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N.S. moves forward on ‘entity regulation’

Thursday, July 02, 2015 @ 8:00 PM | By Donalee Moulton


The Nova Scotia Barristers’ Society has released its first report on entity regulation, moving the society further ahead on the road to a new regulatory landscape.

“We have a clear path forward,” said Tilly Pillay, NSBS president in Halifax and chair of the society’s entity regulation steering committee, which identified plans to hire a project manager and develop a detailed budget for the initiative in its inaugural report.

Close to $100,000 has been earmarked for the reform initiative, which dates back to 2006, when the society released a discussion paper on the regulation of law firms (as opposed to lawyers) and established a law firm regulation task force. The group’s work broke new ground in Canada when it led to the Legal Profession Act being amended to permit the regulation of law firms as “members of the Society.”

Entity regulation will license entire law firms as well as other legal groups or parts of organizations such as a department of justice or a workers’ compensation appeals tribunal. As part of the shift envisioned by the NSBS, this new form of regulation will promote mitigating risk, with an emphasis on compliance in the broadest sense, and not in detailed reporting and documentation.

“This system frees up lawyers to provide more services to clients by reducing the burden of regulation,” said Pillay. “It works well for everyone, especially the public we are mandated to protect.”

In place of paperwork is guidance. Currently, for example, lawyers are required to fulfil a set number of hours for continuing legal education and document their participation. That will not be the case with entity regulation.

“Under the new system, the entity would have to maintain the competence of its lawyers and staff. How they do that would be up to them,” said NSBS executive director Darrel Pink.

Guided by 10 principles from the society’s code of conduct, large firms, departments, boutiques and other legal entities will be required to demonstrate adherence to the spirit rather than the specifics of society rules.

“We will articulate for lawyers what we expect them to achieve, but we won’t tell them how,” noted Victoria Rees, the NSBS’s director of professional responsibility.

Such ambiguity does not sit easily with lawyers, she acknowledged. “Lawyers are often more comfortable with strict rules than a broader space for their professional judgment. This new approach is a new way of thinking.”

To reassure lawyers and to help paint a picture of what future regulation might look like, the society has held focus groups across the province, surveyed members, and reported regularly on progress. There is no definitive timeline on the transition to entity regulation.

“This will be phased in. We’re not going to flip a switch and say entity regulation is here,” said Pillay.

Nova Scotia’s interest in entity regulation is not unique in Canada. Other law societies are also investigating what this new regulatory environment would look like. In its report to convocation last year, the Law Society of Upper Canada’s alternative business structures (ABS) working group concluded that entity regulation is a necessary element of effectively regulating ABS.

At present, the province’s Law Society Act permits the full regulation of professional corporations including compliance requirements, investigations and discipline. However, the working group recommended the society seek a statutory amendment granting express authority to regulate firms and other entities providing legal services.