the Federation,” www.flsc.ca/en/about/history.asp .

6 FLSC, “Mission of the Federation,” www.flsc.ca/en/about/mission.asp .

7 Canadian Bar Association, consultation submission, July 11, 2007. See also Canadian Bar Association, “About the CBA,” www.cba.org/CBA/about/main .

8 Notaries in Quebec are not to be confused with notaries public. Quebec notaries must complete a full legal education and must article before being admitted to the profession, while notaries public are strictly commissioned clerks. Also, contrary to notaries in Quebec, notaries public may not provide legal advice. Although notaries public have the power to certify documents, their certification has only a limited probative effect. Chambre des notaires du Québec, “The Latin notary and the notary public,” www.cdnq.org/en/notariesInQuebec/latin.html ; Canlaw, “What is a Notary Public,” www.canlaw.com/notaries/notary.htm .

9 Department of Justice Canada, “Resolving Disputes: Think About Your Options,” www.justice.gc.ca/en/dept/pub/rd/index.html#dispute_resolution .

10 Ibid.

11 Department of Justice Canada, “A Legal Career with Justice,” http://canada.justice.gc.ca/en/dept/ri/rec/lcj/index.html .

12 Law School Admission Council, Inc., “Law as a Career,” www.lsac.org/canadianCFC/template2.asp?url=LawCareer.htm .

13 Department of Justice Canada, note 11, above.

14 Statistics Canada, “Employment Size Ranges for NAICS 541110—Offices of Lawyers ,” custom request, 2006 . There were 23,484 law offices across the 10 provinces and 75 offices in the territories. Note that the FLSC reports total membership in all Canadian law societies of approximately 98,000. This includes notaries in Quebec and may also include double counting of lawyers who are members of more than one law society. FLSC, “2005 Law Societies Statistics,” www.flsc.ca/en/pdf/statistics2005.pdf .

15 FLSC, ibid.

16 Ibid.

17 Ibid.

18 FLSC, “Admission to a Law Society,” www.flsc.ca/en/lawSocieties/lawSocieties.asp#admission .

19 See, for example, University of Manitoba, “Admissions Information,” http://umanitoba.ca/, and University of New Brunswick, “Admission Handbook 2007,” http://law.unb.ca/pdf/AdmissionsHandbook2007_001.pdf .

20 FLSC, “The Practice of Law in Canada,” www.flsc.ca/en/lawSocieties/lawSocieties.asp .

21 Law Society of British Columbia, “About PLTC,” www.lawsociety.bc.ca/licensing_membership/pltc/about.html ; Law Society of Alberta, “2007–2008 CPLED Program,” http://www.cpled.ca/downloads/
AB_cpled_program_handbook.pdf
; Law Society of Saskatchewan, “Programs and Services: Saskatchewan Legal Education Society Inc.,” www.lawsociety.sk.ca/newlook/Programs/sklesi.htm ; Nova Scotia Barristers' Society: “Bar Admission Course,” www.nsbs.ns.ca/barcourse.html .

22 École du Barreau du Quebec, “Stages,” www.ecoledubarreau.qc.ca/stages/admissibilite.php ; Law Society of British Columbia, “New Admissions,” www.lawsociety.bc.ca/licensing_membership/
becoming_bc_lawyer/new_admissions.html
; Law Society of Alberta, Rules of the Law Society of Alberta , r. 56(1)(a); Law Society of Yukon, Rules of the Law Society of Yukon , r. 84.1(a).

23 The FLSC responded to the Bureau's questionnaire and provided a consultation submission on behalf of the law societies of Newfoundland and Labrador, New Brunswick, Nova Scotia, Prince Edward Island, Ontario, Manitoba, Saskatchewan, Alberta, British Columbia, Yukon and Northwest Territories. Although Nunavut is not expressly mentioned as being covered by the FLSC's questionnaire response and consultation submission, it is implicitly, since Nunavut has adopted the Northwest Territories' Legal Profession Act and Rules .

24 Lawyers must meet certain specified conditions in order to provide legal services outside their home jurisdictions under the scope of the National Mobility Agreement. See “Mobility,” below.

25 FLSC, “Mobility of Lawyers in Canada,” www.flsc.ca/en/committees/mobility.asp . According to Black's Law Dictionary (8th ed., 2004, p. 448), defalcation can mean embezzlement, the failure to meet an obligation, and/or a non-fraudulent default.

26 FLSC, consultation submission, June 11, 2007.

27 Ibid. An economic nexus is a connection that is established when a lawyer, while practising law on an occasional basis within a jurisdiction, does something that is inconsistent with this.

28 FLSC, “Mobility of Lawyers in Canada,” note 25, above.

29 FLSC, consultation submission, June 11, 2007. See also Barreau du Québec, “Special Authorization to Practise Law in Québec, ” www.barreau.qc.ca/avocats/autorisation-speciale/index.html .

30 Ibid.

31 Law Society of the Northwest Territories, Rules of the Law Society of Northwest Territories , r. 49.

32 FLSC, “The Practice of Law in Canada,” www.flsc.ca/en/lawSocieties/lawSocieties.asp#foreign .

33 Regulation respecting the Standards for equivalence of diplomas and training of the Barreau du Québec, R.Q. c. C-26, r.19.2.1.

34 See, for example, Nova Scotia Barristers' Society, “Practising in N.S.: Foreign Applicants,” www.nsbs.ns.ca/foreign.html .

35 FLSC, “The Practice of Law in Canada,” www.flsc.ca/en/lawSocieties/lawSocieties.asp#admission .

36 FLSC, consultation submission, June 11, 2007. See also World Trade Organizations, Trade Policy Review: Report by the Secretariat , February 14, 2007, www.wto.org/English/tratop_e/tpr_e/s179-04_e.doc .

37 Law Society of Upper Canada, By-law 14 , s. 4(2).

38 See, for example, British Columbia, Legal Profession Act , S.B.C. 1998, c. 9, s. 15, and Prince Edward Island, Legal Profession Act , R.S.P.E.I. 1988, c. L-6.1 , s. 20(1).

39 See for example, Law Society of British Columbia, Professional Conduct Handbook , c. 12, r. 8, and Law Society of Newfoundland and Labrador, Rules of the Law Society of Newfoundland and Labrador , r. 12.07.

40 Law Society of British Columbia, Professional Conduct Handbook , c. 12(4); Law Society of Newfoundland and Labrador, Rules of the Law Society of Newfoundland and Labrador , r. 12.03. In its consultation submission of June 28, 2007, the British Columbia Paralegal Association defined a paralegal as “a person with training and knowledge of the substantive and procedural aspects of the law, who is capable of independent legal work performed subject to the general supervision of a lawyer.”

41 An Act to Promote Access to Justice by Amending or Repealing Various Acts and by Enacting the Legislation Act, 2006 , S.O. 2006, c. 21.

42 Law Society of Upper Canada, “ Paralegal Regulation,” www.lsuc.on.ca/paralegals/ .

43 Land Titles Act , R.S.O. 1990, c. L.5.

44 In this capacity, lawyers and notaries are known as subscribers. The Land Title Act , R.S.B.C. 1996, c. 250, s. 168.1, defines a subscribe as “an individual who is authorized by a certificate to sign electronic applications and instruments under this Part, and electronic returns under the Property Transfer Tax Act .”

45 FLSC, consultation submission, June 11, 2007.

46 Law Society of Newfoundland and Labrador, Rules of the Law Society of Newfoundland and Labrador , r. 8.11(c); Law Society of Upper Canada, Rules of Professional Conduct , r. 3.04(2)(c)

47 Regulations made pursuant to the Legal Profession Act , r. 7.6.6 (c).

48 Law Society of Newfoundland and Labrador, Rules of the Law Society of Newfoundland and Labrador, r. 8.11 (c)

49 Legal Profession Act , R.S.Y. 2004, c. 134, s. 105.

50 Law Society of Yukon, Rules of the Law Society of Yukon , r. 193.

51 Law Society of Alberta, “Changes to Advertising Rules Effective February 2007,” www.lawsocietyalberta.com/advisory/advisory_nov_04.cfm .

52 Nova Scotia, Regulations made pursuant to the Legal Profession Act , r. 7.6.3 (d); Law Society of Prince Edward Island, Regulations of the Law Society of Prince Edward Island , r. 41(2); Law Society of Saskatchewan, Rules of the Law Society of Saskatchewan , r. 1605; Law Society of Yukon, Rules of the Law Society of Yukon , r. 199.

53 Nova Scotia, Regulations made pursuant to the Legal Profession Act , r. 7.6.2 (d); Law Society of Yukon, Rules of the Law Society of Yukon , r. 193.

54 With the approval of the Chairman of the Discipline Committee, an advertisement may be allowed to exceed the prescribed size (Law Society of Yukon, Rules of the Law Society of Yukon , r. 197).

55 Law Society of Newfoundland and Labrador, Rules of the Law Society of Newfoundland and Labrador , r. 8.05 (c); Quebec: Code of ethics of advocates , R.Q. c. B-1, r.1, s. 5.06, for lawyers ; Code of ethics of notaries , R.Q. N-3, r.0.2 , s 70, for notaries.

56 Law Society of Newfoundland and Labrador, Rules of the Law Society of Newfoundland and Labrador , r. 8.12(1), 8.12(2).

57 FLSC, consultation submission, June 11, 2007.

58 Law Society of British Columbia, Professional Conduct Handbook , c. 14, r. 16.

59 Ibid, r. 18.

60 Law Society of Manitoba, Code of Professional Conduct , c. 14, C8.

61 Law Society of Newfoundland and Labrador, Rules of the Law Society of Newfoundland and Labrador , r. 8.10.

62 Law Society of Prince Edward Island, Regulations of the Law Society of Prince Edward Island , s. 40(1), 40(2).

63 Law Society of Saskatchewan, Rules of the Law Society of Saskatchewan , r. 1615(1), 1615(3).

64 Law Society of Upper Canada, “About the Program,” http://mrc.lsuc.on.ca/jsp/csp/index.jsp .

65 Law Society of Alberta, Code of Professional Conduct , c. 5, r. 5 ; Quebec Professional Code , R.S.Q., c. C26, s. 58.

66 Law Society Act , 1996, S.N.B. 1996, c. 89, s. 17(2)(u), 17(2)(v).

67 FLSC, consultation submission, June 11, 2007.

68 Law Society of Alberta, Code of Professional Conduct , c. 5, r. 6(d); Law Society of British Columbia, Professional Conduct Handbook , c. 14, r. 12c; Law Society of New Brunswick, Code of Professional Conduct , c. 16, commentary 4f); Law Society of Upper Canada, Rules of Professional Conduct , r. 3.04(1)c); Law Society of Saskatchewan, Rules of the Law Society of Saskatchewan , r. 1611(1)(c).

69 Law Society of Alberta, Code of Professional Conduct , c. 5, R.1, C.1a); Law Society of British Columbia, Professional Conduct Handbook , c. 14, r. 5d; Law Society of New Brunswick, Code of Professional Conduct , c. 16, commentary 4e); Law Society of Newfoundland and Labrador, Rules of the Law Society of Newfoundland and Labrador , r. 8.05(1)(a); Nova Scotia: Regulations made pursuant to the Legal Profession Act , r. 7.6.3; Law Society of Upper Canada, Rules of Professional Conduct , r. 3.04(1)c); Law Society of Prince Edward Island, Regulations of the Law Society of Prince Edward Island , s. 38(3)(b); Law Society of Saskatchewan, Rules of the Law Society of Saskatchewan , r. 1602 (d).

70 Law Society of Manitoba, Rules of the Law Society , r. 5-114(1), and Code of Professional Conduct , c. 14, r. 7; Nova Scotia: Regulations made pursuant to the Legal Profession Act , r. 7.6.3.

71 Law Society of Alberta, Code of Professional Conduct , c. 5, R1, C1(a).

72 Nova Scotia: Regulations made pursuant to the Legal Profession Act , r. 7.6.3; Law Society of Yukon, Rules of the Law Society of Yukon , r. 193.

73 Canadian Bar Association, Code of Professional Conduct , c. XI, Commentary 1.

74 Law Society of New Brunswick, Code of Professional Conduct , c. 9, Commentary 2)(c)i).

75 FLSC, questionnaire response, question 5.1, January 18, 2007.

76 Professional Code , R.S.Q., c. C-26, s. 86.01(12). The Professional Code is the parent legislation governing the Quebec professional system. In consequence, the Bureau's recommendation that follows applies to all professionals, not only lawyers and notaries, including pharmacists, accountants and optometrists, which other chapters of this study cover.

77 A contingency fee agreement is an agreement between a lawyer and a client whereby a lawyer is only paid when there the legal matter concludes successfully for the lawyer's client. The fee is based on a percentage of the award.

78 Legal Profession Act , R.S.Y. 2004, c. 134, s. 68(3).

79 Solicitors Act , R.S.O. 1990, c. S.15, s. 28.1(3).

80 British Columbia, Legal Profession Act , S.B.C. 1998, c. 9, s. 67(5); New Brunswick, Law Society Act , 1996, S.N.B. 1996, c. 89, s. 83(5); Law Society of Saskatchewan, Rules of the Law Society of Saskatchewan , r. 1502(b).

81 Law Society of British Columbia, Rules of the Law Society of British Columbia , r. 8-2.

82 Law Society of New Brunswick, Contingent Fee Rules , r. 2(1).

83 See, for example, Law Society of British Columbia, Professional Code Handbook , c. 9, r. 6, and Law Society of Manitoba, Code of Professional Conduct , c. 11, C10.

84 See, for example, Nova Scotia Barristers' Society, Legal Ethics and Professional Conduct Handbook , r. 12.10, and Law Society of Saskatchewan, Code of Professional Conduct , c. 11, C9.

85 Conditions that must be satisfied in order for a member of the Law Society to be able to enter into a multidisciplinary partnership with an individual who is not a member are set out in Law Society of Upper Canada, By-law 7 , s. 18(2).

86 Law Society of Upper Canada, ibid, s. 30(2).

87 Code of ethics of advocates , s. 3.05.14. In section 1 of the Professional Code , a professional order is defined as any professional order listed in Schedule I of the Code or constituted in accordance with the Code. Schedule A of the Regulation lists o ther persons authorized to engage in professional activities within a limited liability partnership or joint stock company: contributors of the Chambre de l'assurance de dommages; contributors of the Chambre de la sécurité financière; members in good standing of a law society constituted outside Quebec; patent agents registered with the Commissioner of Patents under the Patent Act ; and members in good standing of the Canadian Institute of Actuaries.

88 British Columbia, Legal Profession Act , S.B.C. 1998, c. 9, s. 81(4); Manitoba, Legal Profession Act , C.C.S.M. c. L107, s. 33(3); New Brunswick, Law Society Act , 1996, S.N.B. 1996, c. 89, s. 37(8).

89 Law Society of Saskatchewan, Rules of the Law Society of Saskatchewan , r. 1616.