Credit: Flickr/Chris W.
AS PART of its measures to protect public interests and maintain the dignity of the legal profession in Ontario, the Law Society of Upper Canada (LSUC), which is the regulatory body for lawyers and paralegals (licensees) in the province, recently made some key policy changes to the advertising rules in its Rules of Professional Conduct (RPC). The LSUC also resolved to place a limit on referral fees.
FOLLOWING complaints from the public and interest groups on the proliferation of misleading advertisements by licensees and the rise of unethical referral fees practices, the LSUC constituted the Working Group on Advertising and Fee Arrangement in February 2016. Malcolm Mercer chaired the Working Group, which consists of 13 members. The other members include Jack Braithwaite, Paul Cooper, Jacqueline Horvat, Michael Lerner, Marian Lippa, Virginia Maclean, Jan Richardson, Jonathan Rosenthal, Andrew Spurgeon, and Jerry Udell. The duo Robert Burd and Carol Hartman served on the Working Group as members until August 2016.
THE WORKING GROUP reviewed the rules and practices on advertising, referral fee and contingency fee in different practice areas, including real estate, personal injury, criminal law and paralegal practices, to determine whether any regulatory responses are required. It also received useful feedback from the public.
ON FEBRUARY 23, 2017, the benchers of the LSUC deliberated upon the submission of the Working Group. The decisions of the LSUC are summarized below:
New rules on advertisement
New rules on referral fees
IN ENSURING transparency and proportionality in referral fee arrangements, the LSUC resolved to place a limit on the amount that can be charged for referrals and to establish the requirements that will guide clients to understand the referral process. In line with this resolution, it directed the Working Group to develop the proposed rules amendments and other recommendations that are necessary to implement the new rules on referral fee. The amount at which the referral fees will be capped is top on the list of the issues to be considered by the Working Group.
AS A PREMISE to the LSUC’s decision, the Working Group had noted in the Report it submitted to the regulatory body that misleading advertising is fueling a lack of transparency in referral fees. And that referral fee has skyrocketed, sometimes going as high as about 30%. A higher referral fee, according to the Working Group, creates pressure on the licensee to charge a higher fee to the client. Since high referral fees will eventually result in high contingent fees, this trend will adversely affect the recovery obtainable by claimants in personal injury cases.
WHILE the new rules may seem like unnecessary restrictions on the freedom of commercial expression, the objective of protecting the public interest is of greater importance. Thus, with these changes, it is expected that misleading advertisements of legal services and the culture of charging exorbitantly high referral fees will be put under control. Notably, the new rules will serve as a springboard for other law societies in Canada to use in revamping their own rules on advertisement of legal services and referral fees. Ultimately, the changes will help to protect the interests of the public and promote confidence and trust in the legal profession, all of which are the hallmark of the law societies.
Law Society of Upper Canada, “FACT SHEET: Law Society limits referral fees and strengthens advertising rules in the public interest” (23 February 2017) online http://www.lsuc.on.ca/uploadedFiles/Advertising-and-Fees-Fact-Sheet-CAP.pdf.
Law Society of Upper Canada, Convocation - Professional Regulation Committee Report: TAB 4 (23 February 2017), online http://www.lsuc.on.ca/uploadedFiles/For_the_Public/About_the_Law_Society/Convocation_Decisions/2017/2017-Feb-Convocation-Professional-Regulation-Committee-Report.pdf.