Academics review Competition Bureau Study of the Professions

(Posted on November 20, 2008)

On December 11, 2007 the Competition Bureau published a study entitled “Self-Regulated Professions: Balancing Competition and Regulation”. One of the chapters of the Study deals with the regulation of the legal profession. The Federation of Law Societies of Canada and its member law societies have given careful consideration to the Study and continue to do so as part of their activities.

Among the assertions made by the Competition Bureau which underpin its rationale for the Study, is that Canada’s professions are significantly less productive than their American counterparts and that the current regulatory landscape for Canadian professional service providers excessively and unjustifiably inhibits competition.

As the legal profession is among those singled out in the Study, the Federation thought it helpful to explore the basis of these assertions. To that end, respected legal and economic academics Edward Iacobucci and Michael Trebilcock, both professors at the Faculty of Law at the University of Toronto, reviewed the Study and authored a paper entitled “Self-Regulation and Competition in Ontario’s Legal Services Sector: An Evaluation of the Competition Bureau’s Report on Competition and Self-Regulation in Canadian Professions”. It will be submitted for publication by the professors in the near future in order to further academic discussion of these matters.

You can download their paper here.  

In their paper, the professors make a number of points which are worth highlighting. First, they state that the evidence on which the Bureau bases its analysis of productivity is insufficiently targeted to draw any meaningful inference and could, in fact, be evidence of greater competition in Canada. Second, they point out that inferences about the state of competition in professional services cannot be drawn with any confidence from the labour productivity results relied on by the Bureau and they question the Bureau’s conclusion that there is a link between the alleged lower productivity and self-regulation. Third, they assert that not only is there no undue concentration of legal services markets but an analysis of barriers to entry further supports the conclusion that legal services markets are robustly competitive.

Finally, the professors conclude that the test which should be applied by law societies in regulating the legal profession is whether, in pursuing legitimate non-competition-related objectives, the rules and regulations restrict competition only as much as is necessary in order to achieve those objectives.

In accordance with their mandates to regulate members of the legal profession in the public interest, the Federation’s member law societies are involved on an ongoing basis in the review of their rules and regulations. A number of these were the subject of recommendations by the Bureau in its Study. Changes being made by law societies will be made public in due course.