Clementi Mulling Relaxation Of Law Firm Ownership Rules, Reports Suggest

by Robin Pilgrim, LawAndTax-News.com, London

26 February 2004

The Clementi review of the UK's legal services industry may recommend the relaxation of ownership rules for law firms in order to allow legal professionals such as solicitors, barristers, lawyers, and patent attorneys to create new "legal disciplinary practices", according to reports in the national media.

Citing unnamed sources close to the review, the Financial Times revealed this week that in addition to offering greater freedom to law firms by relaxing the ownership rules to allow such practices, Prudential chairman Sir David Clementi, who is conducting the review, is also considering proposals which would allow non-lawyers to own at least part of a law firm.

Observers have suggested that if the consultation paper set for release next month does recommend the legal disciplinary practice model, plans to push for multi-disciplinary practices (whereby lawyers would be permitted to go into business with other professionals, such as accountants) may be put on hold.

This is likely to disappoint many within the industry, including Lord Chancellor, Lord Falconer, who observed at a Law Society council meeting held late last year that:

"We must not let the welcome fact of the work of the Clementi review put a stop to all progress in the meantime. We need to work together to examine areas where change for the consumer's benefit can be delivered in the short and medium term."

"Multi-disciplinary partnerships, the role of employed solicitors, the probate market - these are just some of the areas we should look at quickly and imaginatively to see how we can respond rapidly to consumers' needs whilst, of course, ensuring that their interests are properly protected."

In a later interview, Lord Falconer confirmed that with regard to paving the way for the introduction of MDPs: "We won't need to necessarily wait until the Clementi review is completed at the end of 2004. The Law Society could come up with a way to do it without waiting."

However, the consultation document is expected to draw attention to the difficulties of regulating different professions when they are operating as one business entity, pointing to the recent split between accounting firm KPMG and its law firm, KLegal as evidence of this.

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