Tuesday, November 4, 2008

Masterpiece or a mess?

About a year ago, on the 30th of October 2007 the Legal Services Act received royal assent.

Various parts of the reforms come into force at certain points in time until 2011 and some of the regulations are going beyond what the recent legal services act (Rechtsdienstleistungsgesetz) allows in Germany.

The so-called Legal Disciplinary Partnerships (LDP) are a form of co-operation that is supposed to enable different legal practitioners e.g. solicitors, licensed conveyancers, barristers, law cost draftsmen, notaries public, patent- and trademark agents to work in a common practice. Alternative Business Structures, however, are intended to enable a multi-diciplinary co-operation of lawyers and other professions. Non-lawyers will be able to own an ABS, in part or wholly and an ABS will even be able to be listed at a stock exchange.

These forms of organisation and the possibility of an equity stake by non-layers lead to a more complex situation with regards to organisational possibilities. At the same time the regulatory structure also gains in complexity.

In the course of the last legal reform the Law Society lost the authority to supervise its members to the Solicitors Regularory Authority (SRA). The Law Society's function is now "only“ to represent the intrests of solicitors. There is a smilar picture in respect of barristers, who are represented by the Council of the Bar but supervised by the Bar Standards Board (BSB).
The Legal Services Act created an additional institution, the so-called Legal Services Board (LSB) which will be a supervisory body above the level of the SRA and BSB. The LSB is also supposed to decide who wil be responsible for supervising Alternative Business Structures. The LSB will consist of 5 lawyers and 4 lay-persons and there will also be a consumer panel attached.
To strengthen what Jack Straw, the Minister of Justice, named as the main goal of the act i.e. to improve consumer protection there will also be a new institution in the form of the Office for Legal Complaints (OLC). The OLC is modelled on institutions like the Ombudsman in the Financial Services are and will be able to decide cases up to a certain amount within its own discretion.

Opinions differ whether there is actually a real demand for the participation of non-lawyers in the ownership of law firms and the possibilities of raising capital in this way.

Personally, I have doubts whether this simultaneous increase in complexity both on the level of supervison and in the forms of practising law will really lead to better results for clients. With regards to the answer to the question "Masterpiece or a mess?" one can only refer to Franz Beckbauer's famous quote: "Schaun' mer mal!" (Let's wait and see)

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