French law firms urge delay of non-lawyer restrictions

The five-year deadline for French multidisciplinary practices to get rid of their non-lawyer partners is likely to be extended following lobbying from law firms.

The Ministry of Justice has written to all French law firms asking for their comments on whether the law, due to take effect in the New Year, should be postponed.

Francis Cavarroc, director of civil affairs at the Ministry of Justice, writes: “Law firms having the form of a societe commerciale must transform themselves within five years, ie 1 January 1997. This obligation creates considerable difficulties for some firms due to having to buy out shares from non-lawyer partners.

“I would be grateful if you could let me know before 10 September whether you feel the law should be postponed to allow firms time to confirm to the new law.”

Under a previous law, former tax and legal consulting companies were allowed to form themselves into Societe Commerciale under which they were allowed to own up to 49 per cent of the equity of the firm, as long as lawyers owned at least 51 per cent.

The new law reduces the permitted non-lawyer ownership from 49 per cent to zero. It also forbids law firms from referring to their accountancy firm allies by name in their letterheads or other literature.

Xavier du Sarrau, managing partner of Archibald Anderson, said he did not want the law postponed. “As far as equity goes we are already completely pure – we are 100 per cent owned by lawyers.”

He said some leading French firms like Francis Lefebvre faced a real problem since the Lefebvre family, non-lawyers, owned a substantial portion of the shares.

“The lawyers from within the firm will probably have to raise the money to buy these shares. The non-lawyer shareholders must be reluctant to sell their shares for something which is below the return they have got in the past year.”

The Big Six accountants which have associations with French law firms are unlikely to fall foul of the new law since they have kept their legal firms and auditing firms separate.