In the Media

Lord chancellor defends 'Tesco law'

PUBLISHED November 27, 2006

A contentious bill to allow law firms to go into business with other professionals and permit outside investment will "free up the way lawyers can operate", Lord Falconer, the lord chancellor, said yesterday.

The Legal Services Bill, published yesterday, could provide firms with valuable new access to finance, although there are concerns that firms taking advantage of the new provisions could fall foul of conflict of interest rules in other countries.

The final bill has been amended in response to criticism by a parliamentary committee and the legal profession, which said it could threaten lawyers' independence and create conflicts of interest.

The proposals - known as "Tesco law" because of the way they would open up the legal market to other services, such as supermarkets - involve the setting up of an independent super-regulator for the profession.

Lord Falconer said the final bill, which receivedits first reading in parliament on Thursday, was the product of a long consultation and would balance a liberalising impulse with protections for users of legal services.

"We want to free up the way lawyers can operate," he said. "But we have included very robust safeguards."

The lord chancellor ac-knowledged the proposed reforms could conflict with laws barring outside investment in countries such as Germany, but he said there was no compulsion for firms to participate.

He said that leading City firms with which he had spoken were happy with the proposals.

Allen & Overy, one of the largest law firms, has said that it, and its peers, would be unlikely to take advantage of the planned law for fear it would prevent them from operating in other countries.

Bridget Prentice, constitutional affairs minister, said that the government had implemented about three-quarters of the changes to the bill recommended in a highly critical report -published in July by a joint Commons and Lords -committee.