March of the MDPs raises spectre of regulatory nightmare

Robert Sayer says it is time for a single set of regulations to cover all suppliers of legal services, regardless of their professional backgrounds.

A recurring theme at this year's Solicitors' Conference was the inevitability of Multi-Disciplinary Partnerships (MDPs). So let us assume that they do come into being.

Client A goes to the Mega Partners MDP for advice on opening a new business. Mega's estate agency division sells client A the premises, its in-house surveyor checks it, its financial advisor sorts out the loan, its licensed conveyancer does the conveyancing, its business consultancy helps with recruitment and employees contracts, while its solicitor does everything else.

A one-stop service all under one roof. Fast, efficient and convenient.

But a year later the client's business fails. The bank wants its money, the spouse is complaining about a personal guarantee over the family home and the premises cannot be sold because the only potential buyer claims the drains are dubious and wants a massive price reduction.

Client A wants to sue Mega Partners. So does the lender.

Mega has insurance, but cover is not sufficient for the whole claim. Does the solicitor, with unlimited personal liability, get left to carry the extra, or will Mega have been allowed to contractually limit its liability – as the accountant partner may be used to doing?

What about inadequate professional conduct issues? Say a Mega-employed estate agent misleads the client in order to make sure the monthly sales targets are met. Where a solicitor would be struck off, an estate agent partner might get a fat bonus next Christmas. Who plays to what rules?

The boundaries between professions are already becoming blurred. Banks, accountants and other non-lawyers are providing legal services. Solicitors are becoming financial advisers, estate agents and business consultants.

At present a client may have a will prepared by a solicitor, barrister, bank, accountant or an unqualified will writer. If a problem arises, the client may end up with any of four different regulators (with different codes of conduct), or have none at all to turn to.

The Law Society says solicitors cannot reach a binding agreement with a testator about what they will eventually charge for probate work. The Banking Ombudsman says banks can. If MDPs are allowed, which regulator prevails?

Regulation is essentially a matter of client protection. If a regulation is necessary to protect the client receiving a particular service, presumably it must apply to everyone providing that particular service.

That it should be the nature of the service provided, not the nature of the provider, which dictates the rules, has already been accepted in financial services. The argument that this should also apply to legal services is already quite powerful.

With MDPs it seems to be even stronger. Perhaps it is time to consider one set of legal services regulations, with one regulator, for all who offer those services under whatever form or name.