Juke box Dury: City firm Field Fisher Waterhouse advised debt fund Aegis on financing Sex&Drugs&Rock&Roll, a film about the life of pop singer Ian Dury (pictured). Aegis intends to commit $50m (£33m) to film funding in total. Cheltenham firm Wiggin advised the film’s producers. Nuclear stake: Magic circle firm Linklaters advised energy company Centrica on taking a £2.3bn stake in British Energy, the EDF-owned operator of eight nuclear power stations in the UK. EDF and Centrica will also enter a joint venture to build four nuclear power stations in the UK. As part of a separate joint venture, EDF and Centrica will plan the construction, operation and decommissioning of four European reactors. City firm Herbert Smith and US firm Sullivan & Cromwell advised EDF. Magic circle firm Allen & Overy advised Centrica. Turkish energy: Magic circle firm Freshfields advised German energy supplier EnBW on establishing a joint venture with Turkish conglomerate Borusan, to invest €2.5bn (£2.2bn) in energy projects. Turkish firm Somay Hukuk Bürosu advised Borusan. Telecoms float: City firm Herbert Smith advised US investment bank Goldman Sachs on its role in the flotation of telecoms company Hutchison Telecommunications Hong Kong on the Hong Kong Stock Exchange. Magic circle firms Linklaters and Freshfields and US firm Cleary Gottlieb advised Hutchison, its parent company and related Hutchison subsidiaries. Treatment centre: Birmingham firm Wragge & Co advised the East and North Hertfordshire NHS Trust on signing a contract for a multi-million-pound treatment centre at the Lister hospital, Stevenage, with Clinicenta, an NHS partner organisation. The Lister Surgicentre is expected to open in April 2011 and will treat more than 15,000 NHS patients a year. City firm CMS Cameron McKenna advised Clinicenta.
Obiter has been officially outdone. For some time now the Gazette has been trying to bag an interview with our own justice secretary (yes, you, Mr Straw), only to discover that not one but two new starters at Leeds firm Schofield Sweeney are rather more adroit at securing access to the great and the good, albeit in foreign lands. Solicitor Richard Jobes was given a month out of his training contract last year to work at Barack Obama’s campaign HQ in Richmond, Virginia, where he canvassed suburban voters and helped organise rallies. ‘I had major misgivings about how a British citizen might be received in the midst of a presidential campaign,’ he says, noting that fellow campaigners responded to his presence with ‘enthusiasm mixed with curiosity’. Nevertheless, he was treated to the daily spectacle of ‘legions of old ladies who descended each night with vats of lasagne, buckets of deep-fried chicken and freshly baked cookies’ in recognition of his and other campaigners’ efforts. It’s tough at the top. Meanwhile, another new joiner Adrian Ballam, formerly of Eversheds, once scooped a one-on-one interview with Nobel-prize winning Lech Walesa, the former Polish president. Come on, Mr Straw, we can’t be outshone like this. What are you afraid of?
I recently represented an Iranian-born solicitor – let us call him Mr Zadini – in disciplinary proceedings at the SDT. Some of the allegations against Mr Zadini were very serious, but he was not responsible for any of the serious regulatory breaches because he did not carry out any of the relevant work within the firm. One of Mr Zadini’s partners accepted responsibility for the serious matters and the SRA withdrew the allegations against him. He was dealt with only for two breaches of the accounts rules and one minor matter dealing with inadequate cascading of money-laundering information within the firm. His culpability fell towards the bottom of the scale. He was fined £2,000. In the meantime his business had been wrecked, not least because of the SRA’s policy of publicising forthcoming disciplinary appearances by solicitors. If you were to put Mr Zadini’s name into Google you would find on the first page ‘Solicitors Regulation Authority Solicitor ID 123456 – record check’. With one click you would find yourself at the SRA webpage ‘Published regulatory and disciplinary outcomes’. With two more clicks you would find the six charges faced by Mr Zadini. If you were thinking of instructing Mr Zadini to carry out some legal work for you, I suspect you would think again. I spend much of my professional life trying to help and advise solicitors in trouble with their regulator. Some deserve harsh disciplinary treatment, but many do not. Time after time my clients complain to me about the unfairness of having the disciplinary charges published by the SRA on its website, there for all to see. And time after time they report a downturn in new instructions as a result of that catastrophic publicity. Is this fair? To my mind the answer is no. The SRA has a very wide range of regulatory powers. It can impose conditions upon practising certificates, and in this way it can efficiently protect the public interest pending the resolution of disciplinary charges by the SDT. It has no need to publish those charges to the world at large. Often it does not impose any conditions upon solicitors who are facing charges. Whether it does or not, a careful judgement is made as to what the public interest requires. Such conditions are inevitably imposed for the protection of the public, and are, properly, published on the SRA website. Back in June 2007, when the publication policy was being thrashed out, Peter Williamson, chairman of the SRA, wrote in the Gazette: ‘The consequences of publishing disciplinary information could have serious effects and there will need to be appropriate thresholds and safeguards, including the right of appeal to the SDT.’ That admirable statement of principle has since been entirely abandoned. There are no thresholds and there is no right of appeal. Instead, all referrals to the SDT are published on the SRA website unless the solicitor concerned is fortunate enough to be represented by one of the very few firms of solicitors who oppose this indiscriminate policy. And there is no right of appeal to the SDT against a decision to refer a case to the SDT (any challenge must be by way of judicial review – there has been no reported successful challenge). There is another reason why the policy produces manifest unfairness. It discriminates against those with unusual surnames. My instructing solicitor in the Zadini case was the redoubtable Nigel West of Radcliffes le Brasseur. If you web-searched Mr West, you would have to wade through pages of materials about the eponymous spy writer before finding anything about Nigel West the solicitor. I cannot help believing that the SRA publication policy must discriminate against ethnic minority lawyers. It is time that the SRA reconsidered and abandoned its policy of indiscriminate publication and formulated a more rational and proportionate one. Gregory Treverton-Jones QC is a barrister at 39 Essex Street chambers, London, and co-author of The Solicitor’s Handbook
The current practising certificate fee system is crude and unfair. It is a clumsy ‘one glove fits all’ approach to collecting the funds to pay for regulation. It takes no account of the type of work done by the solicitor, whether he or she handles client money and the statistical probability of regulatory attention. I am delighted to say that this will change in October. Although work on the detail and actual numbers continues, I am confident that the profession is about to have a fee structure that is fairer and which takes greater account of regulatory risk and the likely effort for the Solicitors Regulation Authority. Change was inevitable. The Legal Services Act 2007 requires the SRA to regulate firms as well as individual solicitors. The majority of the SRA’s effort is focused on firms. Lord Hunt recognised this in his recent review of legal regulation, when he recommended “that the practising certificate fee should be clearly and, so far as possible, equitably split between an entity element and an individual element. I recommend that in-house solicitors should pay only the individual element’. The SRA held two consultations, one of them in conjunction with the Law Society, before deciding the way ahead. We have striven for a system that is: Henceforth, 40% of the SRA’s income will be raised from individual fees and 60% from a firm-based fee. Our current assumptions lead us to expect the individual fee to be around £520. We came to the conclusion that the calculation of firms’ regulatory payments should be based on their turnover (defined in England and Wales as gross fees), assessed in different bandings. All firms in private practice already record turnover as part of their annual accounts process and use it when renewing their indemnity insurance. It is an excellent indicator of how much business a firm conducts, and is a reasonable proxy for assessing ability to pay. This measure should avoid an unfair burden falling on firms where the earnings of practising certificate holders are relatively low. In recent years, in-house solicitors working in local government and in commerce and industry have made a compelling case for not paying as much as colleagues in private practice. These groups make up 14.5% of all practising certificate holders. They do not handle client funds, pose a much lower regulatory risk and create relatively little work for the SRA. Henceforth, solicitors in these sectors will pay only the individual fee, not the firm-based fee. However, this will result in an increased fee burden on private practice of about 15%. Compensation Fund fees will be split equally between individuals and firms. The Compensation Fund currently has reserves £25m higher than target, so we propose to halve the surplus in order to lighten the burden on the profession. This year, individual solicitors, including those in the employed sector, are likely to pay a flat fee of around £10 towards the compensation fund. Firms that hold client money will pay a further flat fee of around £150. fair and proportionate, particularly in relation to small and new businesses; efficient and economic to administer; as stable and simple as possible; based on verifiable data; targeted on those who tend to create the bulk of the SRA’s work; and capable of enabling us to predict future income with accuracy. Unfounded rumoursI gather there are suggestions that the reform of the practising certificate fee structure is an underhand way of raising the SRA’s income. This is nonsense. I have already undertaken to do everything possible to reduce the regulatory burden on solicitors. That remains the case. I also understand there is concern that this is an attempt to shift the burden away from the major commercial firms towards smaller practices. Again, this can be categorically denied. While stressing that the figures are provisional, I can provide examples of two firms, both with three PCs. At the moment, both would pay the same. In future, one with turnover of £286,000 should pay significantly lower fees; another with turnover of £761,000 should pay more. I accept that some City firms conducting the largest transactions, generating the highest fees, will pay more. They will have large corporate clients with substantial in-house legal departments, which will be paying significantly less. Other firms which will certainly pay significantly more are those with large numbers of non-solicitor fee-earners, or put another way, firms of any size with high revenue per PC holder. With regard to access to justice, over 60% of firms which derive half their turnover from legal aid will have a reduction in fees, while overall fewer than 5% are likely to have an increase of 50% or more. Solicitors in such firms have to recognise that the SRA now regulates not only them as individuals, but also their organisation. Change in the method of paying for regulation was inevitable, because of the new types of legal practice enabled by the Legal Services Act. We have taken the opportunity not only to revise the system to cope with these developments, if needed, but also to end various historical inequalities. I am confident that the new system, with its closer focus on regulatory risk and the use of turnover to assess how much firms should pay, will be infinitely fairer than the present one. Charles Plant is chair of the board of the Solicitors Regulation Authority
The delay in the relaxation of rules preventing barristers from entering law firm partnerships has been blamed for the low take-up of the first wave of new legal business structures. According to the latest Solicitors Regulation Authority figures, 216 legal disciplinary partnerships were up and running on 10 May. Most LDPs had only one or two non-solicitor partners, with 147 non-lawyer partners in total, and 99 lawyers who were not solicitors. Just seven barristers were partners in LDPs, despite a widely held assumption at the time LDPs were launched that barristers would form a large proportion of LDP partners. Firms have been able to convert to LDP status since 31 March 2009. LDPs allow non-solicitors to form up to 25% of the partners in a law firm. They precede full alternative business structures (ABSs), which the Legal Services Board plans to sanction from October 2011. Management consultant Simon Young said that, while take-up so far has been lower than expected, the changes will have allowed some firms to ready themselves for the advent of ABSs. He added that take-up might have been higher if barristers had been able to enter law firm partnerships from the off, rather than having to wait for the Bar Standards Board to allow such moves from 1 April 2010. Because non-lawyer LDPs will have to apply to become ABSs from late 2011, and the rules on ABSs have not yet been finalised, there was too much uncertainty for some firms to convert to an LDP, said Young. Of the 147 non-lawyer partners in law firms, 34 are accountants; two are financial planners; one is classified as a teacher/lecturer; 33 are classified as ‘other’; and no profession is given for the remaining 77 who are not solicitors. Of the 99 lawyer LDP partners, 82 are legal executives; seven are licensed conveyancers; seven are barristers; two are costs draftsmen; and one is a patent attorney. LDP conversion has been taken up by firms of varying sizes but are mostly smaller firms.
The Ministry of Justice will slash £2bn from its £9bn budget in order to meet government spending targets, the Public and Commercial Services Union (PCS) has claimed. Citing a letter understood to have been circulated to MoJ senior staff today, the PCS estimated that around 15,000 of the MoJ’s 80,000 staff risk losing their jobs as a result of the cuts. The MoJ’s director-general of finance Ann Beasley is reported to have sent the letter to senior civil servants outlining the scale of the cuts. Justice secretary Ken Clarke submitted proposals to the Treasury in mid-July, outlining how the department will reduce its overall budget in line with the government’s target of 25-40% reductions. It was reported in July that the £2.1bn legal aid budget would be cut by £500m as part of the proposals, although the MoJ dismissed the figure as ‘speculation’. An MoJ spokesman said today: ‘We are discussing options with [the] Treasury and will not provide a running commentary on the process. No decisions have been made. The outcome of the spending review will be announced on 20 October.’ The PCS said that ‘cuts on this scale cannot be delivered without closing prisons and bringing courts to a standstill.’ General secretary Mark Serwotka said: ‘This is the first indication of the true scale of the cuts being imposed upon departments by this coalition government, and it paints a devastating picture. It is clear that the civil service will simply not be able to cope. We will take every opportunity to remind the government and the public that there is an alternative and these politically motivated cuts are entirely avoidable.’
Gareth Mitchell, partner, Pierce Glynn, London SE1 Martin Comport explains that ‘sometimes, cynical me thinks that [legal aid] certificates are given on the basis of “let’s say the chances are 50/50 or less but then they will be much greater when the opposition know that we have a certificate”’. Mr Comport can take comfort in the fact that for many years civil legal aid certificates have only been granted where prospects of success are greater that 50% (save in a limited number of exceptional cases, for example, where liberty is at stake), and that the Legal Services Commission’s Funding Code Criteria (which are published on the LSC’s website) contain a provision in the precise terms he suggests: ‘Full representation will be refused unless the likely benefits to be gained from the proceedings justify the likely costs, such that a reasonable private paying client would be prepared to litigate, having regard to the prospects of success and all other circumstances.’ If Mr Comport does not want to support the Law Society’s legal aid campaign that is his choice. But I hope he would agree that any debate about the future of legal aid should be based on accurate information about the operation of the current scheme.
State-imposed control of the internet is ‘inevitable’ if the conflict between the right to privacy and a free press is ever to be resolved, lawyers and journalists suggested last week at a Law Society public debate. They also warned that the current press regulator is toothless in a ‘culture without moral boundaries’ and where ‘public interest’ was a viable defence in less than 10% of privacy cases. The occasion was the second in a series of Law Society public debates, for which the Gazette is media partner. The panel comprised media and privacy law silk Hugh Tomlinson QC; London firm Schillings media litigator Gideon Benaim; Index on Censorship editor Jo Glanville; and Guardian newspaper investigations executive editor David Leigh. The meeting also heard that the media should not panic over injunctions and super-injunctions – there have been fewer than 100 in the last decade – and that printed newspapers will be extinct within a decade. Tomlinson began by saying that current media and privacy laws work ‘up to a point’, but that ‘parliament should specifically address the issue so that the law has democratic legitimacy’. Benaim agreed, saying that a ‘regulator with teeth’ would make journalists more cautious about what they wrote and how they got their stories. Glanville asked him: ‘But how could the Press Complaints Commission, even with teeth, have stopped the hackers when the police and Crown Prosecution Service were unwilling to act?’ Leigh said that no amount of regulation would control the work of ‘citizen journalists’ to whom freedom of speech was inviolable. Tomlinson said that this was why state regulation of the internet was ‘inevitable’. He added: ‘But there are dangers – think of Assad in Syria.’ Leigh blamed ‘canteen culture and peer pressure’ for fostering the tabloid attitude that ‘anything goes’ when a good story was in the offing. The culture was allowed to develop because of the ‘political power of one media group that frightened the politicians’, Leigh added. The panel agreed that online media and falling advertising revenues meant print journalism was a ‘dying world’ and would be extinct in 10 years’ time. But Tomlinson concluded: ‘A tabloid that can explain complex issues in a comprehensible form is a good democratic resource.’ ‘Privacy, Free Press and the Public Interest’ was chaired by Law Society chief executive Desmond Hudson.
A fixed-price legal services provider today became the first new entrant of the alternative business structure era to enter the commercial market. Riverview Law, backed with funding from global firm DLA Piper, aims to attract every type of client from small and medium-sized businesses to large corporations. The firm’s offer includes annual contracts providing unlimited legal advice, the scrapping of hourly billing and fixed fees on all services. Large organisations will be invited to outsource in-house legal functions to Riverview Law, also at a fixed price. A team of around 75 lawyers has been recruited, including 43 barristers – 12 Queen’s counsel, to provide legal support in a corporate – rather than partnership – structure. The new firm is a trading name of LawVest Ltd, whose shareholders include DLA Piper and AdvisorPlus, a provider of outsourced HR, employment and health and safety advice. LawVest’s chief executive, Karl Chapman (pictured), said: ‘We have many advantages law firms don’t have; we started with a blank piece of paper, we spent time talking to businesses about what they want, and then we designed an operating and customer service model that delivers it – top lawyers, legal assistants and customer support people, combined with end-to-end technology and low overheads. ‘Some law firms have already said to us that it won’t work because it’s impossible to deliver comprehensive fixed pricing. Our response is simple: maybe you can’t deliver fixed pricing, but we can.’ Riverview Law says it can offer businesses with up to 1,000 employees annual contracts for all their day-to-day legal support from £200 a month. The level of funding from DLA Piper has not been disclosed, but the deal raises the possibility of the established firm competing for business with its new partner. DLA Piper co-chief executive Sir Nigel Knowles is the non-executive chairman of LawVest.
A new business model allowing barristers to accept instructions through an agency route could help the bar claw back work from solicitor-advocates, a legal consultant has suggested.John Binks (pictured) of the Bar Consultancy Network, a former manager at the Legal Services Commission, said a ‘SupplyCo’ model would give barristers greater control of fees in criminal work.Current practising rules permit barristers to be in independent practice, and work within and have an ownership interest in an SRA-regulated business providing legal services, he said. Barristers working in such practices can therefore provide referral advocacy services as part of the activity of those entities.Binks said that the services the entity can provide and the terms it can offer are freed from the ringfencing created by LSC payment structures and Bar Standards Board rules.He said this removes the differentiation between solicitor preparation, which is paid under the litigator fee, and advocacy, which is paid under the graduated fee. ‘The solicitor and barrister can work together on a case, organising division and work, and related fee income in a manner that is both more advantageous to the client and to their joint businesses,’ he added.In contrast to the ProcureCo model, advanced by others within the bar, and which would act as a model only for the procurement of legal services, the SupplyCo enables those using it to offer legal services.Binks told the Law Society’s legal aid conference last week that the SupplyCo model offered one way for the publicly funded criminal bar to claw back income from solicitor-advocates. In addition, he said this model would leave barristers better placed to bid for work under price-competitive tendering.Binks dismissed increased direct access as the way ahead for the bar, saying: ‘The bar won’t get far with direct access.‘The bar must understand that dealing with clients direct is a skill, and a skill that most barristers don’t have.’