Far too many Ontarians cannot access justice because they cannot afford a lawyer and do not qualify for Legal Aid. This undermines our legal system and the reputation of our profession. Non-profit organizations could help close the gap by providing affordable legal services like they do in other areas, such as non-profit affordable housing. Unfortunately, non-profits are prohibited from providing affordable legal services. This should change.
The Law Society of Ontario is moving in the right direction by allowing lawyers to provide legal services through non-profits starting this year. Unfortunately, the Law Society also plans to prohibit non-profits from charging any fees whatsoever. This will unnecessarily undermine the Law Society’s reforms by ruling out the kind of sliding-scale and other alternative payment arrangements that have proven successful elsewhere. Without this revenue source, the potential benefits will be highly restricted.
Non-profits provide affordable services and charge fees in many sectors in Ontario: examples include non-profit affordable housing corporations, daycares, universities, language schools, special needs therapy providers, outdoor education providers, and a wide variety of organizations providing affordable programming for kids. These and many other non-profits are funded fully or partially by the fees they charge. This model could and should be expanded to legal services to enhance access to justice.
Fee-charging non-profits also provide legal services in the United States and play an important role in enhancing access to justice. A study published in 2017 in the New York University Journal of Legislation & Public Policy found that non-profit firms charging sliding scale rates are “tipping the scales of justice back into balance by providing needed assistance for some of the millions who cannot obtain services from traditional legal delivery models and cannot afford to hire an attorney at prevailing market rates.”
It concluded that these organizations “have been quietly filling this role for years, and are serving thousands of clients every year who otherwise would have gone unrepresented.” If it works there, why not in Ontario?
Non-profits can help underserved populations because they can use foregone profits to benefit clients, supplement revenue with foundation funding, hire especially dedicated staff, create institutional continuity, and pass on lower costs to clients. More fundamentally, the driving purpose of these non-profits is to help underserved populations.
Non-profits need to charge fees in order to address the large volume of unmet legal needs. Government and charitable funding will never be sufficient, especially if this funding can only be used to provide services that are completely free because of a prohibition on fees. Government and charitable funding will go farthest if it is combined with revenue from alternative fee arrangements.
Without fees, non-profits are completely reliant on government and charitable funding, which can be financially unstable and risky. This kind of funding can disappear quickly. Fees add financial diversification.
Non-profits that charge fees are directly accountable to their clients. Fee-paying clients have leverage through the fees they pay and potential future referrals. To survive, fee-charging non-profit organizations must keep their clients satisfied and have an incentive to provide good quality services to as many clients as possible.
This direct accountability can also drive quality and efficiency improvements. Clients are in a unique and important position to oversee the quality and cost of legal work being provided to them. They will likely monitor work product and legal costs even if they are paying far below market rates or through an alternative model.
Finally, if non-profits are prohibited from charging fees, their clients will be unable to obtain cost awards. This will release their opponents from the risk of an adverse cost award, reducing the opponent’s incentive to settle.
The Law Society of Ontario considered allowing fees that are restricted to below market rates and/or through models where fees from well-off clients subsidize reduced fees for others. It rejected these more restrictive options primarily because they raise too many regulatory complications. But these kinds of restrictions are unnecessary. They are not put on other kinds of non-profits providing services in other sectors in Ontario. For example, non-profit affordable housing providers often provide a mix of market and reduced rent units. The key requirement is that non-profits be operated on a non-profit basis so that any excess in revenue over cost is returned to clients for a public purpose through better services, cost reductions, or otherwise.
There is a common misconception that charging fees is inconsistent with non-profit status. As the above examples show, this is clearly not the case. The opposite is true. Charging fees can greatly expand the capacity of non-profits to do good work, improve accountability, and drive quality and efficiency.
We should not continue to shut out the many Ontarians who cannot afford a lawyer but earn too much to access Legal Aid or need help in an unsupported practice area such as civil litigation. Our justice system cannot guarantee fairness or justice when these people are up against a well-resourced opponent. The Law Society of Ontario deserves considerable credit for raising non-profits as one of the tools to address this fundamental problem. Although it plans to disallow fees in the short term, it also plans to reconsider the fees issue in the future. Hopefully it will remove the fee prohibition so that non-profits can help to make our legal system more just and fair.
Kent Elson is a lawyer and founder of Elson Advocacy.