It always makes me a little nervous when I hear a politician talk a lot about some hypothetical, far-fetched action he has absolutely no intention of taking. It makes me think of the investment book I read once which documented at least a dozen instances of some finance minister--was it Mexico's?--pledging not to devalue the country's currency, then following up slam-bam with a massive devaluation.
What's got me worried now is how Ontario Premier Bob Rae and his Attorney-General Howard Hampton keep talking about prepaid legal plans--especially Mr. Hampton's insistence that the government is not thinking of introducing universal coverage. I hope this isn't a sign that it's already on the drafting board.
Both Rae and Hampton have talked a lot about the need to make legal services more affordable. But before rushing to treat the symptoms, wouldn't it make more sense to figure out what's causing the disease?
The price of legal services, like most other prices, con-forms stodgily to that basic principle of economics, the law of supply and demand.
One of the reasons that lawyers can charge outrageous fees is that we are a coercive cartel. Only a privileged, licensed few can perform legal services. Anyone else who tries will be prosecuted for practising without a licence.
Limiting the supply of anything is a sure way of driving up the price.
The other side of the problem is the proliferation of law over the past few decades. For example, in 1960, Ontario's codified law con-sisted of 5 volumes of statutes and 3 of regula-tions. By 1980, there were 11 and 8 volumes respectively--more than double. This welter of new law has resulted, not surprisingly, in an increased demand for lawyers' services.
Increasing the demand for anything is the other sure way of driving up the price.
Messrs. Rae and Hampton complain that "the little guy" can't afford a lawyer any more. Of course not. The government itself is in there bidding up the price of this limited resource. About ten percent of all practising lawyers are employed in-house by government. The feds alone pay a further $30 million a year to private practit-ioners.
What will prepaid legal plans do to combat these causes of high legal fees? Absolutely nothing.
The Canadian Auto Workers Union has already implemented a private plan. Yes, this reduces the cost of legal fees--for those who happen to be auto workers. For everyone else, things will get slightly worse, because auto workers will be going to lawyers more often and driving the price up even further.
Anyone who has ever been covered by a dental plan will recognize the pattern. It becomes easy to agree when the dent-ist suggests that you have more frequent check-ups, and there's no reason to postpone or scrimp on repair work.
Dentists love private dental plans. Lawyers will love private legal plans too. Business will increase and bad debts will be a thing of the past. Far from reducing Canada's total expenditure on lawyers, prepaid legal plans will most likely increase it.
Will this really give the Canadian public more satis-faction? I doubt it. Given the choice between extra cash and a prepaid legal plan, many employees would choose the cash--and they wouldn't go spend it at their neighbourhood law offices. Obviously, these plans are really a method of redis-tributing the burden of legal fees from those who need lawyers frequently to those who need them rarely or never.
Fortunately for the public (unfortunately for lawyers), prepaid legal plans are less likely than dental plans to catch on. Health plans are a tax dodge; they're specifically exempted from employees' taxable incomes under the Income Tax Act. Legal plans aren't--yet. It won't be long, I expect, before lawyers start lobbying for this advantage.
If employers or unions decide voluntarily to buy private plans for their workers, that's their own business. I'm not suggesting that they be stopped. But if I'm right that the gradual spread of private plans will simply make things worse for those who aren't covered, then how will any govern-ment that purports to be con-cerned about the little guy resist the temptation to implement this supposed boon for everyone?
This would of course exacerbate the problem, increasing the demand for legal services and lining lawyers' pockets like never before. Howard Hampton is aware of this. He was quoted in The Globe and Mail making this very point about medicare and doctors.
So what are all these trial balloons really about? Is it a way of winning lawyers' affections for the NDP? Or is there something more sinister about it? Pardon my paranoia, but I'm a little uncomfortable with the thought that the government may some day put us all on its payroll and issue a schedule of "approved" legal services. What's nagging me is that old proverb about paying the piper and calling the tune.
thing is certain: Ontario's NDP government shows no intention of tackling
the real causes of high legal fees. Their penchant for controlling
and legislating the minutiae of everyday life bodes well for the continued
prosperity of lawyers.