courts, law, lawyers

Law Society wimps out

The practice of law is a tightly controlled monopoly. Cynics will suggest that this is merely to protect the affluence of fat cat lawyers, by preserving lucrative commercial activities exclusively for them, while lawyers themselves argue that it is in the public interest to only permit highly trained, licenced, and insured individuals to undertake these tasks.

The “practice of  law” is an extensively defined term in the Legal Professions Act, and includes the obvious, such as giving legal advice or appearing in court as counsel or advocate for a fee, but also includes “drawing, revising or settling  an instrument relating to real or personal estate that is intended, permitted or required to be registered, recorded or filed in a registry or other public office.”

By this definition, charging someone a fee to draft and file incorporation documents constitutes the practice of law. Only lawyers can legally incorporate companies for a fee, and this fact has been a source of much tension  within the business community for years. On its face at least, the incorporation process has always been dead simple, and, since the Registrar of Companies went online a few years back, pretty well anyone with access to a computer and a VISA card can perform the rudiments of an incorporation within minutes.

In the result, recent years have seen a large uptick in “do-it- yourself” incorporations (its always legal for you to do it yourself, just as you have a right to represent yourself in court) Indeed the profit centre in the corporate area of my own practice has shifted away from initial incorporations to the repair of badly done DYI companies, since they pretty much all rneed repair at some point..

The truth of the matter is that the online “fill in the blanks” incorporation process misses a number of crucial steps, such as the issuance of actual share certificates,  the adoption of articles and the creation of a minute book with a proper record of shareholders. Most DYI incorporations are seriously flawed. That’s a risk amateurs are free to take, but there are good reasons to restrict  those who charge a fee for incorporating to the ranks of the legal profession. Its not as simple as it looks.

The guardians of the legal monopoly in BC is the Law Society of BC, who, for many years have relentlessly tracked down and prosecuted the accountants, bookkeepers, business consultants and others who  have had the temerity to advertise incorporation services for a fee (and there are a lot of them!) There is indeed an entire section of the Law Society dedicated to ferreting out unauthorized practice, employing  several private detectives to do their snooping. Their typical catch seems to be a small home-based bookkeeper who had no idea they were treading onto hallowed ground.

As lawyers we are encouraged, and in some cases required, to bring transgressions of the Legal Professions Act to the attention of the Society, so when I recently stumbled upon a slick Facebook ad from ownr.co, boldly offering online incorporation for a fee, I was quick to email the unauthorized practice tip line at the Law Society.

Their response was a disappointment. It read as follows

“Thank you for your e-mail. Incorporating companies for or in the expectation of a fee is the practice of law. That said, the Law Society will only enforce the provisions of the Legal Profession Act if it is in the public interest to do so. The Law Society has determined that it will not pursue template or ‘fill in the blank’ incorporation services unless there is an indication that legal advice is offered or if there is evidence of harm to the public.”

So what then is the difference between the little ‘mom & Pop” incorporation shops that the Law Society prosecutes so zealously, and ownr.co? Ah, well, it seems that ownr is run by none other that the Royal Bank ! Our Law Society, it seems, is only brave when it is going after the little guys, but wimps out when it comes to calling out a major  bank for the unauthorized practice of law.

 

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