A CHANGING PROFESSION
Why has a principle which appeared for many decades to be uncontroversial begun to give rise to perceived ethical and practical difficulty? The answer may lie in the fact that over the last two decades considerable and unprecedented changes have been taking place within the solicitors’ branch of the legal profes- sion.[16] Perhaps the most notable transformation during this period has been in the size and structure of law firms.
Until 1967 solicitors were prohibited from forming partnerships of more than 20 members.[17] This changed with the passing of the Companies Act 1967, and now there is no limit on the number of solicitors who may form a partnership.[18] Many firms took advantage of this provision, some expanding by merger to create what has become known as the ‘mega’ firm.[19] Others grew internally, appointing new partners as they did so. The largest of these firms now has well over 100 partners and employs in excess of a thousand fee-earners.[20] Not only are many of these practices multi-centred, several are also multi-national.[21]Such growth prompted adjustments in the internal structure of many firms. Management has become a more obvious feature of organisation, with some firms appointing full-time directors to deal with the day-to-day running of the office and to handle marketing.[22] Alternatively firms may belong to a national network of practices formed with the purpose of sharing client contacts, pooling expertise, co-ordinating training and dividing the cost of recruitment and computer technology. The average annual turnover of the largest firms is reported to be in excess of £107 million.[23]
The forces which shaped this transformation are essentially threefold. First, in the 1980s the government was keen to stimulate competition within the legal profession.[24] Measures were therefore introduced which required solicitors to share the conveyancing monopoly, accounting for some 50 per cent of their collective income, with licensed conveyancers.[25] The profession’s response was to the effect that if competition was to be allowed, solicitors should be able to compete on an equal footing.[26] The Government was persuaded to consider issues of competition and deregulation of the legal profession in much greater depth.
The 1989 Green Paper entitled ‘Work and Organisation of the Legal Profession’ stated that:The Government believes that free competition between the providers of legal services will through the discipline of the market ensure that the public is provided with the most effective network of legal services at the most economic price.[27]
Further measures were subsequently brought into force which outlawed scaled fees, permitted advertising and allowed new providers of legal services to be established.[28] The effect was to stimulate competition as law firms became more entrepreneurial in developing new markets for their services and ‘selling’ their firm to clients.[29]
Secondly, changes came about as a result of the steady increase in the demand for legal services. Since the end of the Second World War changing patterns of ownership, increased complexity of social relationships, the development of technology and, perhaps most importantly, the growth in resources of the employed population have meant that more people have needed to use solicitors.[30] The introduction of legal aid in 1950 also meant that legal services became accessible to more people. The ‘Thatcher Revolution’ in the 1980s, which led to the ‘big bang’[31] in the City of London and the deregulation and reregulation of financial services, created further substantial work for law firms.[32] As a result of the Thatcher government’s policies, firms were afforded an opportunity to play a part in the growing international market for corporate and commercial legal services.[33] In the words of one solicitor:
Until the end of the 80s lawyers sold a domestic product—English law and things to do with England. We used to go around the world selling it but it was a domestic product. The ‘big bang’, the liberation of the London financial markets, and more recently, the collapse of the Berlin wall and the arrival of huge areas of the world for projects, the realisation of governments that you could no longer go on supporting ailing state-run industries, have all opened up huge areas of work for us.
We now sell a truly international product.[34]The third driving influence behind these transformations came from clients themselves. The growth of consumerism led to clients demanding a better service from their lawyers at a cheaper price. As the Marre Committee pointed out in 1988:
More members of the public are now inclined to complain about poor quality or costly services (or what they perceive as poor quality or costly services) and to demand that the traditional ways of doing things be justified. Moreover, members of the public are no longer deferential to those who provide professional services and will no longer tolerate secretiveness. This is not to say that members of the public are better informed about legal matters (although they may be) but simply that consumers are less willing to accept uncritically the authority which used to be attached to professional people.[35] For the purposes of the themes to be explored in this book a key point is that many clients no longer saw themselves as bound to one firm of solicitors. They sought the best possible service at the cheapest price. It was not just private clients who were prepared to ‘shop around’. One commentator described the change in attitudes amongst business clients as follows:
Previously, many commercial clients had been content to enter into long-term and relatively undemanding relationships with their lawyers. Now, however, these same clients were required to operate in highly competitive global markets and therefore sought to gain the best possible value for money from their lawyers. They began to employ lawyers (‘in-house’) to monitor and control the work of private practitioners. Fees began to be rigorously scrutinised and work had increasingly to be won by skilful presentations in direct competition with competitors.[36]
In response to these changes in the commercial and legal world, the ‘mega’ firm was born.[37] These firms were able to handle huge transactions and in general meet the needs of major corporate clients.
In parallel with this increase in size amongst the major law firms, the overall number of solicitors in England and Wales also rose dramatically. In 1966 there were 21,672 solicitors practising; in 1970 there were 30,463; in 1996 the figure had increased to 68,037; and by 1999 there were 100,957 practising solicitors.[38] Moreover, specialism became the order of the day within many firms. At least 70 per cent of solicitors in England and Wales claim to specialise, either principally or exclusively, in a given area of legal work.[39] Firms now pride themselves on their reputation in specific fields.[40]The trend towards specialisation, coupled with the growth in numbers, has contributed to much greater mobility within the profession.[41] It is now much less likely that a solicitor will join a firm as an articled clerk and remain there until retirement. Even partners frequently move to new firms, often taking their assistant solicitors, secretaries and clients with them.[42] Many solicitors are ‘poached’ by competing firms; others move because they believe their chances of promotion will be greater elsewhere.[43]
These changes in the legal and commercial environment have led some firms of solicitors to believe that they should offer their clients a ‘one-stop shop’.[44] In other words, they have considered forming a multi-disciplinary partnership (MDP) with other professionals such as accountants, merchant bankers or stockbrokers. The idea behind this is to bring together all the human resources necessary to conduct the work required by corporate clients, thus saving them the burden of instructing representatives of each profession separately.[45]
One effect of the changes which have taken place over the last 20 years has been that the practice of the very large law firms has diverged significantly from that of medium sized and smaller firms.[46] The 20 largest firms now employ 40 per cent of all solicitors and provide legal expertise to solve complex legal problems on a ‘massive scale’.[47] This has contributed to the gulf between the ‘mega’ firms and high-street practices.
The clientele is completely different, as is the scale of operation, and this in turn has rendered some areas of legal practice almost unrecognisable compared with, say, the early 1980s when Abel studied the profession in the UK. At that time Abel characterised barristers as being far more exposed than solicitors to market forces. He commented that:[Barristers’] immediate consumers—solicitors—are more sophisticated and often endowed with considerable market power (because they are repeat players). Solicitors. .. generally perform in private... and their individual consumers are relatively ignorant about law and lawyers and lacking in market power (because demand is infrequent and unpredictable); even businesses tend to be less knowledgeable about solicitors than solicitors are about barristers.[48]
Abel did however foresee that the size and structure of law firms could change significantly, with a greater degree of specialisation and a small number of firms dominating particular markets:
Perhaps the most important form of protection is simply the further elaboration of the phenomenon that originally gave rise to the professions, namely specialisation... The growth in size of solicitors’ firms... has allowed their members to specialise as well, confident that large business clients will look to the firm for a wide variety of services. These firms have the same enduring relationship with business clients (and wealthy individuals) that chambers have with their solicitor intermediaries. As firms continue to expand and merge, the market may become increasingly oligopolistic.[49]
Abel anticipated that as a result in the growth in size of some solicitor firms, and the creation of joint partnerships with accountancy firms, there would be a
transformation of the market from one dominated by exchanges between individual producers and consumers to one in which large institutions organise both producers and consumers and mediate the transactions between them.[50]
However, Abel did not go on to explore the impact—or the potential impact— of these transformations upon the solicitor/client relationship, and in particular upon the bulwark of that relationship, which is the uncompromised allegiance owed by the solicitor to his client, including the duty of confidentiality.
He did not consider how the solicitor/client relationship might be transformed by the development of the mega firm, and he did not identify the practical difficulties and ethical dilemmas which might then result.THE REGULATORY REGIME
Despite the changes which have occurred over the last twenty years, every solicitor, whether practising within a very large firm or operating as a sole practitioner, is, at least in theory, subject to the same regulatory control. The huge variation in the organisation and workload of law firms, ranging from the ‘mega’ firm on the one hand to the sole practitioner on the other, has led some commentators to question the appropriateness of Law Society rules as a means of regulating this hugely varied legal and commercial environment.[51]
Since 1933 the Law Society of England and Wales has had the power to make rules regulating the professional practice, conduct and discipline of solicitors in respect of any matter.[52] The rules, codes and principles of conduct issued by the Law Society are contained in The Guide to the Professional Conduct of Solicitors (the ‘Guide’) which is currently updated about every three years.[53] All aspects of solicitors’ practice are addressed, from the most fundamental rules to more everyday matters such as what solicitors should wear when attending court.[54] At present the Guide is in its eighth edition and runs to some 893 pages.[55] Practice Rule 1 sets out the basic principles of professional conduct for every solicitor, namely:
A solicitor shall not do anything in the course of practising as a solicitor, or permit another person to do anything on his or her behalf, which compromises or impairs or is likely to compromise or impair any of the following
(a) the solicitor’s independence or integrity;
(b) a person’s freedom to instruct a solicitor of his or her choice;
(c)the solicitor’s duty to act in the best interests of the client;
(d) the good repute of the solicitor or the solicitors’ profession;
(e) the solicitor’s proper standard of work;
(f) the solicitor’s duty to the court.[56]
Rule 1 is said to form the ‘bedrock of solicitors’ practice’[57] and to be the prime consideration if an ethical problem occurs. The other commentaries and material in the Guide represent the Law Society’s interpretation of the basic principles as applied to the various circumstances arising in the course of a solicitor’s practice.[58]
A breach of the rules by a solicitor or firm of solicitors may in theory elicit a Draconian response from the Law Society. Possible sanctions include striking the solicitor off the roll, suspending the solicitor from practice indefinitely, imposing a fine of up to £5,000 for every allegation proven and ordering the solicitor to take, at his or her expense, such action as is deemed proper in the interest of the client.
In addition to the rules, codes and principles of conduct issued by the Law Society, solicitors are bound by the requirements of the general law. The law of agency, contract, tort, evidence, criminal justice and, especially, fiduciary obligations, can all have a bearing upon the professional behaviour of solicitors. Indeed, the Guide makes specific reference to this fact.[59]
Furthermore, solicitors are officers of the court and are required to act in a manner befitting that relationship.[60] As one learned judge put it:
We expect and indeed we extract from solicitors, who are our officers, a higher standard of conduct than we can enforce against those who are not our officers.[61]
To accept anything other than the highest standards from its officers could potentially bring the entire legal system into disrepute. The Supreme Court[62] has inherent jurisdiction over solicitors as officers of the Court by virtue of section 50 of the Solicitors Act, 1974.[63] Sections 51-55 of the Act give the court wide-ranging powers to institute disciplinary proceedings against solicitors.
In principle, therefore, solicitors are subject to stringent regulation. Not only are they bound by the rules of their professional organisation, they are also subject to review by the courts. Indeed, it is doubtful whether any other profession is, at least in theory, subject to such a weight of regulation and oversight.[64]