INTRODUCTION
Rather than allowing its members to ‘manage’ conflicts of interest within.specified guidelines, the Law Society seeks to prevent conflicts from arising and, to that end, prohibits its members from acting in almost all conflict situations.
This chapter compares the Law Society’s approach with that of other regulatory bodies whose members provide a service comparable to that of solicitors. The most fruitful comparisons in this context are with three groups whose professional responsibilities are in varying degrees related to those of solicitors, namely barristers, accountants and members of the financial services industry.1. Barristers
Barristers are generally considered the senior branch of the legal profession.[195] They act as specialist advocates for parties in courts or tribunals, and undertake the writing of opinions and some of the work preparatory to trial.[196] The conditions under which barristers work differ from those experienced by solicitors in several respects. Most importantly, they cannot be instructed directly by lay clients[197] and they may not form partnerships or companies.4 Therefore they are, at least in theory, sole practitioners. It is however customary for barristers to practise in groups called ‘chambers’ and to share the cost of accommodation and clerking.5 The clerk acts as a practice manager, allocating work to barristers and negotiating fees with solicitors.6
As well as providing office accommodation, chambers afford other benefits for individual barristers. They may call upon each other for advice on points of law, share the cost of training, and the chambers will also provide for their information technology needs. Indeed, as competition at the Bar has increased and professional clients demand more specialist advice, chambers have responded accordingly.7 Many specialise in particular areas of law and market their practices by offering conferences and seminars for both solicitors and lay clients.8 Some have even appointed chambers’ directors to manage their needs in this increasingly competitive environment.9 As some commentators have observed, this in turn has strengthened collegiality amongst barristers:
Chambers have become more specialised, concentrating on particular areas of work and dropping others.
This could be seen to strengthen collegiality because of the support practitioners working in similar fields are able to offer each other. Indeed, it has been stated that many barristers’ chambers became more supportive environments as specialism increased.10As well as having a place in chambers, every barrister is a member of one of the four Inns of Court.11 The Inns ‘call’ barristers to the Bar when they have completed their training, and provide libraries and other collegiate benefits. This collegiate structure is deeply ingrained at the Bar:
4 Bar Code para 207. But see The Lawyer, Editorial, 15 November 1999, p 1, where it is suggested that measures are being taken by some barristers to form limited companies. Also, see The Lawyer, ‘Top silks call for partnership rights’, 6 December 1999, p 1.
5Average chambers would appear to consist of 22 barristers, A Boon and J Levin, The Ethics and Conduct of Lawyers in England and Wales (Hart Publishing, Oxford, 1999) at 135.
6But see Commercial Lawyer, Editorial, ‘Changing Role of Barristers’ Clerk’, 20 Nov/Dec 1997, p 13 and P Shrubsall and J Flood, Barristers' Clerks: The Law's Middlemen (Manchester University Press, Manchester, 1983). See also M Griffiths, ‘Relations between Barrister and Clerk’, in Inns of Court School of Law Professional Conduct 1998/9 (Blackstone, London, 1998) at 48: ‘The clerk’s role is unusual. He or she is the agent and business manager of the barrister, the ultimate manager of the support team within chambers and the personal adviser to the barrister on all aspects of his or her professional life... The modern clerk is an experienced and skilful manager at the helm of what is often a multi-million pound business.’
7 See Mullally, ‘Building the case for Chinese walls at the Bar’, (1999) 29 Legal Week 10: ‘The modern reality of the Bar is now quite different; chambers share overheads, adopt a more corporate approach and share facilities and computer systems—Jonathan Kelly, Simmons & Simmons’.
8A Boon and J Levin, n 5 above at 89.
9 See, for example, Commercial Lawyer, Editorial, ‘Bar News’, (1998) 22/21: ‘Wilberforce Chambers has appointed Suzanne Cosgrave as Chambers Director... [she] has the professional management abilities that Chambers need in order to adapt to the changing environment at the bar today. She has considerable experience of working in areas and organisations that are undergoing change, and that experience will be invaluable to us in planning for the future.’
10A Boon and J Levin, n 5 above at 89.
11 Gray’s Inn, Lincoln’s Inn, Inner Temple or Middle Temple—Courts and Legal Services Act 1990 s 41(3).
The Modern Fiduciary: Conflicts in Other Professions 53 Historically, the Bar was an archetypal collegial structure whereby barristers associated not only with members of chambers but with all of those in their Inn of Court. Collegiality, ‘this good spirit, a part of the professional tradition, enables them to contest with their professional brethren all day in the forum, and meet outside on the friendliest terms and with respect for those with whom they have been engaged in the strife of litigation’.[198]
Barristers and solicitors owe similar fiduciary duties towards their clients, receive similar training, and are regulated in a similar fashion.[199] The Bar Code of Conduct, Rule 203, emphasises this fiduciary relationship:
A practising barrister... must promote and protect fearlessly and by all proper and lawful means his lay client’s best interests and do so without regard to his own interests or to any consequences to himself or to any other person (including his professional client or fellow members of the legal profession).
Secondly, both solicitors and barristers are educated to degree level[200] and undertake one year’s professional training.[201] Then, both professions require an apprenticeship to be undertaken.
For barristers this training is termed ‘pupillage’ and for solicitors it is completed by way of a two-year training contract with a solicitors’ firm.Finally, both the Bar and the solicitors’ profession are self-regulating. Barristers are regulated by the Bar Council[202] and solicitors by the Law Society.[203] The Bar Council confers rights of audience on its members, issues rules of conduct, and enforces disciplinary sanctions.
2. Accountants
Curiously, there is nothing to stop anyone from calling himself an accountant and setting up in business offering accountancy services.[204] Some accountancy work is, however, restricted[205] unless the accountant is qualified with one of the six major accountancy bodies:
i) Institute of Chartered Accountants in England and Wales (ICAEW)
ii) Institute of Chartered Accountants in Ireland (ICAI)
iii) Institute of Chartered Accountants in Scotland (ICAS)
iv) Association of Chartered Certified Accountants (ACCA)
v) Chartered Institute of Management Accountants (CIMA)
vi) Chartered Institute of Public Finance and Accountancy (CIPFA).
It is the practice and regulation of chartered accountants which will be addressed in this chapter, specifically of those accountants who are members of ICAEW. The work which such accountants now undertake ranges far beyond their traditional role of summarising information in order to calculate how much profit a business has made, how much it owes, and how much is owed to it.[206] Some accountants now offer a range of services which include auditing, book-keeping, cost accounting, financial management, taxation and insolvency work, personal and corporate finance, and advice on information technology.[207]
Accountants, too, owe fiduciary duties to their clients,[208] and they adopt similar organisational arrangements as solicitors, namely partnerships. Accountants have also experienced similar changes over the last two decades in respect of their size, structure and organisation.
They have been subject to increased competition and have developed their services accordingly, searching out new areas of work.[209] Some firms have attempted to provide a ‘one-stop shop’ for their clientele and indeed there have been suggestions that accountancy firms and law firms could merge.[210] Were this to happen, it would raise the possibility of yet more conflicts of interest arising.[211]3. Financial Services
In 1986 the Financial Services Act introduced a new system for the regulation of firms providing financial services. It was believed that as a result of the changes to the structure of the financial markets in the mid-1980s—in particular, the abolition of the Stock Exchange’s single capacity requirement and the development of financial conglomerations offering a wide range of services—there was much greater potential for professionals to be placed in situations where they owed conflicting duties to different customers, or where there was a conflict
The Modern Fiduciary: Conflicts in Other Professions 55 between their own interests and those of their customers.26 The 1986 Act introduced a new system for the regulation of firms providing financial services. It allowed them, both expressly and by implication, to adopt a lower standard of conduct than that required by fiduciary law.27
It is beyond the scope of this book to undertake a thorough examination of these rules and their operation in practice, an exercise which has been undertaken elsewhere.28 What is of interest, however, is the subsequent Law Commission Report entitled Fiduciary Duties and Regulatory Rules. Although the Commission’s report was concerned principally with the financial services industry, it concluded that ‘the terms of reference include all areas subject to statutory and other forms of public law regulation.’29 The Commission’s findings therefore have application to all three professions.
The report analyses in particular:
i) contractual techniques for avoiding potential breaches of duty;
ii) structural techniques for managing conflicts;
iii) the public law dimension, that is, how far a regulatory system can be taken to have modified the common law and equitable duties owed by fiduciaries.
The final part of this chapter will, therefore, examine the Law Commission’s main findings and recommendations, and consider their significance for solicitors.