Ontario rent controls an opportunity lost for legal profession

Friday, May 12, 2017

Rent controls and funeral homes have a commonality. Both represent opportunity in the legal market; rent controls, an opportunity lost, and funeral homes an opportunity seized. They also represent the great divide that exists between the headspace of lawyers on this side of the Atlantic and that of the profession in the U.K.

In Britain, legal services are going the way of the dead. Counterintuitively, this is a good thing. In what amounts to the oddest announcement I’ve seen in a while — at least at first blush — The Co-operative Group, whose Co-operative Legal Services (CLS) was the first alternative business structure (ABS) licensed in the U.K. in 2012, announced that CLS will be integrated with its $500 million FuneralCare service to create a new Life Planning Division.

So in this instance, the route to the cemetery is forward-thinking. A reincarnation, if you will, one that represents an important testament to the hard reality that lawyers, after all, are just one cog in the ever-integrating wheel serving business and consumers alike.

CLS director Matt Howells was correct when he spoke of the “natural synergy” between estate planning, which is CLS’ largest practice area, having added 100 associates and support staff since 2015, and the funeral home industry.

As it turns out, the CLS announcement came 10 years after the Legal Services Act 2007 authorized ABS, which allowed for non-lawyer ownership of entities that provided regulated legal activities. Since 2012, the Solicitors Regulation Authority has issued 600 licences, including many to large non-legal entities that have provided capital, skill sets and out-of-the box thinking to an otherwise moribund sector.

This 10th anniversary also brought the Bar Standards Board, which regulates barristers, onside with the announcement that it intended to grant four ABS licences for advocacy-related practices. This could adversely impact solicitors in England’s bifurcated systems of barristers and solicitors because barristers will no longer have to rely on solicitors for such things as drafting, investigation and interviewing.

That’s the genius of ABS, at least in England: on the one hand it giveth to solicitors, on the other hand it taketh away. The upshot? Innovate constantly or perish.

By way of contrast, the best Ontario can do in 2017 is celebrate 10 years of paralegal regulation by the Law Society of Upper Canada. But if the celebration is not muted, it should be: it means that it’s been 10 years since the last significant market evolution of Ontario’s lawyers — a decade of paralysis, more or less, one in which LSUC’s throttling of any real movement toward ABS in the province will continue to haunt the profession going forward.

The impending expansion of rent control in Ontario is an excellent case in point. When rent controls were first introduced in Ontario, lawyers missed the boat. A small group of non-legal consultants took over, handling the majority of rent increase applications before the Ontario Rental Housing Tribunal, now the Landlord and Tenant Board. The applications were high stakes and meant millions to the enormous rental sector, then Ontario’s largest industry, and its high-profile clients. It was nothing less than a glorious client development opportunity missed by most of the bar.

Nor was it an opportunity just for the larger firms. Much of the rental sector consists of mom and pop or medium-sized landlords, precisely the market that the profession is failing.

It’s not that lawyers’ training provides them with all the skills needed to conduct a rent control hearing. In particular, the minute characterizations of expenses and complicated calculations that go into a rent control application are probably outside most lawyers’ ambit.

But that doesn’t mean that law firms shouldn’t be significant players in the rent control arena. After all, what qualifies accounting firms to do time and motion studies? It’s not the training accountants get, but the experts from various fields that they surround themselves with as an integral part of their organizations. The accountants can do that because they don’t have the arcane restrictions that surround the way they organize themselves.

That’s why the Big 4 are moving so swiftly and successfully into legal services. If we don’t go and get them, they and others are going to come and get us.

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