But first let me deal with the change in regulatory emphasis, which is proposed in this Review, namely a shift in emphasis towards regulation of the economic unit and away from regulation of individual lawyers. This is particularly relevant for the proposed regulation of new business practices which bring together lawyers from different backgrounds; but it also has relevance for some existing legal practices, where regulatory emphasis needs to be on practice management and systems as much as on individuals.
The Bar Council favours this shift in approach. As regards LDPs, it should be as easy as possible for lawyers with different professional qualifications to work in the same legal practice. It does not follow, however, that when practising together they should continue to be regulated by their original professional bodies: on the contrary, we believe it to be essential that any firm (whether structured as a partnership or as an incorporated practice) supplying legal services to the public should have a single regulator. We see no difficulty in accommodating such arrangements within a suitable regulatory model. This is a necessary precursor to LDPs and in any event will improve mobility within the profession. We believe that freedom of professional movement is desirable.

This means, first of all, that a lawyer who has qualified as a member of one legal profession should be permitted, where practicable, to continue to practise under the rules of that profession even where he or she chooses to work in a practice with members of another legal profession.

Moreover, the Bar’s rules no longer require a barrister who practises as a solicitor to cease to be a barrister: they require only that while he or she is practising as a solicitor he does not practise as a barrister at the same time. He or she can retain his qualification as a barrister and switch back to practising as a barrister at any time he or she chooses to do so. I should make it clear, however, that while the Bar Council is prepared to permit barristers to enter partnership with other lawyers, subject to regulation by a recognised body other than itself, it remains of the view that it should not permit partnerships among barristers who remain under its direct regulatory auspices. In other words, those who wish to practise as referral advocates will remain sole practitioners. The public interest reasons for this have been well rehearsed and I shall not repeat them here.

Moving on to the regulation of LDPs, partnership law makes every partner in a firm responsible for clients’ money handled by the firm, and for any misappropriation or misapplication of that money, whether or not he or she personally has access to the firm’s client accounts. Anyone, barrister or other, who becomes a partner in a firm of solicitors, therefore needs to be regulated in relation to his or her additional responsibilities, e.g. handling clients’ money. This is best done by requiring him or her – in common with all the other partners – to practise under a solicitor’s practising certificate. This will not restrict a barrister’s rights of audience (or other legal rights).

Logic requires that, where the firm takes the form of a partnership, then the partners who constitute the firm and who are jointly responsible for all of the firm’s activities should operate under a single set of rules enforced by a single regulator. So we are pleased that Sir David takes this line and further considers that all lawyers working in the same practice, even if they are not in partnership together, ought to be required to practise under the same professional regime. We consider such a requirement to be essential.

The Review envisages that an LDP would involve members of different legal professions combining to offer legal services to the public. It further proposes that non lawyers should be permitted to become principals or ‘managers’ of such practices, subject to the principle that lawyers should be in a majority by number in the management group. It also proposes that outside ownership should be permitted, subject to a ‘fit to own’ test and also to a number of safeguards built around the identity of those who manage the practice and the management systems they employ.
The Bar Council is not in principle opposed to such changes to permit LDPs but believes that it will be essential to ensure that appropriate measures are in place to maintain the highest professional standards.
I turn now to the more vexed question of outside ownership. The Review further proposes the possibility of separating ownership of a legal practice from its management, and allowing persons or organisations that are themselves unconnected with the provision of legal services to own LDPs.
Sir David argues that there would be considerable benefit in permitting outside owners of legal practices. In general economic terms, new capital from outside the industry would be permitted which should increase capacity and exert a downward pressure on prices. In a business sense, new investors might bring not just new investment but also fresh ideas about how legal services might be provided in consumer-friendly ways. Such new businesses might better address some consumer concerns.

He acknowledges, however, a number of issues that arise where management and ownership are split. They relate to: -
(i) concerns about inappropriate owners;
(ii) concerns that outside owners would bring unreasonable commercial pressures to bear on lawyers which might conflict with their professional duties;
(iii) concerns that new owners would cherry-pick the best business;
(iv) as an extension of the argument about cherry picking, concerns that LDPs could jeopardise access to legal services in rural areas;
(v) concerns that new owners would have conflicts of interest;
(vi) issues about whether some restrictions might be placed on the nature and extent of the owners’ interest in the LDP; and
(vii) concerns that there is no precedent for such outside ownership.

Our view is that he has not produced compelling answers to all these matters. Any proposals to permit commercial investors to participate in the ownership of legal practices need to be approached with caution. We can see benefits in facilitating investment. But it would in our view be wrong in principle, and would give rise to significant risks to the public, to allow a law firm to be managed or controlled by persons who are not members of any legal profession and are therefore not subject to the professional duties on which the practice of law ought to be based.

This could result in non-lawyers becoming not only managers of legal practices, but also owners and investors in them. We have real concerns about non-lawyers, who are not trained in legal practice or bound by legal ethics, being in control of a legal practice. There will need to be very close scrutiny of safeguards here, to ensure there is no danger to professional standards.

We remain opposed to ownership or control of legal practices by people not bound by professional ethical codes. It is a clear step towards multi-disciplinary practices, which have been discredited: they would cause the "Enronisation" of the law.

We are very doubtful if safeguards can be devised which could protect against these risks. This is particularly so in the field of litigation where the public interest is engaged in the widest sense. Injecting private capital into law practices could compromise their independence and act as a motor for unnecessary litigation. Those who invest will want to grow the market as well as increasing their share. That will be a driver for activity. In the context of litigation that is unlikely to be a good thing. Recent studies by the Better Regulation Task Force and Mintel have shown that we do not have a compensation culture in this country. But there remain real concern about this. The Bar does not want to go down that path. In particular, non-lawyers will bring a different cultural approach to the running of the firm and the tension between professional standards and commercial self-interest will be stretched too far. The public interest will be damaged.

I recognise that these dangers must be fewer in the context of certain advisory work. But probate and conveyancing, the two most obvious areas, are already not limited to self-employed lawyers, as Sir David acknowledges. We do not accept that extension beyond this is necessary or desirable. Further, it is not at all obvious how outside owners, who will want to make a profit on their investment, will necessarily provide services that are cheaper than those offered by lawyers alone. Practices that do not make a profit do not survive in business, regardless of ownership. The efficiency gains would have to be considerable to result in cheaper delivery of services.

In summary, the Bar Council considers it vital that the public interest continues to be at the forefront of the professions’ considerations.

Guy Mansfield QC