SUBMISSION TO THE AMERICAN BAR ASSOCIATION COMMISSION ON THE FUTURE OF LEGAL SERVICES

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2 SUBMISSION TO THE AMERICAN BAR ASSOCIATION COMMISSION ON THE FUTURE OF LEGAL SERVICES 1. INTRODUCTION Slater and Gordon is pleased to provide a submission to the American Bar Association s Commission on the Future of Legal Services ( the Commission ). The Commission seeks comments on a range of questions relating to the delivery of, and the public s access to legal services in the United States. The Commission s examination of access to justice in the United States is both timely and necessary to enable the legal profession to innovate and provide affordable and effective services into the future. We are the first publicly listed law firm in the world and an Australian company providing multi-faceted consumer and personal legal services in Australia and the United Kingdom (UK). We provide this submission based on our experience of regulatory innovations of most benefit to consumers in these jurisdictions and which we believe are likely to have benefits for consumers of legal services in the United States if adopted. Equitable access to justice, as the Commission notes, is critical to a society in which the rule of law plays a fundamental role. Any person with a legal problem should be able to participate in the justice system on the same footing as any other person, regardless of experience or resources. Towards this end, as the Commission s issues paper acknowledges, it is critical for the legal profession to evolve to provide more efficient and affordable legal services to our communities, particularly for individuals who face economic, cultural and health barriers. Our submission focuses on the potential benefits for consumers of alternative business structures in the United States and the following question posed in 3(b) of the Issues Paper released by the Commission: To what extent should those who are not licenced to practice law be permitted to have an ownership interest in law firms? The essence of our answer to this question is that modernising regulations to include new models of law firm ownership provides opportunities for more efficient and effective services when compared to traditional models of ownership. Current pricing methods and delivery of legal services are typically lawyer rather than client driven. Alternative business structures create competition; enable innovation and choice for consumers. It is our experience in the Australian and UK context that alternative business structures have played an important role in advancing the goals of affordability, innovation and choice for consumers. It is also our experience in Australia and the UK that regulatory changes permitting us to become a publicly listed company has allowed us to access additional external capital (at lower cost) and in turn this has enabled us to expand in terms of the breadth of practice areas, the geographic reach of services and choice of service models for clients. By reducing the overall cost of capital and utilising capital markets to gain greater access to capital we have been able to employ more significant economies of scale and thereby create a greater depth of specialist expertise and offer consistently high service standards with lower delivery costs. 2. ABOUT SLATER AND GORDON Simply stated our mission is to provide people with easy access to world class legal services. Established in 1935, Slater and Gordon traditionally focused its practice on representing workers and their families particularly those who suffered a serious injury or illness as a result of an accident and wrongful actions of a third party. Today our clients come from all backgrounds and socio-economic circumstances and are people and business owners throughout Australia and the UK who require legal assistance and advice on personal injury claims; conveyancing and property matters; family law disputes; wills, estate planning and probate; commercial litigation; business advisory; employment law; criminal law; defamation law; litigation and dispute resolution. Page 1

3 The firm is also involved in class actions, and has initiated a number of ground breaking proceedings including as co-counsel in a recently settled action to recover damages for loss caused to survivors of the drug thalidomide in Australia and New Zealand. This drug left thousands of children catastrophically and permanently disabled in the 1960s. We have over 1,300 staff and 72 offices in all Australian jurisdictions with the exception of the Northern Territory and are now Australia s largest provider of consumer and personal legal services. In 2012 Slater and Gordon entered the legal services market in the UK and were able to do so as a result of regulations permitting non-lawyer ownership of law firms and alternative business structures, in England. We now have 1,350 staff working across 18 locations in the UK. We are now the second largest provider of consumer and personal legal services in the UK. Several factors set us apart from other consumer law firms in Australia and the UK. These factors include our multi-jurisdictional presence; our commitment to affordable legal services; our size and economies of scale; national systems of quality assurance; as well as our 70 year history of advocating for the socially and economically disadvantaged. 3. OWNERSHIP OF LAW FIRMS IN AUSTRALIA New South Wales (NSW) was the first jurisdiction in Australia and indeed the rest of the (common law) world to permit external and non-lawyer ownership of law firms. This occurred on 1 July 2001 with the enactment of legislation permitting legal practices to incorporate, share receipts and provide legal services either alone or alongside other legal service providers who may, or may not be legal practitioners. Since the enactment of this legislation more than 3,000 law firms in Australia have altered their practice structures through incorporation (representing 30% of law firms). These law firms are known as incorporated legal practices (ILPs). The rationale for introducing new forms of legal structures was multi-fold. Reasons included removing the regulatory barriers between states and territories to facilitate a seamless, more national legal services market (including laying the groundwork for a national regulatory framework); providing greater flexibility in choice of business structures for law practices; enhancing choice and protection for consumers of legal services; and enabling greater participation in the international legal services market. There was also a growing perception in Australia, from within the legal profession itself, that traditional law firm ownership structures no longer met the needs of law firms wishing to consolidate and diversify services and therefore was no longer meeting the needs of clients. 1 As a result of the legislation, numerous law firms have incorporated to gain access to external investment and several law firms in Australia have listed on the Australian Securities Exchange (ASX). 4. GEOGRAPHIC ACCESS TO SERVICES, ECONOMIES OF SCALE AND SERVICE QUALITY The increased scale of our legal practice would not have been possible without the external capital raising that was permitted by regulations allowing non-lawyer ownership of law firms and incorporation in Australia. We have been able to create efficiencies, expand our range of services, set and meet higher service standards and reduce costs for our clients largely because of the reduced transaction costs that come with scale and the lower cost of and greater access to external capital. (a) Consolidation of Legal Practices and access to Services The public listing of Slater and Gordon and consequent capital raising has allowed national expansion and growth that would not otherwise have been possible. Since 2006, we have acquired more than 29 firms in Australia. This has expanded our expertise and the range and geographic reach of services we provide. 1 Law Council of Australia, (2001) 2010: A Discussion Paper: Challenges for the Legal Profession, available at CBD6713A3E09&siteName=lca Page 2

4 These acquisitions have allowed as to strategically extend service provision in low to medium income regional and suburban areas. We have opened new offices and ensured that where smaller law firms have been closing their doors due to failing viability, local services of a high standard remain available. Our acquisition strategies have enabled some of those firms planning closure to have an effective exit strategy for both their clients and experienced staff ensuring that the impact on local communities that would result from a loss of legal services is minimised. In addition to new sites established by acquisition of existing firms we have also opened twenty new offices in Australia since These offices are in regional or suburban areas and operate either as a stand-alone office (Office Hub or Local Contact Centre) or a centre where appointments can be made with visiting lawyers (Visiting Service). This significant increase in the number and variety of access points for those needing legal advice, assistance and support has increased access to justice in regional and suburban Australia. (b) The Provision of Online Services We have recognised that lower cost on-line legal services provide another option for consumers, particularly those with legal problems who live remotely or who have mobility challenges. In 2010 we launched an online Will service. The online will service provides a fast and convenient way to draft a Will at an affordable cost and offers free storage of the Will once it is completed. The service does not allow clients with complex estates to complete an online Will and recommends that the client seek personal legal advice from an estate planning professional. Last year we launched a new on-line legal service for employment law and unfair dismissal claims. The online service provides information, advice and assistance to workers who believe they have been unfairly dismissed. The website guides customers through a free set of questions to determine their eligibility to make an unfair dismissal claim. In addition, access to capital has allowed us to make a sustained investment in the development of technology (in the form of systems and process engineering) which has been instrumental in our ability to improve the quality and delivery of client outcomes. Our experience demonstrates that access to external capital is a key enabler of the innovation which will be required to meet the current and emerging access to justice challenges of legal systems around the world. (c) Pricing Structures that Advantage Consumers No Win No Fee Slater and Gordon pioneered the introduction and wide spread use of conditional fee or No Win No Fee arrangements in Australia. This approach means that, if a claim is unsuccessful, the client does not bear the cost of the legal services. This offers a person of limited means access to legal representation to give effect to their rights where they otherwise may not be able to afford it. We have been able to use our capital structure and revenue base to provide conditional fee funding to clients on an unprecedented scale. Our relatively low cost of capital provides an enormous benefit to clients who would otherwise not be able to afford access to the legal system after suffering a personal injury. No Win No Fee arrangements are now provided in all areas of personal injuries compensation law including asbestos-related diseases, worker injury claims, motor vehicle accident claims, public liability and medical negligence claims. No Win No Fee arrangements have played a critical and effective role in ensuring that people suffering serious personal or financial injuries, many of whom have lost or have diminished livelihoods, are nevertheless able to pursue their rights to compensation. We note that whilst clients most commonly utilise No Win No Fee arrangements in personal injuries actions, these arrangements have also been made available in class actions, including the claim initiated on behalf of Australian and New Zealand survivors of the thalidomide drug. Page 3

5 Fixed Fees and containment of the price of Legal Services In addition to No Win No Fee arrangements, we were also the first national law firm in Australia to introduce fixed fee legal services covering every stage of a family law matter up to and including court proceedings.. Our development of a fixed fee arrangement for family law services was a response to research regarding client needs and expectations. This research confirmed that uncertainty regarding legal costs substantially increases client anxiety in what is already a stressful period in their lives. The fear of legal costs escalating also inhibits individuals from seeking legal advice at all, and is no doubt partly responsible for the escalation of self represented litigants in our Court system. The fear of uncertain and unaffordable legal costs is diminished by the fixed-fee arrangements. It gives greater visibility of costs up front for clients. We currently also provide fixed fees in areas such as conveyancing, veteran s and military compensation. We are in the process of expanding the fixed fee pricing model to other general legal services including commercial property transactions and employment law. Again, we believe our model of legal practice has been pivotal in our ability to shift away from pay as you go or pay by the hour pricing models. 5. FURTHER OPPORTUNITIES TO BROADEN ACCESS TO JUSTICE (a) Pro Bono We have had a longstanding commitment to social responsibility. Over the years we have performed significant amounts of pro bono work. Our criteria for taking on pro bono work is that the matter establishes or preserves the rights of those who cannot afford professional legal advice without subsidy, the disadvantaged or marginalised, or persons otherwise deserving public support. Our pro bono program is expected to cost the Australian arm of the firm approximately $2.5 million in fees forgone in the next financial year. We also have a dedicated disbursement fund to cover the cost of performing this work. In 2008 we launched a Pro Bono and Public Interest Policy to encourage staff to perform pro bono and public interest work for which the company receives no financial benefit. In 2010 we developed a Pro Bono and Community Engagement Policy that provides positive incentives to each Practice Group as well as administrative staff managers, to encourage participation in pro bono and community engagement work. In 2010, we appointed a Pro Bono Coordinator to manage the administration and further development of a pro bono culture. 2 The coordinator is supported by the Pro Bono & Community Engagement Committee which meets regularly to discuss applications and potential projects that fit within the policy s Guidelines. This year we introduced a new uniform Pro Bono Policy to encourage and support staff, across all of our practices who perform pro bono work, delivering on our commitment to increase the level of pro bono work performed each year. 3 Our pro bono portfolio is broad. In the 2011/2012 reporting year, for example, our lawyers acted on behalf of six asylum seekers held in immigration detention in Australia who were minors and at risk of serious mental harm. As a result of the firm s advocacy all six were removed from immigration detention centres and transferred into community detention. Every staff member (legal, para-legal and other) is also encouraged to utilise up to 15 hours volunteer leave per annum to participate in a broad range of volunteering activities according to their interests. (b) Culturally Diverse Services In addition to providing legal assistance in the form of class actions and pro bono, we also offer non-legal services. In 2010, for example, we developed a We Speak Your Language Program 2 Slater and Gordon, Annual Report , p.5, available at Annual-Report-2011.pdf 3 Slater and Gordon, Annual Report 2014, p.12, available at Page 4

6 to improve our cultural awareness and to provide better service to people from non-english speaking and culturally diverse backgrounds. The need for the program was born out of recognising the barriers faced by new migrants and non-english speaking Australians in accessing high quality legal advice. The We Speak Your Language program, which comprises four main components: A legal helpline for non-english speakers who take initial calls from clients and assist them in their own language; A translator and interpreter service to assist clients in meetings or phone calls and in the preparation of documents in their own language; A new website which offers translated pages, and online enquiry forms in a number of languages; and An online cross cultural awareness training program designed to assist staff to improve their own cultural awareness and build on their competencies. (c) Social Work Services In 2009 we established a national Social Work Services team to provide social work services and appropriate non-legal referral for clients experiencing acute and chronic financial difficulty or psycho-social problems. The Social Work Service team has developed a Legal Education Program to provide legal education forums to clinical social workers. The Program has received accreditation from the Australia Association of Social Workers ( AASW ). (d) Philanthropy 6. CONCLUSION In January 2014 we launched the Slater and Gordon Health Projects and Research Fund to provide philanthropic grants focussed on improvement of care and treatment of people with asbestos related illnesses, occupation caused cancer or with significant disability caused by a devastating injury. Slater and Gordon are providing $1 million AUD for projects in Australia and 500,000 in the United Kingdom by This will build on Slater and Gordon s existing philanthropic efforts including the Asbestos Research Fund which has provided $1.4million in philanthropic funding and the Community Fund into which the firm and staff contribute. The Slater and Gordon Community Fund has for a number of years provided philanthropic grants for innovative projects that address inequality and disadvantage in Australian communities. The Commission on the Future of Legal Services examination of access to justice comes at a time when a number of jurisdictions are considering amending their regulatory framework to allow for greater innovation in the delivery of legal services and greater access to justice. Allowing those who are not licenced to practice law to have an ownership interest in law firms, as our experience has shown, greatly enhances access to justice. Page 5

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