BSB seeks power to shut down chambers

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15 May 2015

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BSB: “changing legal services market” may create greater risks

The Bar Standards Board (BSB) has proposed that it should be given, for the first time, the power to intervene in barristers’ practices and chambers.

The BSB said a statutory power of intervention was necessary to tackle the risks of “dishonesty, insolvency or abandonment”, in place of the non-statutory powers it currently relies on.

Issuing a consultation, the regulator said: “Given the changing legal services market in which the Bar is operating (increasing public access, barristers undertaking litigation, new types of business model with the advent of entity regulation), the BSB cannot be certain that the level of risk will remain the same in the future.

“In certain situations, the regulator needs to be able to move in and take charge of affairs in order to protect the interests of clients by obtaining alternative representation for them or by securing papers or other assets which may belong to them.”

The BSB said the situations where it might need to intervene were where a practice was failing, entering administration or insolvency, or where dishonesty was taking place. Other situations were where a practice had been abandoned, or where it was “unable or unwilling” to co-operate with the BSB.

“This new power would not be restricted to entities,” the regulator said. “The BSB’s recent experience of supervising chambers has highlighted some situations (such as insolvency or mismanagement of chambers) where powers of intervention would similarly be useful in relation to individuals and chambers.

“This is a power that would be used very rarely in the most serious of situations, but the BSB believes that all clients should be able to benefit from the same protections as those of ABS entities in the event that something goes seriously wrong.”

The BSB said that it currently had to rely on non-statutory powers such as imposing conditions or seeking the co-operation of a receiver.

Along with the power to intervene, the BSB said it would seek the power to impose fines of up to £250m on firms and £50m on managers or employees – the statutory maximum for alternative business structures.

These would be much higher than the current maximum of £250,000 for a firm and £50,000 for a barrister or other lawyer. However, the BSB said that although it was seeking the new fining powers, it was not planning to increase the limits at the moment, and this would need a separate application to the Legal Services Board.

The regulator said it was taking the same approach to setting up a compensation fund, and although it did not believe one was necessary at the moment, it wanted to be able to “act promptly in the interests of consumer protection” if the evidence changed.

Ewen Macleod, director of regulatory policy at the BSB, commented: “To be clear, these are powers that would be used very rarely, but we think that, in the event something goes awry, all clients should benefit from the same safeguards – regardless of whether they’re the client of an ABS, a BSB-regulated entity, or a barristers’ chambers.

“Other regulators already have similar controls so we want to ensure there are no holes in the safety net for consumers.”

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