In response to increasing concerns and complaints about misleading advertising of lawyer services, in February 2016, the Law Society of Upper Canada (LSUC) established the Advertising and Fee Issues Working Group to collect information, investigate complaints and consider potential regulatory responses to inappropriate practices. A key objective of this initiative is to make amendments to the rules of professional conduct that will ensure advertising and fee practices, including referral and contingency fee practices, are accurate, transparent, consensual and in the interests of the public.
The three most important recommendations that stemmed from the Working Group investigation are:
- Referral fees should be capped;
- Second opinion ads are to be immediately prohibited.
- Lawyers are not permitted to advertise for work that they do not intend to keep.
The following are the key issues and concerns that were investigated by the Working Group.
- Advertising for legal services with the intent to refer potential clients to other lawyers and obtain referral fees for said referrals.
- Advertising awards and endorsements that are misleading and/or not objectively verifiable.
- Lack of clarity with respect to ‘all-in’ pricing for legal services.
- Lack of transparency in the charging of contingent and referral fees.
- Referral fees that are disproportionate, both when charged ‘upfront’ and when a percentage of the result in a contingency fee situation.
At the LSUC Convocation on February 23, 2017, upon consideration of the Working Group’s findings and recommendations, the Law Society voted in favour of capping fees and regulating referral fees (which may be charged by a lawyer or paralegal when they refer a client to another lawyer or paralegal). Key concerns with referral fees, cited by the Working Group, are that they are not transparent, nor are they beneficial to clients. In many cases, clients were not aware they were being referred or that there was a fee involved. Also, referral fees have increased over time and often represent a significant percentage of the legal fees. Another concern noted in the Working Group report is that “up-front referral fees incent referrals to the lawyer who will pay the most for the referral and provide no incentive to refer to the lawyer who will achieve the best result for the client.”
The Convocation also accepted Working Group recommendations that will increase transparency and ensure genuine client consent for referral fees, but the details of the related amendments are yet to be finalized. A proposal to curb or ban the use of misleading awards was also approved, as well as a recommendation to ban the practice of advertising for legal services that are not provided.
One of the newly approved rules states explicitly that “lawyers and paralegals may not advertise for work they are not licenced to do, not competent to do or do not intend to do”. It is hoped that this clarification of accepted practices will prevent law firms from using mass advertising to entice clients with the intent to refer them to lawyers at other firms, for a fee and sometimes without the client’s consent. This practice, along with other practices that involve the advertising of legal services and terms that are different than the lawyer or law firm intends to provide, has been criticized as ‘bait and switch marketing” and will no longer be acceptable under the new rules.
The primary objective of the amendments to rules governing advertising and fees is to protect clients and the public. However, as noted in a recent article by Steve Rastin in AdvocateDaily, proper practices can only be ensured if followed up by LSUC monitoring of lawyer activities and enforcing of the new rules.
At Rastin & Associates, transparency, respect and fairness have always been the foundation of our client relationships. As discussed in a recent blog on misleading advertising practices, Rastin & Associates does not refer cases to outside firms, except in rare conflict of interest circumstances. At Rastin, you can be assured that your case will be given our full and committed attention, with the goal of obtaining the best outcome for you and your family.
You can call us at 844-RASTIN1 or email Rastinlaw.com