22 March 2010
The Legal Services Act may be causing a few sweaty palms at the bar, but as Bridget Lucas reports, grasping the nettle and using the changes to best advantage will take the sting out of an altered litigation landscape
The bar has for some time been aware that to sit Canute-like at the edges of the sea change in the provision of legal services brought about by the Legal Services Act 2007 (LSA) is not an option. But for self-employed barristers, for whom a corporate structure or any form of profit-sharing has up to now been anathema, the consequences of dipping a toe in these turbulent waters remain difficult to fathom.
The Bar Standards Board has given the go-ahead to barristers being managers of legal disciplinary partnerships (LDPs), and has given a clear indication that this will apply to alternative business structures - at least where non-lawyers constitute up to 25 per cent of the managers - when they come onstream in 2011. Barristers should also be able to practise in more than one capacity at a time (as both managers of LDPs and independent practitioners) and in barrister-only entities, which might be partnerships, companies or LLPs. Clearly this liberalisation is sensible, but in reality how will barristers be able to compete in the new litigation landscape?
That is not an easy question to answer, which is perhaps not surprising given the acknowledged difficulty in predicting what the consequences of the LSA are likely to be. Will it be business as usual, or are we drifting inexorably towards a fused profession?
Fortunately the bar has been getting used to change. The present litigation world in which the commercial and chancery bar operates is fundamentally different from that which existed even a decade ago. In the commercial and chancery courts this is not so much a product of the much-heralded advent of rights of audience for solicitors (in fact rarely used), or of in-house advocacy units (which have not proved as popular as many feared). What the bar has faced is the spectre of large law firms maximising work (and profit) by turning their attention not to advocacy (save in the arbitration context), but to the general litigation work traditionally undertaken by the bar. Added to that is the fact that alternative dispute resolution (ADR) results in far fewer cases going the distance, so that the previously perceived need for expert advocacy and strategic input from the bar at the initial stages has faded. So even without the LSA the bar has its battles to fight to regain ground, failing which the specific expertise that distinguishes barristers from litigation solicitors will simply disappear for the younger generation.
Curiously, and notwithstanding the diminution in work for the bar, litigation costs continue to escalate ever upwards. Relative to solicitors, barristers are inexpensive. With costs being a determinative driver in decision-making, in particular in the present economic climate, barristers need to communicate this selling point clearly and effectively. A senior junior can be cheaper than a significantly more junior associate solicitor and will bring a wealth of invaluable experience to the case. This is a clear advantage for a client focused on the bottom line. With efficient and proactive case management, the oft-quoted criticism of duplication of work can be minimised. The client and solicitor will get the benefit of a barrister able to devote their time to a particular case without the distraction of any number of other clients. Added to that is the advantage of being able to choose the team that will provide the best possible service and skill set for each particular case. The benefits are not confined to cases likely to end in contested trials, and apply even if cases end in mediation or settlement.
Solicitors have suggested that their encroachment onto the territory of the bar is in part because they are being squeezed by their own clients’ in-house teams, which have become increasingly proactive. But it need not be the bar that loses out - it has lost its fear of biting the hand that feeds it. Barristers’ increasing willingness to entertain and embrace modern charging practices, including conditional fee arrangements or fixed-fee arrangements, has resulted in a number of direct relationships between in-house counsel and chambers, particularly in the more straightforward cases. That trend may continue into some of the more substantial work. At present barristers will struggle to provide the backup support for large cases.
owever, that support could be outsourced and provided by specialist consultants setting up dedicated war rooms tailored to the specific requirements of cases.
Time to change
Outsourcing by law firms to keep costs down is centre-stage at present and may extend into the litigation sphere, particularly in the area of disclosure. Yet the oldest form of litigation outsourcing is to the bar, a fact not lost on some of the niche litigation firms set up by former partners of City firms, which often provide excellent service at a reasonable price and which draw on the bar for support.
The LSA presents the opportunity for barristers to assess both how they can most effectively satisfy their clients’ and solicitors’ needs and how they wish to do so. While many barristers will shy away from the corporate model of profit-sharing with the inevitable accountability that follows, others may well consider it to be a price worth paying for a working environment where there is more support, a cooperative spirit and increased financial security. As chambers become more corporate in their brand and image, and given the continuing loss of females from the profession, such a structure may not be far away. Clubbing together and sharing risk to secure work from cost-conscious clients and public bodies intent on securing value for money is a business model that cannot be ruled out.
The chairman of the bar Nicholas Green QC is urging an even more drastic rethink of the traditional self-employed referral model by advocating the use of ProcureCos, which put barristers in direct competition with solicitors in order to secure work. The first is in the starting blocks (Argent Chambers will be watched intently when it launches in April 2010), while Outer Temple Chambers has also launched an international initiative to extend its market overseas.
Against a backdrop of such uncertainty barristers must engage with their clients, with solicitors and with their competitors (in whatever form they may take). Barristers are not necessarily the best entrepreneurs and there may be limited appetite for change given the lack of long-term vested interest for those at senior levels who have prospered under the existing structures. For the forward-thinking, though, there will be a role for effective external business strategists to proffer advice and a need for the enhanced business support that a changed structure would entail.
If you cannot turn the tide, at least see it coming. Do not be Ethelred the Unready, who died upon hearing that Canute had laid siege to London. Canute then married his wife.
Bridget Lucas is a junior barrister at Fountain Court