John Stapleton says in the age of 'one-stop shops' it is time for a single regulator to govern the conduct of all professions.
Despite the indifference with which many lawyers will greet yet another Law Society consultation paper, the society's latest effort – this time on multi-disciplinary partnerships (MDPs) – deserves to be taken very seriously.
At the centre of the MDP consultation lies a vital debate about public interest and consumer protection – a debate that strikes at the heart of the professions' ethical conduct.
With the confusion that naturally follows the overlapping of different professional disciplines, the key question being asked is which ethical codes should be applied to protect consumers – and also where they should be applied.
Competitive forces have compelled professional firms to carry out client work outside the traditional areas regulated by their respective professional bodies.
But it is around these traditional areas where the ethical codes of the different professions were built. Competitive forces are now in danger of eroding those codes.
So, as the Law Society vice-president Robert Sayer suggested in his column in last week's issue of The Lawyer, a single regulator supervising all professional services should be seriously considered. This would hopefully ensure that different areas of advice are conducted under the protection of the appropriate ethical code to make sure the consumer buys from a level playing field.
There are many areas where the codes of practice of the various professional bodies are significantly different, such as commission sharing for referral of work, client privilege or confidentiality, custodianship of client funds, and conflict.
These discrepancies let the unscrupulous supplier of professional services set up under the regulator whose rules will best suit his purposes.
Also, there are companies and firms providing peripheral professional services who are not regulated by any professional body.
Let me cite one example. My firm was approached by an estate agent's chain to set up a conveyancing factory for referrals from all their agencies. It is natural for estate agencies to seek a commission for referrals but, for a law firm, the payment of such a commission would be in breach of Law Society Rules.
These rules correctly protect consumers from referrals based on commission rather than on the skill of the practitioner (although one hears of such arrangements proliferating among solicitors' firms under the pressure of competition). This prohibition of paying the referrer commission was a bar to further negotiations between ourselves and the estate agent.
But licensed conveyancers, accountants and surveyors have no such prohibitions.
The consumer has to buy professional services in a confusing regulatory world. The lawyer can risk personal disaster by breaching client confidentiality, and the accountant can do so by letting malpractice go unreported. The client who seeks legal advice from an accountant and accountancy advice from a lawyer may have a few shocks when things go wrong.
My firm is a diversified legal and financial services business with the potential to be an MDP.
We provide legal services, including tax and trust administration, through our law firm Thomas Eggar Church Adams, financial services (mainly portfolio management) through Thesis Asset Management, and corporate finance through Thesis Corporate Finance.
However, we are in the bizarre position of trading as three entities separately regulated under quite different codes and cultures – those of the Law Society, IMRO and the Securities and Futures Authority (SFA).
The difference in codes is significant. To give one example, SFA regulations permit corporate finance advice to clients in dispute with each other. But this would break fundamental Law Society rules about conflict and representing only one client.
The barriers between the professions are falling, and the populist cry is for the one-stop shop, but the cultural and ethical principles of the various professions are as diverse as ever.
How can the professions, and indeed those not governed by professional bodies but providing similar services, compete fairly with each other? It is surely inevitable that, under commercial pressures, the gap between professed values and actual behaviour will widen.
Poor ethical decisions bear long-term risks. Some might say that the opening up of the conveyancing market was a factor leading to the variable standards of conveyancing in the cost-cutting atmosphere of the late 1980s and early 1990s.
The pressure of competition will inevitably push work away from professional bodies with strong codes of practice towards those with weaker rules. This will be superficially attractive to the client because of cost and access but, in the long term, their interests will not be protected.
For the benefit of consumers, is it not time for the providers of professional services to be brought together under a Professional Services Authority, similar to the Financial Services Authority?
This would establish a clear set of principles for different areas of advice that would protect the public and allow a level playing field for competition. It might also provide a simpler regulatory environment with a reduced cost of compliance.
A Professional Services Authority would be able to harmonise and improve the ethical standards that are in the long-term interests of consumers. Unified rules would assist individual decision-making, as well as consistent training and development.
Ethical standards are central to the provision of professional services; ethical consequences can be managed just as an organisation manages any valuable resource.