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SEC Roadshow: 'All Change? Or not?'

On 12 January at the Bar Council offices, Stephen Leslie QC introduced the SEC road show entitled "All Change? Or Not?" which followed an historic announcement by the Bar Standards Board (BSB) on 20 November 2009. Bar Chairman Nicholas Green QC, Chair of the BSB Baroness Deech and Financial Adviser Richard Watkins summarised the potential changes and consequences. The evening concluded with a lively Q&A.

Potential changes to the way barristers supply legal services were created by the BSB's decision to permit barristers to:

• Make use of entities such as companies or partnerships to procure and administrate (but not supply) legal services
• Manage Legal Disciplinary Partnerships (LDPs) without re-qualifying as solicitors
• Practice in the dual capacity of manager or employee of a procurement entity and as a self-employed practitioner

The BSB has also decided to consult upon whether it should regulate procurement entities since, unlike the Solicitors' Regulation Authority (SRA), the BSB and Bar Council only regulate individuals. The BSB's decisions are yet to be ratified by the Legal Services Board (LSB) but it is hoped this will occur in the next three months.

A procurement entity run by or for barristers may bid for a contract to supply legal services. It may then employ barristers and others to provide advocacy services for the contract. The key is a clear division between the entity procuring the service contract and the barristers who actually provide the legal services. LDPs are fusion by any other name since they may include solicitors and barristers and 25% of the partners may be non-lawyers. The same may be said of companies. ‘Barrister-only Partnerships' (BOPs) may be unworkable given the rule against conflicts raising its head if, for example, you are against a business partner in a case.

The main change wrought by these entities is that barristers control the process, not solicitors. As the road show title suggests, no one quite knows what this means. All present wished to remain ‘one Bar' but recognised this did not mean one style of practice. Civil practitioners voiced a preference to remain a referral profession however this is no longer tenable for many publicly funded barristers. The reason is simple: a client's first point of contact is a solicitor and solicitors now have full rights of audience so there is no need to refer to the Bar and good commercial reason not to. Solicitors have the dual benefit of a monopoly on client- rights of audience. Now that monopoly has access and unfettered been broken the Bar has a chance to fight back.

Nicholas Green QC advised he had seen several procurement entities that appeared to meet the necessary requirements and agreed to try to publicise these. Baroness Deech stated that these are the most important and far reaching changes to the Bar in a century. In taking two years to make its decision the BSB focused on the needs of the consumer, promoting access to justice and maintaining the rule of law. It wished to maintain an independent Bar, keep the cab-rank rule and promote the Bar's pro bono tradition. The intention is to facilitate barristers bidding for contracts through corporate or partnership vehicles whilst maintaining their independent practice. Richard Watkins advised that the changes will require guidance and assistance since procurement vehicles such as companies or LDPs have differing regulatory and tax implications, although there may also be business.

Whilst all present supported these ideals, the sting in the tail came from the comment that the BSB does not focus on the business needs of a chambers. The time taken to make the decision has seriously disadvantaged the Bar. There are now but two months to create a procurement vehicle and business plan, employ staff and tender for work. Furthermore without the LSB's ratification of the BSB's decision, tenders may only be on the basis that they expect to be tender compliant. If the LSB do not ratify, any tender will fail. These contracts are for three years, extendable to five.

The Q&A session proved quite lively. Baroness Deech said it would be expensive for the BSB to regulate entities which prompted this query, "The SRA has been regulating entities for years. Why bother?" Further, given the delays to date, practitioners may prefer their entity to be out-with the BSB's remit, albeit that individuals would remain subject to the BSB code of conduct. The prospect of the BSB facing the SRA in a best value tendering competition to regulate entities caused some wry laughter.

It was generally acknowledged that government funding bodies had no concept of ‘best value', only ‘best price' (cheapest). A particular concern of the young Bar was that bids for block contracts would result in fees being driven down particularly those of the junior barristers. Nicholas Green QC acknowledged the risk but said the Bar Council could do nothing to prevent it; it was a matter of commerce.

A poll of those present at the road show suggested that approximately 25% feared fusion but 40% (criminal practitioners in particular) saw benefit in replacing the existing rules that prevent the publicly funded bar from competing for work with permissive regulations that take account of business.

Jon Whitfield QC

This article was printed in The Circuiteer, Issue 30, Spring 2010 

21 May 2010

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