Neuberger warns against risk of profits before principles in the ABS world

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By Legal Futures

22 February 2013

Neuberger: cab-rank rule is an important safeguard

The president of the Supreme Court has urged the legal profession not to lose sight of its fundamental principles in the rush for modernisation, warning about the risks of pressure from “hard-nosed businessmen” who may invest in law firms.

Lord Neuberger said the sheer number of legal reforms meant the future development of legal practice was “more uncertain than it probably ever has been”, but called on lawyers not to be “passive recipients of change”.

And in a robust defence of the cab-rank rule, which has recently been questioned, Lord Neuberger said the rise of alternative business structures (ABSs) and external investment needed such rules to stem the risk of the “unyielding tentacles of self-interest”.

Speaking to the Association of Liberal Lawyers, the judge said that liberalisation of the market must not result in a “free-for-all”.

He urged the regulatory bodies to ensure non-lawyer investment in legal services does not lead to commercial pressures overpowering the rule of law.

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While acknowledging that there have always been commercial pressures in the law, he said they were “modulated by a professional ethos and a commitment by lawyers to professional principles, and by duties owed to the court”.

Lord Neuberger continued: “Such a professional ethos cannot be assumed to be in the forefront of the minds of hard-nosed businessmen who want to maximise a return on their investment.

“The regulatory bodies will need to work hard to ensure that such pressures are minimised and neutralised. If they fail to do so, and allow a culture of conflict to arise and one where that conflict is quietly resolved in the investors’ favour, we run the risk of losing a properly robust and independent legal profession.”

Urging caution in the “brave new world” of ABSs, Lord Neuberger added: “An external investor in a legal business may well want the firm only to carry out the most remunerative work. This might raise the question of discontinuing work, such as criminal defence work, in order to concentrate on more profitable civil work.”

Lord Neuberger said the changes to the legal landscape “posed risks” as well as opportunities for innovation and that the law must not transform into a “system of unreflective consumer fundamentalism”, a phrase he first coined in 2010.

Addressing a recent report commissioned by the Legal Services Board that suggested the cab-rank rule is ineffective and should be removed from the barristers’ code of conduct, Lord Neuberger gave an impassioned defence of the rule, insisting it is a safeguard which must not be reduced in status.

He argued that for most citizens involved in legal proceedings as potential litigants – and with a shrinking legal aid system – they can be faced with the “horrible choice of not seeking justice or risking bankruptcy”. He said the cab-rank rule is also important in protecting lawyers “from adverse influence, from public opinion, from improper pressure from the media or the state itself”.

Lord Neuberger said that should the number of criminal law firms fall and the cab-rank rule be relaxed, “it will be of real importance for the regulators to ensure that legal practices are regulated so as to further this aspect of the rule of law.

“The brave new world of ABSs and Co-op law, and other economic pressures may also give rise to similar threats to the quality of legal services in the civil and family fields, and such threats must be seen off.”

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One Response to “Neuberger warns against risk of profits before principles in the ABS world”

  1. A prime example of the way in which principles are already being eroded is the decision of the SRA to abandon the prohibition against solicitors referring their clients to tied and multi-tied financial advisers. As the Gazette commented “In what possible regard will it be to the client’s advantage to be referred to an adviser with an ulterior motive? An adviser, lest we forget, who benefits from willfully ignoring any product that does not line their own pocket.”

  2. Ian Muirhead on February 22nd, 2013 at 1:10 pm

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