The Competition Bureau has published the letter it sent to the Paralegal Standing Committee (Ontario) regarding paralegal regulation by the Law Society of Upper Canada.

January 25, 2007

Mr. Paul Dray, Chair
Paralegal Standing Committee
The Law Society of Upper Canada
Osgoode Hall, 130 Queen Street West
Toronto, Ontario
M5H 2N6

Dear Mr. Dray:

RE: Paralegal Regulation by the Law Society of Upper Canada

I am writing concerning the regulation of independent paralegals by the Law Society of Upper Canada (“LSUC”). The Competition Bureau (the “Bureau”) understands that the Paralegal Standing Committee (the “Committee”) has been formed and will soon begin work on matters relating to the regulation of paralegals in Ontario. These comments are intended to inform the Committee about the role of the Bureau and general competition principles as they pertain to professional groups. I hope that the Bureau can bring a unique and important perspective to the Committee as it embarks upon the task of establishing the rules and by‑laws that will govern independent paralegals in the province of Ontario.

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The role of the Competition Bureau

The Commissioner of Competition (the “Commissioner”) is responsible for the administration and enforcement of the Competition Act (the “Act”) which is a federal statute of general application to all sectors of the Canadian economy. The primary purpose of this legislation, as set out in section 1.1 of the Act, is to maintain and encourage competition in Canada in order to promote the efficiency of the Canadian economy and to provide consumers with competitive prices and product choices.

The Act defines a number of practices that are prohibited as criminal offences or are subject to review by the Competition Tribunal under the civil provisions of the Act. The Act does not provide the Bureau with any authority to decide the law or to compel business to adopt any particular type of conduct.

The Bureau promotes competition in two ways. Firstly, we are a law enforcement agency. We investigate allegations of anti‑competitive conduct seeking judicial and quasi‑judicial remedies to stop anti‑competitive behaviour. We also act as an advocate for competition. To that end, we frequently make submissions to federal and provincial legislative bodies or regulators on how to implement reforms that encourage competition.

By engaging in advocacy for competition, the Bureau has the opportunity to ensure that competitive factors are taken into consideration in the formulation of policies. We hope that by having the competitive dynamics and implications of proposed regulatory schemes considered in the developmental stage, the full benefits of competition for consumers can be fully realized.

Professions

Emerging professions are an area of interest to the Bureau, and we have a long history of interaction and study of such markets. The Bureau recognizes that industry regulation can provide important benefits in the public interest. Market forces alone cannot always guarantee appropriate standards of conduct, competence and integrity. Therefore, the Bureau does not oppose, in principle, industry regulation that establishes appropriate rules of conduct. However, regulation involves possible impediments to the competitive process. Therefore, there are a number of general competition principles that the Bureau believes are important considerations in the development of any industry regulatory process.

Regulation should clearly and effectively address legitimate concerns without unnecessarily restricting competition. Regulations should be reasonably necessary for the protection of the public and should not restrict competition any more than is needed to achieve the desired objectives. It is important that regulation not hinder competition by, for example, imposing excessive compliance costs. For regulations to be socially beneficial, the benefits of regulation must at least outweigh the direct costs to businesses.

The very nature of a profession implies that there are certain entry requirements which must be met; these requirements, which are often established by the governing body, can include education and training requirements, examinations and fee payments. Such entry requirements are necessary to ensure the competence of those entering the profession and are clearly in the public interest. However, problems can arise if the governing body of the profession artificially restricts entry by setting entry requirements exceeding those necessary. The scope of regulatory intervention should be limited to those circumstances in which no equally effective but less restrictive policy response can be developed, having regard to the need to protect vulnerable clients and third parties. Restrictions on the normal competitive process, such as the right to practice, should be regarded as an extreme regulatory response, justified only by the most compelling circumstances.

A primary objective of the regulatory framework should be to promote open and effectively competitive markets. Open and effective competition provides the most effective means to promote the efficient, low cost and innovative supply of products and services meeting consumers' tastes and needs.

In the Bureau's view, a market may be considered open and effectively competitive if the following conditions are met: (i) all potential competitors have the ability to compete, subject to any necessary technical, safety or other such requirements, based on their costs and ability to meet consumer demands at competitive prices; and (ii) no participant or group of participants in the market has sufficient market power to profitably sustain a significant and non‑transitory price increase. Only where these conditions are met can competition be expected to provide the maximum benefits in terms of low prices and the efficient use of economic resources.

The regulatory environment should neither favour nor constrain the ability of particular market participants to compete in the market. In all markets, there will be some businesses that are more effective competitors than others. A regulatory environment should not try to offset these differences or in any way try to establish equality among competitors. Rather, it should provide a market framework within which all firms thrive or fail on the basis of their ability to meet consumers' demands at the best combination of price and quality. Only where such conditions exist will the efficient allocation of output among competing suppliers be possible, and total welfare be maximized.

Paralegals in Ontario

For a number of years, paralegals in Ontario have been involved in the provision of advocacy and non‑advocacy services, although the full extent of these services remains unclear. Paralegals often work under the direct supervision of lawyers, however, they may also independently compete with law practices for certain legal services. Paralegals are not currently recognized by statute as an independent profession, nor has the provision of legal services by paralegals been governed by formal regulations or rules of conduct.

Bill 14, Access to Justice Act Footnote 1brings paralegals under the regulatory authority of the LSUC. As such, once the regulatory structure is established, paralegals will have to meet standards of learning, professional competence and professional conduct in order to be authorized to provide legal services in Ontario. The rules and by‑laws that will be developed by the Paralegal Standing Committee will also specify the authorized scope of practice under licenses to provide legal services including conditions, limitations and/or restrictions.

When one group of professionals is reliant upon another group of competing professionals for the ability to practice its profession and the scope of authorized activities, the Bureau is concerned that unfounded quality of service arguments may be used to artificially restrict access to the market in which the professionals compete.

The Bureau encourages vigilance that any such standards and limitations, conditions and restrictions on scope of practice be supported by facts and not speculation and that they not become a barrier that will unnecessarily restrain the ability of paralegals to independently enter the market.

Conclusion

In closing, our goal at the Bureau is to ensure that all markets deliver the benefits of competition, including low costs, high quality, and a variety of choice to Canadian consumers and businesses.

If the Bureau can be of any assistance to the Committee in the development of the rules and regulations as they apply to paralegal regulation, I invite the Committee to contact Zia Proulx at (819) 994‑4830. Should you wish to have further information on the Bureau, I would refer you to our website available at

Yours sincerely,

Richard Taylor
Deputy Commissioner of Competition
(Civil Matters)

c.c.: Mr. Gavin MacKenzie, The Law Society of Upper Canada, Treasurer
The Honourable Michael Bryant, Attorney General

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