Commentary

Time to reform the OAS

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Written by Posted Date: April 2nd, 2012
It’s time baby boomers stop living off the avails of future generations. The Harper government’s plan to revamp the Old Age Security Act should be cheered by Canadians under 50, of which there are plenty — about 25 million, according to Statistics Canada. If the government goes ahead with OAS reform, they will no longer be called on to pay the freight to carry those who benefited the most during the country’s strong growth.
At the time of writing, the government had not tabled its budget, so the plan for OAS reform was unclear. But ministerial speeches indicate the Conservatives are willing to take on the greying of Canada’s population. At the centre are baby boomers, those Canadians born between 1946 and 1965 (disclosure: I fall into the late-stage boomer category, being born in ’61). The first wave of the baby boom became eligible to collect OAS benefits starting in 2011, when they turned 65. Assuming the program doesn’t change, the last boomers will start collecting OAS benefits in 2030.
In January 2012, OAS benefits amounted to $540 a month — indexed to inflation. The government starts clawing back those payments when net income exceeds $67,668, and the entire amount is clawed back when net income reaches $109,764. To put that in perspective, in 2009, a Canadian male earned an average salary of $45,200, while a female earned $31,100, according to Statistics Canada. The median income for a family was $68,410.
Spending for OAS is funded out of government’s general revenues. The problem is that as Canada’s population ages, spending for OAS will skyrocket, rising to $108  billion in 2030 from $36 billion today, a threefold increase. By 2030, there will be more people over 65 than under 14, with two workers for every one person in retirement, compared to a ratio of  4:1 today. It’s a tremendous burden facing future generations, many who aren’t born or haven’t entered the workforce yet.
They will do so carrying an inordinate amount of student debt. The average student loan upon graduation is $27,000, according to the Canadian Federation of Students. They will also be paying much more for a house than their parents and grandparents did and it’s unlikely they will see the kind of rise in property values that have fuelled much of the rise in wealth over the past few decades.
The OAS was first introduced in 1952. It was modified in 1965 to accommodate the creation of the Canada Pension Plan. In 1967 it was amended to create the Guaranteed Income Supplement. The system has been credited with providing Canadian seniors a stable form of income. Interestingly, the original age for benefits to kick in was 70, which dropped to 65 in 1969. During that time, the life span of Canadians has expanded and most can expect to live into their 80s.
Moreover, recent surveys suggest Canadians expect to work beyond the normal retirement age of 65. A survey by Sun Life Financial in late 2011 found that less than one-third of Canadians expect to be fully retired at 66 and 48 per cent plan to ease into retirement and continue working part time. A retirement target of 65 seems outdated in a world where 60 is the new 40. In fact, some countries are raising their mandatory retirement age to 67 or more.
There has been much teeth gnashing over the Conservative government’s move to tackle OAS reform. Much of the consternation seems unnecessary. The government said it won’t impact existing seniors and changes will be phased in. There is ample wiggle room to rein in costs by raising age eligibility requirements or lowering claw-back thresholds. OAS should be a social program to support those most in need — a safety net and not a meal ticket for all.
This is more about defining what government should be and foisting responsibility on Canadians to ensure they are preparing and saving appropriately for retirement. Most working Canadians don’t contribute to RRSPs or TFSAs, the programs designed to help them save and get through their retirement years.
It shouldn’t be the government’s responsibility to provide for all. Governments in Canada cannot continue to be all things to all people. Just ask Greece, or for that matter Ontario. The recent Drummond report warns that without tackling serious issues, such as public pensions and overspending, Ontario is on track to run $30-billion deficits. That will bankrupt the province.
It’s been 45 years since the OAS act faced serious amendments. That’s a long time in politics. Kudos to Canadian politicians for tackling the sacred cow of OAS reform. It’s time boomers paid their own way, while they still have working years left to save. It’s the least we can do for future generations.
Jim Middlemiss blogs about the legal profession at WebNewsManagement.com. You can follow him on Twitter
Illustration: Scott Page
Illustration: Scott Page
It’s time baby boomers stop living off the avails of future generations. The Harper government’s plan to revamp the Old Age Security Act should be cheered by Canadians under 50, of which there are plenty — about 25 million, according to Statistics Canada. If the government goes ahead with OAS reform, they will no longer be called on to pay the freight to carry those who benefited the most during the country’s strong growth.

Timing is everything

  • Editor's Desk
Written by Posted Date: April 2nd, 2012
There is much gnashing of teeth and wringing of hands about women leaving the law profession in droves. But there are still lots who continue in private practice and follow the path to partnership and other successes. There is one thing that most young female lawyers think about — and it is integral in many cases as to whether they will stay or exit the profession: when is the best time to have a baby?
Sometimes these things just happen, but as with many steps along the way in one’s legal career, it can (and probably should) be planned.
A recent panel of women partners on Bay Street, sponsored by Young Women in Law and the Ontario Bar Association, offered a very candid discussion of “Women on the road to partnership.” While most of their advice and experiences would translate to any lawyer on the partnership path, the discussion about children and family seemed to really strike a chord.
The panellists all seemed to agree the best time to take maternity leave was during your years as a senior associate. So if you’re making plans, year five of practice seems to be the sweet spot. Here’s why:
As a young associate, you are doing work for senior associates and partners and don’t have much control over what you are responsible for. This also means you can’t really delegate. And it’s at this time in your career when you are building relationships, finding your way in your legal career, and trying to make a name for yourself (i.e., impress senior members of the firm). It’s long hours and pedal to the metal time.
As a partner, responsibilities change and are more complicated. While you may not be able to delegate work when you are a junior associate, when you are partner you can but other responsibilities of partnership make it much more difficult to duck out of practice for any length of time.
At the senior associate level, you’ve graduated to being able to download some of your work but are still not in the position of responsibility that you’ll find yourself in as a partner. Thus, sweet spot!
All the panellists said they’d had children both as associates and partners and found it difficult to take off more than a few months for parental leave once they were partners.
There was one other piece of advice they shared, in the context of keeping your eye on the partner prize: when you are ramping down for your planned maternity leave, keep your foot on the gas. While you may not be getting new files, offer your services in other ways such as helping to write papers or do some quick and fast assignments.
So if nothing else when planning your career, I think some great tidbits to ruminate over regarding one of life’s bigger decisions.
There is much gnashing of teeth and wringing of hands about women leaving the law profession in droves. But there are still lots who continue in private practice and follow the path to partnership and other successes. There is one thing that most young female lawyers think about — and it is integral in many cases as to whether they will stay or exit the profession: when is the best time to have a baby?Sometimes these things just happen, but as with many steps along the way in one’s legal career, it can (and probably should) be planned.

Pulling the rug out

  • Top Court Tales
Written by Posted Date: March 5th, 2012
The Supreme Court doesn’t just decide those fancy, beloved by the press Charter of Rights cases about civil liberties, police powers, and other headline-grabbing stuff. It still resolves, for example, dull tax disputes between the taxpayer and his avaricious government. It still deals with traditional constitutional fights between different levels of government (there is a surprisingly large number of these cases — they’re almost the court’s bread and butter). Sometimes these apparently tedious decisions, easy to overlook, go to the heart of the country’s economic and business fabric.
One such case is Copthorne Holdings Ltd. v. Canada. Decided last December, Copthorne is about the Income Tax Act’s General Anti-Avoidance Rule, known to tax aficionados and legal geeks as GAAR. (Please try to stay awake.) GAAR is intended to stop abusive tax-driven transactions technically permitted by the Income Tax Act but whose primary purpose is to avoid taxation. Bad boy Copthorne Holdings had engaged in naughty transactions of this sort, but the tax department wasn’t having any of it, invoked GAAR, and denied Copthorne the tax benefits it had anticipated. Copthorne challenged the ruling, but lost in the courts below. The Supreme Court affirmed the lower courts in a unanimous and clear judgment delivered by Justice Marshall Rothstein on behalf of a nine-member panel.
The director of the Canada Revenue Agency has said the decision will not have much of an effect on how the CRA goes about its business. Most tax practitioners are skeptical and expect beefed-up CRA use of GAAR. After all, although recognizing GAAR’s limitations, in Copthorne the Supreme Court strongly endorsed the rule and its application. Tax probity was affirmed. You can bet that the CRA will be vigorously using all the tools at its disposal, including this one.
Copthorne is quite different from Lipson v. Canada, a GAAR case decided by the Supreme Court in 2009. When Lipson was handed down, Canadian tax guru Vern Krishna called it “the most significant tax decision in 70 years.” In a 4-3 decision, petulant judges divided philosophically over tax policy and took bad-tempered swipes at each other. Some judges (the bare majority) favoured GAAR and the government. The rest did not apply the rule and stood in solidarity with the taxpayer. But now, in Copthorne, the Supreme Court seems to have got its act together. The judges are all rowing in the same direction. The philosophical divide has magically disappeared.
Copthorne, unanimous, clear, and
balanced, trumped Lipson. Reaction to the decision was favourable. The Supreme Court seemed attuned to reasonable business practice and gave clear guidance to the financial and tax community. But good feelings about the court lasted less than a week. That was because Reference re Securities Act, another unanimous nine-judge decision, released a few days after Copthorne, was as bad a decision as Copthorne was good. Nine judges got it right in Copthorne. The same nine got it wrong in the reference.
For a long time, those involved in Canada’s capital market have yearned for a single national securities regulator to replace the absurd patchwork quilt of 13 sets of rules administered by 13 separate regulators, one for each province and territory. In 2006, the federal government produced a draft Canadian Securities Act intended to establish a single regulator. The draft act did not unilaterally impose a unified system, but allowed provinces and territories to opt in. The expectation was that, sooner or later, they would all embrace a national system, driven by irresistible logic and by the imperative of an increasingly international capital market.
There was, of course, the inevitable whingeing from some of the provinces, particularly Quebec and Alberta. For political cover, the government of Canada asked the Supreme Court for an advisory opinion on whether the proposed act fell within Parliament’s general power to regulate trade and commerce. The government argued that the securities market had evolved from a provincial matter to a national matter affecting the country as a whole. As a consequence, it said, the federal trade and commerce power now gave Parliament legislative authority over all aspects of securities regulation. Alberta, Quebec, Manitoba, and New Brunswick argued that the proposed scheme infringed the provincial power over property and civil rights.
Most observers thought the Supreme Court reference was pretty much pro forma. A national securities regulator was obviously an idea whose time had come. Surely a few provincial politicians playing to the gallery couldn’t derail a scheme endorsed by everybody who knew something about finance and business. The Supreme Court, it was widely assumed, would recognize reality.
But it didn’t. In an awkward unanimous judgment, the court decided that the draft Securities Act was unconstitutional. It agreed that “what the Act seeks is comprehensive national securities regulation, with the aim of fostering fair and efficient capital markets and contributing to the stability of Canada’s financial system.” But, said the court: “federalism demands that a balance be struck, a balance that allows both the federal Parliament and the provincial legislatures to act effectively in their respective spheres. Accepting Canada’s interpretation of the general trade and commerce power would disrupt rather than maintain that balance. Parliament cannot regulate the whole of the securities system simply because aspects of it have a national dimension.”
To reach this conclusion, the court used an antiquated division-of-powers approach and applied hoary precedent (it cites a case from 1881, the Parsons decision, as a leading relevant authority on the scope of the trade and commerce power). As for the argument that the securities market has been so transformed as to make the day-to-day regulation of all aspects of trading in securities a matter of national concern, the court simply rejected it.
What a bad decision! It doesn’t reflect modern business and fiscal reality. It doesn’t deal with crucial policy issues. It used a very traditional form of constitutional analysis when other approaches were available that could have led to a better result. Just when things were looking good, out comes the rug from under our feet.
Philip Slayton has been dean of a law school and senior partner of a major Canadian law firm. His latest book is Mighty Judgment: How the Supreme Court of Canada Runs Your Life. Visit him online at philipslayton.com.
Illustration: Pierre-Paul Pariseau
Illustration: Pierre-Paul Pariseau
The Supreme Court doesn’t just decide those fancy, beloved by the press Charter of Rights cases about civil liberties, police powers, and other headline-grabbing stuff. It still resolves, for example, dull tax disputes between the taxpayer and his avaricious government. It still deals with traditional constitutional fights between different levels of government (there is a surprisingly large number of these cases — they’re almost the court’s bread and butter). Sometimes these apparently tedious decisions, easy to overlook, go to the heart of the country’s economic and business fabric.

Be the better person

  • Editor's Desk
Written by Posted Date: March 5th, 2012
I’m going to put this out there as a universal truth in the legal profession: at one point, everyone’s been on the other side of the table to another lawyer who’s not been civil. Perhaps it’s been in the courtroom, perhaps just in the hallway, or maybe it was in a letter or a series of letters, or it’s just been during a short phone call. And it seems it doesn’t matter what area of law you practice — civil litigation, corporate-commercial, real estate, family, criminal, immigration law, etc. — there’s always a bad egg out there somewhere. And it’s such a scourge on the profession that law societies, bar associations, and legal academics have tried to tackle the “problem.” But the “problem” really is that rudeness can’t be cured or legislated. “You can’t change an a-hole,” one distinguished member of the bar recently noted at a panel I attended on civility.
While lodging a complaint with the law society against such individuals is an option, the best way to deal with it, according to the above noted panel, is to be the better person. “Don’t be civil because it’s the honourable thing to do, but because it’s strategic.” Too true. The best course is not to engage in a back and forth, be reasonable, be prepared for objections that may come up, and don’t lose your cool.
Ontario Superior Court Justice Susan Healey, who presides in Barrie, Ont., noted that as a judge she sees a tremendous number of lawyers going through the courts, and offered up some invaluable tips on combating incivility and making yourself look good in the process. I will share them because they were good, especially the first one.
• If you’re in court with an a-hole, don’t point it out to the judge. The judge can
pretty much see it for herself.
• Behave well. The more professionalism and integrity you show, the greater
the contrast with the other lawyer.
• Surprise attacks are a bad idea.
• Don’t be dragged down by the combative attitude of the other side.
• Don’t interrupt the judge.
• Don’t talk among yourselves and disregard the judge, you know, who is running
the courtroom.
While her tips above apply to litigators, here are some words of wisdom from Healey that every lawyer should live by: “Arrogance and swagger are not a show
of competence.”
So, as the famous sportswear manufacturer says, “just do it.” Behave well and stay above the fray and both you and your client (not to mention the profession) will benefit.
I’m going to put this out there as a universal truth in the legal profession: at one point, everyone’s been on the other side of the table to another lawyer who’s not been civil. Perhaps it’s been in the courtroom, perhaps just in the hallway, or maybe it was in a letter or a series of letters, or it’s just been during a short phone call. And it seems it doesn’t matter what area of law you practice — civil litigation, corporate-commercial, real estate, family, criminal, immigration law, etc. — there’s always a bad egg out there somewhere. And it’s such a scourge on the profession that law societies, bar associations, and legal academics have tried to tackle the “problem.” But the “problem” really is that rudeness can’t be cured or legislated. “You can’t change an a-hole,” one distinguished member of the bar recently noted at a panel I attended on civility.

What was the point of that again?

  • Banking on Corporate
Written by Posted Date: February 6th, 2012
Corporate law is, I suppose, like a lot of specialized activities — users of corporate legal services seem generally to have little interest in, or understanding of, the ugly machinery of the industry (in this case, the vagaries of statutory requirements, the overlay of common law dictates, and the realities of common practice). And really, why should they? When someone comes to fix my hard drive, I don’t want to know details about the processor, the circuitry, or the history of the PC. I just want to know that there are either no problems, or that whatever problems there were have been fixed.
This dynamic creates interesting results when the service provider, like most corporate lawyers, charges by the hour. Client confusion is natural and predictable when presented with a large invoice for a corporate lawyer having (a) identified a problem the client never imagined (much less knew it had) and (b) invested significant time in crafting a solution for that problem.
Many “technical issues” raised by corporate lawyers are matters where a legitimate interest is served. But the law does tend to accumulate, and some requirements outlast the mischief they were originally designed to address. A good way to identify this legal baggage is the classic test of going back to “first principles,” to consider the original objective of the legal requirement. If a lawyer struggles to articulate the purpose of a given rule, that is a healthy clue that the requirement may have outlived its usefulness (I’m too polite to mention that it may also, however, be an indication that the question is being asked of the wrong lawyers). It is not difficult to understand how some of these things survive: it is much easier to leave the anachronisms alone, there is no easy way to calculate the societal costs of leaving them alone, and there are collective action problems in seeking to fix them. But there is a cost.
Three examples leap quickly to mind. The first is the “solvency test” that continues to apply under some provincial corporate statutes to dividends and other returns of capital. That requirement imported into corporate law an element of creditor protection that may have served a necessary purpose at inception. However, in a modern era, with evolutions in creditor protections and increased creditor awareness of their risks, the need for these provisions is debatable. More curious, the formula for assessing “solvency” under some corporate statutes continues to use the concept of “stated capital,” an anachronism that oddly enough can be varied by the shareholders themselves (interesting from a creditor protection perspective). This type of seemingly benign requirement can result in much corporate, tax, and tactical structuring that has little or nothing to do with the original intent of the requirement.
Another example is “corporate incest,” which describes a phenomenon less sensational than its label. Statutory “corporate incest” provisions prohibit corporations from owning shares in themselves, or in their parent corporations. When adopted, these provisions were targeted at potential distortions in voting or financial reporting that might result from “incestuous” share ownership, but those concerns have either been superseded by developments in reporting or can be easily better addressed directly. The hangover of the “corporate incest” provisions, however, often results in transactions being contorted into knots. Thinking around that type of legal obstacle can be a challenging mental exercise, but the social benefits of the required expenditure of effort are not all that apparent (that is my lawyerly way of describing a complete waste of time).
One last example is the prohibition, subject to limited exceptions, on share transfer restrictions for publicly traded corporations in some corporate statutes. The provision was presumably implemented to facilitate trading in securities of those corporations. The requirement, however, is not necessary to achieve that objective today, and the nature of the limited exceptions makes clear that the rule was developed a long time before the legislators envisaged international securities offerings and the use of highly detailed regulatory restrictions to achieve all manner of governmental objectives. Bottom line, the lingering requirement is an unjustifiable impediment to transaction structuring.
One effect of these anachronisms is jurisdiction shopping. Though that too imposes costs, it is in some ways a healthy process in that it should result in re-examination of local legal requirements. However, though clients may not be interested in discussing the technicalities, corporate law, like every other area of law, must keep abreast of the reality it regulates. Continuous re-examination to ensure the law remains relevant is the least the public, the ultimate client, deserves (even if it doesn’t understand the circuitry). And besides, I have enough trouble on most days explaining the stuff that actually makes sense.
b_150_0_16777215_00___images_stories_01-CANADIANLawyer_2012_February_neillmay.jpgCorporate law is, I suppose, like a lot of specialized activities — users of corporate legal services seem generally to have little interest in, or understanding of, the ugly machinery of the industry (in this case, the vagaries of statutory requirements, the overlay of common law dictates, and the realities of common practice). And really, why should they? When someone comes to fix my hard drive, I don’t want to know details about the processor, the circuitry, or the history of the PC. I just want to know that there are either no problems, or that whatever problems there were have been fixed.

Does your law firm have Klout?

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Written by Posted Date: February 6th, 2012
Does your law firm wield clout in the cloud? It’s a question law firm managers and marketers need to ask in the exploding world of social media, such as Facebook, LinkedIn, Twitter, and YouTube. These sites draw hundreds of millions of users and present law firms with an unprecedented opportunity to market their knowledge worldwide.
Klout.com is a web site that purports to measure your online influence in the social media world (think of it as the Nielsen ratings for online geeks). It does so using algorithms to gauge activity and influence in social networks, measuring things like “re-tweets,” “mentions,” “likes,” and “comments.” Klout uses a scale of 1 to 100. For simply existing, you get a 10 and build from there. An average Klout score is about 20, and those who achieve 50 or more sit in the 95th percentile, according to a recent tech podcast.
It’s interesting to look at the Klout scores of Canada’s 20 largest law firms (see them all at canadianlawyermag.com). Most law firms now at least have a Twitter feed, Facebook page, and LinkedIn group, and many have added a YouTube channel.
I looked at law firms by size, and how they are ranked according to their Klout score as of Dec. 26, 2011. The findings show that size doesn’t matter in the online world. In fact, one of the highest-ranked law firms is Atlantic Canada’s Stewart McKelvey. It’s tied with Norton Rose Canada for top score. As well, Miller Thomson scored well, as did Osler Hoskin & Harcourt LLP, neither of which is near the top of the heap when it comes to size. Despite having the greatest number of tweets, and the highest number of LinkedIn and Twitter followers, Gowling Lafleur Henderson LLP, one of the biggest law firms in the country, scored in the middle of the pack.
Interestingly, Stewart McKelvey and Miller Thomson both achieved their high scores despite having a low number of tweets and followers. Why is that? Because they both scored well in influencing other people who are active in the social media world. They are positioning themselves as thought leaders, which is where you want to be when it comes to influence on the Internet.
Take Miller Thomson’s Stuart Rudner, an employment lawyer who actively blogs. His personal Klout score is 48, which qualifies him as a Klout “specialist,” influencing 655 others. Those 655 others then influence others and so on.
In fact, social media can be the great equalizer when it comes to competing with larger firms. Lawyers in small and medium-sized firms can comment on legal developments, share information, and build profile and reputation just as easily as lawyers at brand-name firms. In his book, Social Media For Lawyers: Twitter Edition, Adrian Dayton documents instances where lawyers land files using social media and responding to chatter, including how he brought in one of his first clients using Twitter.
More interestingly, though, is the shift underway among in-house lawyers in their use of social media. A 2010 survey by InsideCounsel magazine reveals interesting trends. While in-house lawyers rely on traditional media as their go-to source of information, 43 per cent cite blogs and 26 per cent cite social media like Twitter and Facebook as their top go-to sources. More than half expect their consumption of news and information via new media platforms to grow — particularly so for lawyers under 40.
The survey suggests that in-house counsel are increasingly looking at lawyers’ bios on web sites and following blogs to stay abreast of legal developments. Half feel that in the future, high-profile blogs will play an important role in influencing law firm hiring decisions (but only 10 per cent feel a firm’s prominence on Twitter will influence hiring decisions).
It’s a new frontier. Digital communications matter more today than they ever have. Looking at how Canadian firms compare to their U.S. counterparts, Skadden Arps has a Klout score of 33, with 86 tweets and 1,657 Twitter followers and 3,929 LinkedIn followers. Weil Gotshal & Manges LLP has 1,214 tweets, 1,998 followers, and 2,209 LinkedIn followers. Its Klout score is 34. So Canadian firms are in the same league.
Interestingly, Clifford Chance LLP, that global legal giant, can only muster a Klout score of 13, the same as mine. But I haven’t tweeted, though I expect that will change by the time you read this.
The Internet has been the great equalizer in many industries, particularly retail, where small mom-and-pop stores can compete with global enterprises. It has also disrupted many more industries such as newspapers, books, music, and film. Legal services are not immune and social media is only starting to play a role in everything from how lawyers build profile to how they communicate and interact with clients. So you have to ask yourself, does your law firm have Klout?
Jim Middlemiss blogs about the legal profession at WebNewsManagement.com.
You can follow him on Twitter
b_150_0_16777215_00___images_stories_01-CANADIANLawyer_2012_February_chart2.jpgDoes your law firm wield clout in the cloud? It’s a question law firm managers and marketers need to ask in the exploding world of social media, such as Facebook, LinkedIn, Twitter, and YouTube. These sites draw hundreds of millions of users and present law firms with an unprecedented opportunity to market their knowledge worldwide.

A turning point

  • Editor's Desk
Written by Posted Date: February 6th, 2012
A few years ago, one of the biggest issues law firms were dealing with was associate retention. Well, you won’t hear anyone talking about that anymore. Now, the topic on everyone’s lips is articling. There have been rumblings about it for years; in 2008 the Law Society of Upper Canada looked at the future of articling, reports were written, nothing much happened. The status quo continues to this day. However, in December the LSUC put out a 134-page consultation report again looking at the future of articling.
It offers up five ways to deal with the current crisis: maintaining the status quo; the status quo with quality assurance improvements; the replacement of a pre-licensing transition requirement with a post-licensing transition requirement; a choice of either articling or a practical legal training course; or only a practical legal training course.
The law society is in the midst of consultations with the profession on which option is the best to move forward (you have until March 15 to submit your thoughts to the LSUC or attend one of the consultation meetings). From attending a recent consultation, one would get the impression the society already has made up its mind on what’s best: the combo of articling and a practical legal training course. While on first glance that may seem like a good idea, I think in the long run, it probably won’t be.
Firstly, it will mean that in terms of bureaucracy, the LSUC will have to run two systems to monitor both streams. I think we can all agree that is not what the LSUC needs. Secondly, how will there be equality between a training course and articling? And even if that gets worked out, will a young lawyer who has taken the course instead of articling be treated the same by prospective employers? Will there be inherent biases creating roadblocks to success for lawyers who take the course? All I can foresee is problems and inequity in that approach. It apparently works in parts of Australia, but I say choose one or the other.
The reality is that there are articling position shortages, not just in Ontario but in other provinces as well. Although from what I hear, Saskatchewan firms are thriving and looking for articling students. It would seem that the option of maintaining articles as they are or with some extra checks and balances wouldn’t work. The idea of a course, likely costing prospective lawyers more money on top of their law school and other student loan debt, may work. But what you don’t see is the U.S.-style option of letting students write bar exams and then go out into the world as licensed lawyers to either find employment or start their own firms.
Personally, I think there is great value in articling but the system is broken. We’ll see in a few months, how the LSUC thinks it’s going to fix it. This is undoubtedly a turning point in the future of the profession.
A few years ago, one of the biggest issues law firms were dealing with was associate retention. Well, you won’t hear anyone talking about that anymore. Now, the topic on everyone’s lips is articling. There have been rumblings about it for years; in 2008 the Law Society of Upper Canada looked at the future of articling, reports were written, nothing much happened. The status quo continues to this day. However, in December the LSUC put out a 134-page consultation report again looking at the future of articling.

Conflict case a circus

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Written by Posted Date: January 3rd, 2012
It took the U.S. legal system 15 weeks to convict Conrad Black of fraud charges, the majority of which were overturned by the U.S. Supreme Court. It will take the Law Society of Upper Canada almost two years to decide whether or not Black’s lawyers, Beth DeMerchant and Darren Sukonick of Torys LLP, were in a conflict of interest when they advised him and his companies on the non-compete agreements at the centre of his criminal charges.
It’s a sign of stunning ineptitude that the LSUC can’t prosecute lawyers in a timely fashion. It informed them in January 2006 that they were under investigation for actions dating back to 2000. A discipline hearing, which started as an important test of the law society’s conflict rules, has become a prosecutorial folly.
What many thought should have been a slam-dunk for outside prosecutor Paul Stern has turned into a shambles, which should leave benchers shaking their heads and asking hard questions.
Even Black in his book, A Matter of Principle, questions the law society. In a fascinating, inside look at the U.S. justice system through the eyes of an accused, he writes of the now-retired DeMerchant, a former Torys partner, and Sukonick, who was an associate at the time: “I was never overly impressed with their imagination, and some of their advice was incorrect, but I don’t think they were unethical or negligent. The singling out of them, as well as the Law Society’s rather banal allegations, seems to me to be shabby and tokenistic placation of opinion by the Toronto legal establishment, at the expense of two relatively defenceless scapegoats.” (Black’s book provides a candid opinion of lawyers and personalities he dealt with in his career and legal tribulations.)
The Torys lawyers are charged with six counts of failing to adequately disclose their conflicts of interest and obtain consent of their clients in breach of Rule 2.04 of the Rules of Professional Conduct. The discipline hearings started badly for the LSUC in 2009; 168 boxes of materials were unearthed that hadn’t been disclosed by Torys, prompting an adjournment.
It has been downhill since. A major law society witness about conflicts — lawyer Gar Emerson — was kicked off the case because of a conflict. Another witness withdrew after it was determined he was not qualified to provide expert testimony on the matters in question.
There was also an earlier attempt by LSUC counsel to take the hearing in camera, much to the chagrin of the discipline panel and defence lawyers Phil Campbell and Ian Smith. That turned into a needless sideshow over public access to the hearings and if companies involved had waived their privilege, even though much of the material had been publicly disclosed in court documents.
The panel sat for one day in 2009, 31 days in 2010, and 35 days in 2011 (at press time). Despite that, and 16 days of DeMerchant cross-examination, they are only through a couple of the charges. Another seven days of hearings were expected in 2011 and 24 days are set for 2012.
Compounding matters, one of the panelists hearing the complaint, Paul Henderson, was appointed to the bench.
LSUC spokeswoman Susan Tonkin says, “a number of factors can affect the length of a hearing, including the complexity of the proceeding, volume of materials, number of witnesses, number of motions, and, occasionally, unforeseen events.” Law society officials wouldn’t disclose the cost of the prosecution. A six-year case wouldn’t come cheap and if the LSUC loses, the fees will easily reach millions of dollars when defence costs are added in. Then there are the likely appeals.
Yet, if convicted, it’s unlikely the lawyers would be disbarred. They’re not accused of misappropriating funds. Rather, a suspension would likely be in order. Any victory at this stage would be Pyrrhic at best.
Sadly, Sukonick will almost spend more time fighting these charges than he has practising law and his career has been, if not destroyed, then certainly waylaid.
There’s a strong feeling on the street that DeMerchant, who earned as much as $900,000 annually, should have fallen on her sword and saved her junior by pleading guilty, taking her lumps, and moving on. The handling of this case, combined with the persecution of Joe Groia for his comments towards the prosecutor in the Bre-X/Felderhof case, has shaken the confidence of many lawyers when it comes to the law society’s judgment involving prosecutorial decisions affecting members.
The profession desperately needs guidance when it comes to matters of conflict of interest and commercial deals. The LSUC should draft new rules; there’s a good chance they would pass before this prosecution ends. This test case had the potential to clear the air. But it has become a circus — much like the Groia affair.
Jim Middlemiss is an Ontario lawyer and co-owner of WebNews Management Corp. You can reach him by e-mail at This email address is being protected from spambots. You need JavaScript enabled to view it.
It took the U.S. legal system 15 weeks to convict Conrad Black of fraud charges, the majority of which were overturned by the U.S. Supreme Court. It will take the Law Society of Upper Canada almost two years to decide whether or not Black’s lawyers, Beth DeMerchant and Darren Sukonick of Torys LLP, were in a conflict of interest when they advised him and his companies on the non-compete agreements at the centre of his criminal charges.

Good things ahead for 2012

  • Editor's Desk
Written by Posted Date: January 3rd, 2012
With this January 2012 issue of Canadian Lawyer, we kick off our 36th year of covering the issues and trends that matter to the legal profession in Canada. And we have seen a lot of changes, particularly in the last few years. One of the biggest shifts has been the arrival of global law practices on our shores. This month, Macleod Dixon LLP will be folded into the Norton Rose Group, which rocked the Canadian legal establishment last year when it merged with Ogilvy Renault LLP. The face of law practice is changing here and so this year, we have launched a new series on canadianlawyermag.com called the Managing Partner Forum, in which law firm leaders from across the country and all types of firms will discuss the hurdles, successes, and other travails of making it work in today’s market. We launch the series this month with a column from John Coleman, who helmed Ogilvy Renault through its initial merger as well as the marriage with Macleod Dixon to form the new Norton Rose Canada. I look forward to the columns creating some interesting discussions in the profession.
As well, we’ve got a host of new online columnists coming on board for 2012 at canadianlawyermag.com. We welcome Kirk Baert, who will be penning a monthly missive on the state of class action litigation — and not wanting to have it too plaintiff-side heavy, he will be bringing on some guest columnists from the defence side. And one of the things I’ve heard most in my travels is that newly minted lawyers feel a lot less sure of themselves and their futures than they once did and there’s not a lot of information out there to help them along in their careers. So we are launching two new online columns specifically aimed at young lawyers. One is The Accidental Mentor, in which Ontario Bar Association past president Lee Akazaki does his best Dear Abby impression and answers queries of all types from junior associates looking for some guidance. And from the trenches, we have first-year associate Lindsay Scott, who will be sharing the hard lessons she’s learned on the job.
I am also happy to be starting 2012 with our latest Top 10 lists of legal boutiques. Labour and employment and intellectual property boutiques are some of the most prominent in the legal field and it’s always a good competition. Check out this year’s list starting on page 33. As always, I look forward to hearing reader feedback on anything we are doing and anything you think we should be doing. Have a great year.
With this January 2012 issue of Canadian Lawyer, we kick off our 36th year of covering the issues and trends that matter to the legal profession in Canada. And we have seen a lot of changes, particularly in the last few years. One of the biggest shifts has been the arrival of global law practices on our shores. This month, Macleod Dixon LLP will be folded into the Norton Rose Group, which rocked the Canadian legal establishment last year when it merged with Ogilvy Renault LLP. The face of law practice is changing here and so this year, we have launched a new series on canadianlawyermag.com called the Managing Partner Forum, in which law firm leaders from across the country and all types of firms will discuss the hurdles, successes, and other travails of making it work in today’s market. We launch the series this month with a column from John Coleman, who helmed Ogilvy Renault through its initial merger as well as the marriage with Macleod Dixon to form the new Norton Rose Canada. I look forward to the columns creating some interesting discussions in the profession.

Expect a strong and growing law-and-order bias

  • Top Court Tales
Written by Posted Date: November 14th, 2011
Illustration: Matt Daley
Illustration: Matt Daley
Michael Moldaver and Andromache Karakatsanis are our new Supreme Court judges. They replace justices Ian Binnie and Louise Charron, who in May both announced their resignation. (It sure takes a long time to fill a Supreme Court vacancy.) Will this change in the court’s composition have much effect on criminal law?
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