As we say goodbye to 2016, it’s time to embrace 2017. For 2017, law societies should place an emphasis on regulating law firms.

A law firm’s culture seeps into the very make-up of its constituent lawyers. An unethical culture breeds unethical lawyers. An ethical culture breeds ethical lawyers.

In “Regulating Law Firms in Canada“, Professor Adam Dodek states that the absence of law firm regulation undermines the legitimacy of law societies. I agree.

Under the pressure from law firms to meet deadlines, win cases, win motions, appease clients, and surrounded by a certain firm culture, lawyers may find themselves suddenly doing things they never thought possible. For example, a mid-level associate in a large firm may fail to disclose a potential conflict of interest. But by disciplining only that individual lawyer, law societies “miss part of the story of how the practice of law operates and how it should be regulated.”

Professor Dodek explains:

Law firms are front and center in the lawyer-client relationship. As Lucie Lauzière has written, “[t]he law firm is now the intermediary between client and lawyer.” This is certainly true in terms of advertising, solicitation, client intake, conflicts of interest, retainer agreements, billings and many other interactions that clients and potential clients have with the delivery of legal services via “the firm.” With larger law firms, the influence of a collective culture may be even stronger.

Law Societies should regulate law firms because of the enormous power that law firms exert over the behaviour of its constituents. Behaviour once seen as obscene, now normalized by a law firm’s culture, may become second nature to its lawyers. Through the regulation of law firms, law societies can promulgate ethical standards.

There are many ways to regulate law firms. The three most powerful ways to do so are licensing, audits, and discipline. First, law societies should license law firms. This should include a vetting process. Second, law societies should audit law firms as a whole. The audits should include looking at professional conduct practices. Third, law societies should discipline law firms for the behaviour of its lawyers. The discipline of law firms can include fines, suspension of license for the firm, revocation of license for the firm, the imposition of policies, and announcements to the profession of “bad” behaviour of the firm.

Firms need to take responsibility for their individual lawyers. Not every bad apple is a rogue apple. And its time for our law societies to go beyond the individual and take a hard look at the law firms themselves.

(This post was previously published on slaw.ca.)
In my slaw post  John Kleefeld commented that law societies are moving towards changing the regulatory process. Specifically, British Columbia has examined this issue and released a paper in October 2016 titled “Interim Report of the Law Firm Regulation Task Force”.  In the report it was recommended that law firms not be licensed:
 “Given the administrative burden and costs associated with authorization, and the fact that there is already a licensing process at the individual lawyer level, the Task Force recommends that initially, firms not be required to go through a formal process in order to obtain a license to provide legal services. At this stage of regulatory development, registration will suffice.”