Diversity, cash flow, referral fees and fraud – an anatomy of the problems afflicting chambers

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23 October 2015


Bar Standards Board

BSB: almost half the chambers admitted diversity failures

Widespread failure to comply with diversity rules, cash-flow problems, disguised referral fees and fraud have all been revealed in a Bar Standards Board (BSB) report on “high impact” chambers.

Few chambers bothered to get feedback from lay clients, one of them stating that clients would regard it as an “unwelcome intrusion”. Almost half (83) admitted gaps in compliance with the BSB’s equality and diversity rules.

The BSB investigated 170 chambers, assessed as “high impact” in terms of what would happen if they failed, as part of its move towards proactive, risk-based regulation.

A total of 23 chambers admitted cash-flow problems, though they were “confident that forced closure was not imminent”.

However “some chambers reported vulnerability to the departure of a significant proportion of their members, particularly where departing members did not settle amounts owed to chambers”.

In two cases, problems were caused by VAT issues, involving either miscalculation or a “long-running dispute” with the HMRC, which was eventually resolved in the chambers’ favour.

Other chambers said they would manage cash flow and reduce the risk of closure by improving billing and fee collection, controlling costs, “restructuring staffing” or “downsizing premises”.

Despite widespread concern in the Bar over levels of “aged debt”, the BSB said in the report that this question was poorly answered.

“Anecdotally, we have heard a number of reasons cited for the levels of aged debt, ranging from poor controls within chambers to deals done with solicitors, without the knowledge of junior tenants, to forgo their fees in return for the promise of more lucrative work – in other words referral fees, which are prohibited in the BSB handbook.”

Seven chambers (4%) reported incidents of fraud, suspected fraud or “other irregularity”. In one case a criminal “targeted a number of chambers and solicitors” by getting a job as a bookkeeper.

In other incidents two junior clerks stole from chambers by “withdrawing and pocketing petty cash” from the bank and “falsely using a signature stamp” to sign cheques.

Other incidents involved disappearance of cash from the chambers safe, theft of a supplier’s cheque from the Post Office which was used to “reproduce a series of cheques” to the same person, and a “toll fraud attack”, based on gaining access to the chambers phone system and programming international calls.

On diversity, 37 chambers reported “multiple” failures to comply, 17 reported failures to monitor “fair allocation” of work and 11 failed to undertake to “fair recruitment” training.

A further eight reported failures in diversity data collection and publication, four reported failures on policies and one admitted failing to attract “diverse applicants”.

While the BSB acknowledged that this “suggests a high level of non-compliance”, it said in the report that there were “positive points to be made” in that many had made “good progress” and others were updating policies and procedures.

Few chambers actively sought feedback from lay clients and a “number felt it would not be possible or appropriate to do so”, despite a rule in the BSB Handbook requiring barristers with less than three years’ standing to seek feedback from public access clients.

Oliver Hanmer, director of supervision at the BSB, said: “This report shows that supervision is working. We have been able to clearly identify and prioritise chambers and barristers who require more focused regulatory attention to minimise risks.

“There are emerging indications that chambers are taking responsibility for their own risk management as a result of supervision and in turn this should lead to fewer risks materialising and therefore a more effective legal sector in the public interest.

“The BSB will use this information not only to determine its immediate supervisory response, but as a risk-based regulator, to identify emerging themes that will assist in developing regulatory policy and decision-making.”

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