St Philip's plc breaks new ground
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Birmingham set St Philip's Chambers' move to create a public limited company takes it as close as practice rules allow to establishing a partnership.
Some legal commentators believe that its creation could be a precursor to St Philip's shedding some of its less profitable practice groups.
They also speculate that the chambers would be keen to enter into a partnership if and when the bar rules relax to allow such a move.
"The barristers will still be self-employed, but the object is to introduce collective thinking," St Philip's chief executive Vincent Denham says.
He says that the Competition Act, civil justice and legal aid reforms provide the need for collective thinking.
"It [partnership] is an issue that will become pressing but there are a lot of practice issues such as conflicts of interest that will have to be resolved first. However, it is not on the immediate agenda.
Initially, the creation of a plc will provide a vehicle to invest £3m in new premises in the commercial centre of Birmingham and to create a capital base that will allow greater investment in the set's development.
If negotiations are successful the new premises will be in the old Bank of England building in St Philip's Square.
However, it is hoped that the investment of £10,000 from every tenant and a new corporate structure will develop collective thinking among the barristers, the lack of which has long been a central criticism from their peers on the solicitors' side of the profession.
"It is seen not as an investment in land in the centre of Birmingham, but an investment in chambers, that will ultimately reduce the cost to chambers."
"It is not yet fixed in stone. It will probably be a single entity, a plc, where all tenants will be shareholders with equal equity," says Denham.
"Essentially you will see a more efficient financial organisation for VAT, tax and accounting systems and it will also provide some return to chambers members for their contribution to the cost of chambers," he says.
Given barristers' traditional reluctance to change and the fact that each will have to invest £10,000 to become a shareholder, it is perhaps surprising that only a handful of tenants voted against the move.
"The days of barristers practising without making a significant contribution to the business are over. You have to look like an efficient economic unity which requires a more substantial capital base.
"A plc sends a very strong message to the marketplace," says Denham.
Reaction in the Birmingham market has been mixed. While most of the leading firms have been pleased with the progress being made by St Philip's, complaints persist that the commercial group still lacks strength in depth.
"They are, in common with many barristers, full of fine language, about how they are operating as a partnership but they are not reliable," says one litigation partner at a leading local firm. The source argues that the set is reluctant to enter into conditional fee agreements, even when the solicitors themselves are being paid on that basis.
"They can't have it both ways. They need to start sharing things genuinely between [solicitors and barristers]. They won't help spread the risk or share any of the pain with us," the source says.
Paul Howard, head of litigation at Wragge & Co, says: "Anything that is going to enhance quality and strength in depth of the bar in Birmingham is something we support. If this is going to be a stepping stone to that then it's a very good thing."
However, Howard argues that a broad-based service practice does not best meet the needs of Birmingham-based commercial firms.
"We would prefer to see the set concentrating on commercial work to the exclusion of other work, rather than practising across the board," he says.