Law Society of Ontario approves regulatory sandbox for legal tech

The Convening of the Law Society of Ontario approved a five-year sandbox pilot to encourage the development of innovative technological legal services in the province.

Participants in the sandbox must submit an application and obtain approval for a specified period of time – usually two years. according to an FAQ published on the LSO website. Subscribers can then serve consumers through innovative technological legal services (ITLS) while meeting the risk-based monitoring and reporting requirements.

British Columbia launched its own regulatory “sandbox” program for innovations in legal technology last December, following the example of Utah, which launched a similar program in 2020. Given the huge unmet need for legal services among the public and the ongoing problems related to access to justice, technology is seen by many as a way of addressing this deficit.

However, some legal innovation actors have reservations about this particular model.

“I think this would be a great initiative,” Jordan Furlong, an Ottawa-based legal sector analyst, told the Vo. “Not only because of the practicality of actually helping to accelerate the development of new solutions to legal problems in this province that we need, but also because of the messages it sends and what it represents.”

Furlong said the “sandbox” introduction would mean Ontario is serious about taking steps to improve access to justice. It would also be a vote of confidence for investors and innovators in Ontario and elsewhere that it is worth their time and effort.

Furlong adds that while BC gets the credit for moving first, Ontario has a world-class legal technology sector that provides a safe space for testing new services and products on the road.

Gillian Hadfield, professor of law and strategic management at the University of Toronto, and the Schwartz Reisman Chair of Technology and Society, who was also interviewed prior to approval, said it was a mistake not to get ahead with a sandbox pilot. Hadfield helped design the Utah regulatory sandbox and consulted with the LSO on the proposal.

“The problem with access to justice is that we only license individuals – we don’t license or regulate other providers,” says Hadfield. “What that means is that you cannot develop the technology that would be extremely useful for our access to justice problem.”

However, it is important to note that LSO imposes restrictions. It doesn’t open the door to all types of vendors, as it did in England and Wales, Australia and Arizona, who last year abolished their ethics rule prohibiting non-attorneys from doing business in or in a law firm Fees to participate -sharing. Furlong notes that while complaints about access to justice persist in England and Wales, the regulation of legal services a decade ago resulted in market players bringing more competition to the sector.

The Ontario legal industry uses very little technology, Hadfield says. Most of that is in the corporate space because it’s easier to sell e-discovery tools and other tools like Blue J Legal that use machine learning for tax law to these companies. A sandbox could help advance web platforms that, for example, can better connect people with lawyers.

“Over seventy percent of the people who appear in family court in Toronto are unrepresented, so we really want technology that consumers face,” says Hadfield.

For example, natural language processing tools could provide a clear text translation for customers. “There are people who build AI systems to do that,” says Hadfield. “You can give him a document and tell him to explain to someone in fifth grade, and it’s pretty good at translating complex legal languages ​​into simple terms. That’s a big part of the legal need.”

Furlong also points to a service in the US called Upsolve, an online tool that helps Americans manage bankruptcy proceedings.

“I have no idea if Upsolve has any interest in the Canadian market, but if they did it would be the perfect opportunity to show us what they can do,” says Furlong.

Furlong notes that the doom warnings of the changes never occurred in England and Wales and there have been improvements in the legislative area.

“Running amok is not a license,” he says. “It is a very closely monitored and regulated laboratory for developing innovative legal services. There are criteria to get started. There are criteria to continue operating. There are very tight measures in relation to risk and potential harm, as well as measuring the benefit to the public, clients and customers, and they will all be monitored and reported on. “

Chris Bentley, executive director of the Legal Innovation Zone at Ryerson University, rejects the sandpit as suggested.

“I think this is the wrong direction and I fear it won’t have the effect proponents hope it will have,” says Bentley. “I think it will have a deterrent effect on innovation initiatives. It won’t help the 80 percent of Ontarians who don’t have a path to justice get one, and it will ultimately have a negative impact on jobs and investment in the province. “

Bentley insists that the existing ban on outside investment in law firms is actually baseless, but the sandbox would allow tech companies to compete with lawyers who can’t attract outside investment.

“Imagine the scenario where a start-up that was developed by a combination of legal expertise, technology experts, and business experts competes with lawyers who cannot access that expertise in the same way,” says Bentley. “How will that work?”

He advocates a system similar to that in England and Wales, allowing outside investment without government intervention or oversight.

“The Law Society should encourage innovative approaches and encourage outside investments and ideas that not only bring in money, but also different levels of knowledge and expertise,” says Bentley. “The public need is far too great.”

Hadfield notes that law firms across North America have rejected most other attempts to change regulations, but the postponement with this proposal is to create a new approach to regulation. She says Utah challenged the leadership of the state’s Supreme Court and the presidents of its bar association, which started a move for other states to consider opening up.

“I’m more optimistic about change now than I have been in the past fifteen years,” says Hadfield.

As for Ontario, “[i]It is directly on behalf of the Law Society to regulate legal services, “says Furlong.” The report makes it clear that there are already dozens of these products, companies, and services across the country. This is not a theoretical subject that we are discussing. You can’t prosecute them all, you can’t ignore them, and you can’t just issue blanket permit as that is not responsible either. You need to find a way to monitor and monitor the test runs of these types of products in a regulated environment while collecting data. “

Alexandre Désy, lawyer and co-founder of BidSettle, says there is growing recognition in Québec that technology moves fast. In France too, companies like Obtenez Justice have automated and offered legal services online. The company won a challenge from the Paris Bar Association because the technology did not qualify as “legal advice”.

“We will not automate the process of going to the Supreme Court and debating the case law,” says Désy. “For the simple cases it is almost administrative. Your legal aspects are not discussed that often. The same applies to tenant problems. There are forms for [describe] What happened? Who are you and how much money are you looking for? It’s simple stuff. “

According to Désy, the legal community in Canada needs to try new things and if there are too many barriers to innovation nothing will happen.

“There is a huge imbalance between access to justice and the quality of justice,” says Désy. “This imbalance needs to be addressed, and technology is the most promising way forward. It is critical that we enable people to innovate.”

He warns that too much bureaucracy for legal innovation will lead to other countries and leave Canada with no industry.

With Ontario and BC following the regulatory sandbox model, legal innovation could provide a real boost to regulatory reform, according to Furlong. The two provinces also represent a large part of the legal profession in Canada.

“You might not need a sandpit anywhere else when you have one in BC and one in Ontario,” says Furlong. “BC and Ontario would truly usher in a new era of legal regulation and a whole new approach to how we govern the delivery of legal services and how we help ensure access to redress for Canadians. That could be the best outcome of be everyone. “

Dale Smith is an employee based in Ottawa.

Comments are closed.