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The OFT is demanding direct access to the Bar. But with so much progress already made in this area, how much impact will the new rules actually have? Peter Bennett reports

The Office of Fair Trading (OFT) has forced the Bar to allow direct access. The new rules were approved by the Bar Council and now await the approval of the Lord Chancellor, Lord Irvine. That traditionally takes from three months to 18 months. The best estimates indicate that the new rules will come into force around September. But what are the new rules, and what impact will they have on the commercial Bar?

Direct access – the new rules
Some may argue that the new rules are one further small step on a well-worn road that the Bar has travelled for years. Direct professional access (DPA) for non-contentious work has been available to a host of professionals for decades. Bar Direct opened limited access to organisations licensed by the Bar Council and instruction rights for legal executives were agreed in 2002.

Direct access rules do, however, represent a fundamental change in the balance of regulation. Previously, the regime was strictly controlled with a few small areas of exception. The new rules are essentially open access for corporate organisations, with some limited safeguards. Decisions on access are transferred from the cumbersome regulations and committees of Bar Direct to the decision of the individual barrister working within the Code of Conduct.

Barrister action
Once the new rules have been approved, a barrister with more than three years experience will need only to have attended a Bar Council-approved training course in order to accept instructions. 2003 Bar Mutual regulations provide insurance cover for Barristers automatically, without the need for special notification or payment.

The Bar Council approved training is intended to ensure that the barrister understands the safeguards that they should operate when taking direct access instructions. The barrister must: be satisfied that the work in question can be properly and competently carried out without the support of a solicitor, having regard in particular to the limitations on the scope of a barrister's functions; advise prospective clients, in writing, of the services that barristers offer and of the limitations on the scope of those services; ensure that instructions to act without a solicitor should be accepted on appropriate written terms of work and that detailed case records should be maintained; advise a client if, at any stage, the barrister considers that the assistance of a solicitor is needed, and for the barrister to decline or cease to act if such advice is not heeded.

A barrister in private practice cannot conduct litigation – although the OFT may force that change in the future – and so a solicitor will be required in all but the simplest litigation. The new regime may, however, change the location of that solicitor from private practice to other organisations. Whether that shift will be marginal is very hard to predict.

Chambers' preparation
A chambers contemplating accepting direct instructions would need to: ensure that all barristers who wish to take such instructions complete the accredited Bar Council training course; ensure clerks are aware of the regulations, including the restrictions on junior barristers taking such work; ensure that top-up insurance covers direct access work – Bar Mutual does provide cover; ensure that the proposed written terms for accepting direct instructions are drafted and embedded into the chambers' computerised system, to ensure 100 per cent compliance; create systems to ensure that case correspondence is recorded and stored for seven years; consider procedures for both barristers and clerks to be able to take advice where a barrister believes they should withdraw from the instructions, because they are being asked to act outside the limits of the barrister's role.

Minimal impact for the commercial bar?
Commercial litigation needs solicitors and always will. Commercial organisations have legal departments that have always been able to instruct the Bar directly when it was in their interest to do so. Even very small companies and organisations will have a finance director or other professional who could instruct for advisory work under DPA rules if they wished. The level of instructions from in-house solicitors and in-house professionals under DPA rules has been welcome, but marginal, and the market of individual commercial organisations below that level – those that could not instruct under DPA – is insignificant. So, will the impact of the new direct access rules be negligible?

This will probably be the case for the commercial bar in 2003 and 2004 because it will take time for the market to adjust to the changed regulatory environment. But there may be some changes by 2005.

The impact by 2005
There are six possible effects which may impact by 2005. Demystification of instructing the Bar is one. The Bar Direct scheme is bureaucratic and a DPA instruction produces a complex document in response to an instruction. Even basic issues of preparing a brief to instruct counsel and negotiating with counsel's clerk are obstacles in the mind of the uninitiated. There will be many questions to answer: Will instructions be accepted without being tied up with pink ribbon? What is a brief fee? Is a refresher the barrister's champagne bill if we win?

If the publicity arising from the introduction of direct access spreads the concept that any commercial organisation can easily get advice from the Bar, it may well increase instructions from those who always could instruct but were intimidated from doing so. This may well be the most significant impact of the new regime.

The new rules might result in 'quick and dirty' pre-litigation advice. Very early advice from counsel is likely to be taken more frequently. That advice may even be to ask whether a dispute is worth instructing solicitors. Simple 'traffic light' advice – green for proceed to litigation, red for get out or settle and amber for proceed with caution – from counsel with experience at the sharp end of litigation is very valuable.

An 'I will not start what I cannot finish' culture may prevail. The balance between work undertaken within organisations and work given to external solicitors could change in favour of in-house work. If an organisation believes that the Bar is easily accessible it may, on marginal cases, run the matter in-house for longer, with counsel's advice.

Non-solicitor professional firms, which currently operate some DPA to the Bar but mainly instruct solicitors in the traditional way, are likely to be at the forefront of change. They are profit-hungry and are likely, with only minor internal changes, to be the first to exploit any changes. Their primary motivation is to keep control of a case and to capture greater income streams and profit. The accountants must be at the head of this group.

Individual companies with a single legal dispute are unlikely to change current practice. Business membership organisations running many disputes are much more likely to respond to marketplace changes. If a national organisation was spending large sums on legal fees, the direct access changes could be a factor in the in-house/external instruction balance that they keep under constant review.

As the OFT drives all suppliers of legal services into a deregulated environment we should expect new commercial organisations to come into the marketplace using a different mix to resolve disputes. Their primary aim is to resolve disputes profitably. After the event litigation insurance and litigation funding have brought large plcs and banks to the edge of the legal marketplace. By 2005, they are likely to be much more significant players and potentially an important source of litigation funding and hence work for the commercial bar.

The greatest impact of direct access lies not with the regulatory changes. Any commercial organisation that wanted advice from the Bar can access that today. Any barrister would provide that advice if it was in their area of competence and would tell them to instruct a solicitor first if they saw that the client was misunderstanding the barrister's role, or it was in the general interest of the client. Nothing has changed. However, markets operate efficiently where there is perfect information. Currently, the wider market believes that instructing barristers is a complex process and these direct access rules are changing the regulatory environment from a negative 'no, you cannot use the Bar except…' attitude, to a positive 'yes, you can use the Bar providing…' one.

The growth of pre-litigation advice could have an impact on the relationship between solicitors and the Bar. Since the opening of rights of audience to solicitors, our clients are also our competitors. The greater involvement of counsel pre-litigation could make solicitors the client of counsel and this could lead counsel, when asked to suggest suitable solicitors, to advise against instructing Bar-hostile firms. This is easily justified on cost grounds – a solicitor who refuses to instruct the Bar, whatever the circumstances, will be charging double for the advocacy service or using inexperienced litigators, or both. That cannot be in the interest of the commercial client.

Peter Bennett is chief executive officer at Maitland Chambers