Report by Governance Experts Calls for Review of LSO’s Governance Structure After CEO Pay Debacle
A recent report by independent governance experts has sparked intense scrutiny of the Law Society of Ontario’s (LSO) governance structure, following a high-profile controversy over the former CEO’s compensation. This incident, leading to the abrupt departure of CEO Diana Miles, has revealed significant flaws in the LSO’s decision-making processes and intensified calls for reform.
Background: The CEO Pay Controversy
Diana Miles, who became CEO in 2018, received a substantial salary increase in June 2024, from $595,000 to $936,800. This decision was made by the LSO’s Compensation Committee, which included key board members like then-Treasurer Jacqueline Horvat and another member who had previously represented Miles in compensation negotiations.
According to LSO rules, such a significant pay change required approval from the full board of benchers in Convocation, a step that was overlooked. Benchers only discovered the increase in November 2024, prompting an independent review led by former associate chief justice Dennis O’Connor.
After considering O’Connor’s report in a confidential meeting, Convocation terminated Miles’ employment in March 2025 and appointed an acting CEO. This episode has severely damaged the LSO’s reputation, highlighting weaknesses in oversight and transparency.
Governance Failures and Erosion of Trust
The controversy has raised concerns about the board’s ability to uphold public trust. The Compensation Committee’s bypassing of protocols and the delayed disclosure to benchers have drawn wide criticism.
In response, LSO Treasurer Peter Wardle introduced a reform plan focusing on executive compensation governance and procedural strengthening. Key measures include amending by-laws for Convocation approval of CEO pay changes, clarifying the Compensation Committee’s roles, and enhancing decision-making transparency.
Calls for Transparency and Release of Report
Initial refusal to release the O’Connor report fueled further controversy, with legal organizations like the Ontario Bar Association advocating for transparency. They emphasized that public disclosure, with privacy redactions, was crucial for restoring trust.
Following advocacy, benchers voted to release the redacted report in late March 2025, addressing calls for accountability and demonstrating a commitment to transparency.
Broader Governance Reform
The CEO pay scandal coincided with a broader governance reassessment. A task force report proposed structural changes, including reducing the board size from 54 to 30 members and altering its composition to include fewer elected lawyers.
Reform supporters argue these changes will enhance efficiency and public confidence. Critics, however, warn that reducing elected lawyers may undermine self-regulation and the profession’s ability to hold external interests accountable.
The scandal has become a catalyst for governance review at the LSO. While immediate reforms focus on executive pay and transparency, broader structural changes are under consideration. Restoring trust will depend on the LSO’s commitment to accountability and regulatory responsibilities.
Independent Review Reveals Critical Governance Failures
The independent review led by former associate chief justice Dennis O’Connor uncovered significant lapses in governance and oversight within the LSO. The report highlighted that the Compensation Committee’s decision to increase Miles’ salary was not only procedural but also lacked proper documentation and rationale. O’Connor’s findings emphasized that the committee failed to provide a clear justification for the substantial pay increase, raising questions about the transparency and accountability of the decision-making process.
One of the most troubling aspects revealed by the report was the role of the Compensation Committee member who had previously represented Miles in compensation negotiations. This conflict of interest was not disclosed during the decision-making process, further undermining the integrity of the pay increase. The report also noted that the committee’s decision was made without consulting the full board of benchers, violating established protocols and bypassing essential checks and balances.
Reform Plan Aims to Strengthen Governance and Transparency
In response to the O’Connor report, LSO Treasurer Peter Wardle introduced a comprehensive reform plan to address the governance shortcomings. The plan includes several key measures aimed at enhancing transparency and accountability within the organization. One of the primary reforms is the amendment of the LSO’s by-laws to require Convocation approval for any changes to the CEO’s compensation. This change ensures that such decisions are subject to broader scrutiny and oversight.
Additionally, the reform plan calls for the clarification of the roles and responsibilities of the Compensation Committee. This includes establishing clearer guidelines for decision-making and ensuring that all members of the committee are aware of their obligations to disclose potential conflicts of interest. The plan also proposes the introduction of more robust checks and balances when recommending executive compensation changes, ensuring that such decisions are made with greater transparency and accountability.
Enhancing Transparency and Public Trust
A key component of the reform plan is the enhancement of transparency around board and committee decision-making. The LSO has committed to providing more detailed information about executive compensation decisions and ensuring that all relevant documentation is made available to benchers and the public. This move is intended to restore trust in the organization and demonstrate a commitment to accountability.
The reform plan also includes a review and revision of the Bencher Code of Conduct to ensure that benchers are held to the highest standards of integrity and accountability. This measure is designed to address concerns about the board’s ability to uphold public trust and ensure that the LSO operates in the best interests of the legal profession and the public.
Broader Implications for LSO Governance
The CEO pay scandal has sparked a broader debate about the governance structure of the LSO. The proposed reforms to the organization’s governance model, including reducing the size of the board and altering its composition, have been met with both support and criticism. Proponents of the reforms argue that a smaller, more streamlined board will improve decision-making efficiency and enhance public confidence in the LSO’s regulatory mandate.
However, critics have expressed concerns that reducing the proportion of elected lawyers on the board could undermine the principle of self-regulation. They argue that a board with fewer elected lawyers may be less representative of the legal profession and less capable of holding external interests accountable. This debate highlights the challenges of balancing efficiency with representation in the governance of professional regulatory bodies.
The outcome of this governance review will have significant implications for the future of the LSO and its ability to regulate the legal profession effectively. The organization’s success in restoring trust and accountability will depend on its ability to implement meaningful reforms and demonstrate a commitment to transparency and good governance.
### Conclusion
The independent review led by Dennis O’Connor has brought to light critical governance failures within the Law Society of Ontario, particularly concerning the Compensation Committee’s decision to increase Miles’ salary. The lack of transparency, undisclosed conflicts of interest, and bypassing of established protocols have raised serious concerns about accountability within the organization. In response, Treasurer Peter Wardle’s reform plan aims to strengthen governance and transparency by amending by-laws, clarifying roles, and enhancing oversight. These reforms are essential for restoring public trust and ensuring the LSO operates in the best interests of the legal profession and the public. The outcome of these reforms will significantly impact the LSO’s future and its ability to regulate effectively.
### FAQ
#### What were the key findings of the O’Connor report regarding the LSO governance?
The O’Connor report revealed significant governance failures, including the Compensation Committee’s lack of proper documentation and rationale for increasing Miles’ salary. It also highlighted a conflict of interest involving a committee member who had previously represented Miles, which was not disclosed during the decision-making process.
#### What reforms has the LSO introduced to address governance issues?
The LSO has introduced a reform plan that includes amending by-laws to require Convocation approval for CEO compensation changes, clarifying roles and responsibilities of the Compensation Committee, and introducing stricter checks and balances. Additionally, the Bencher Code of Conduct is being reviewed to ensure higher standards of integrity.
#### How is the LSO enhancing transparency and public trust?
The LSO is enhancing transparency by providing more detailed information about executive compensation decisions and making relevant documentation available to benchers and the public. The reform plan also includes measures to ensure accountability and restore trust in the organization.
#### What are the broader implications of the governance reforms for the LSO?
The proposed reforms, including changes to the governance structure, have sparked debate about balancing efficiency with representation. Critics argue that reducing the proportion of elected lawyers on the board could undermine self-regulation, while proponents believe it will improve decision-making efficiency and public confidence.
#### How will the LSO’s governance reforms impact public trust?
The success of the reforms in restoring trust will depend on the LSO’s ability to implement meaningful changes and demonstrate a commitment to transparency and good governance. The organization’s future effectiveness in regulating the legal profession hinges on these reforms.
