Law Society clashes with Bar over changes to cab-rank rule

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By Legal Futures

30 May 2012

Davies: without certainty, the effectiveness of the rule will be undermined

The Law Society has called on the Legal Services Board (LSB) to reject changes to the cab-rank rule in the latest stage of the long-running saga over standard contractual terms between barristers and solicitors.

Responding to the LSB’s request for advice on the changes, Law Society chief executive Des Hudson said they would have an “anti-competitive effect for those solicitors seeking to instruct on behalf of their clients on terms other than those specified by the barristers”.

The Bar Standards Board (BSB) has accused the Law Society of misunderstanding what it has proposed.

Under the proposed scheme, if a solicitor sought to instruct a barrister on the BSB’s New Contract Terms (NCT) or on the individual barrister’s own advertised terms, the cab-rank rule would apply. If they sought to instruct on any other terms, the rule would not apply. The BSB expects many barristers to use the NCT.

Further, if a firm of solicitors did not pay a barrister’s fees, and an award made by the joint Law Society/Bar Council tribunal remained unpaid, and/or a court had given judgment in favour of the barrister, the unpaid barrister could complain to the Bar Council under a new list of defaulting solicitors.

If the solicitors were placed on it, then the cab-rank rule would not apply to any barrister receiving instructions from those solicitors.

In January the LSB issued an unprecedented statutory warning notice that it is considering whether to reject these changes to the cab-rank rule. Seven organisations responded to the LSB’s request for advice that followed this, with only the Law Society hostile to the changes.

While he described as “unsatisfactory” the present position of instructing barristers on a non-contractual basis, with the withdrawal of credit scheme as a sanction, Mr Hudson said “the proposed prescription by the regulator of contractual terms of business governing the relationship between its members and the members of another profession does not square with the BSB’s better regulation obligations”.

He said the changes would “further undermine” the utility of the cab-rank rule by adding to the “already long list of exceptions to it”. He continued: “Indeed in our view these proposals reinforce the case for a more fundamental review of the future of the cab-rank rule.” However, the LSB was clear that it was not seeking views on the desirability or otherwise of the cab-rank rule itself.

Mr Hudson said he was also disappointed that the NCT are “plainly balanced in favour of the barrister”.

In her response to the advice received by the LSB, BSB director Vanessa Davies argued that the need for the rule, and for the barrister/solicitor relationship to be put on a contractual basis, meant the BSB has to define “in what circumstances a barrister is and is not obliged to accept any given terms and conditions, so as to be obliged under the cab-rank rule to act, as otherwise there will be uncertainty about whether and how the rule applies and the effectiveness of the rule will be undermined”.

Ms Davies said there had been misunderstanding – including by City firm Hogan Lovells, which advised the LSB – about the BSB’s proposals. She said the NCT will not be imposed on all barristers by the code of conduct and do not usurp the parties’ freedom to contract; rather, they are “a reasonable corollary of the cab-rank rules”.

She explained: “The contractual terms of work are terms under which, in the BSB’s considered view, it is reasonable to require barristers to be prepared to work and which will therefore, if accepted, place the barrister under the obligations of the cab-rank rule. The same will likewise apply to any other terms the barrister has published as standard terms on which he or she is willing to contract.”


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Joint (ad)ventures in the legal sector

Nigel Wallis lo res

We all know that nothing in life is certain. As the actor, director and philosopher Clint Eastwood once said: “If you want a guarantee, buy a toaster.” He also said he’d tried being reasonable and didn’t like it. They should teach this kind of philosophy in law school. One thing in life is reasonably certain though. If you’re a law firm worth your salt, at some point you will be approached by another entity (most probably a work introducer) with a whizzy idea to ‘partner’ with you to ‘help you accelerate your growth’. In commercial speak this means, ‘we’d like to keep feeding you work but we’d also like to share in your profits’. The arrangement may be pitched to you as a joint venture – a win-win no less.

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