In the Media

Society ?looking at alternatives to client accounts?

PUBLISHED November 19, 2012

Monday 19 November 2012 by Catherine Baksi

The Law Society is looking at whether solicitors still need to have client accounts and what other options could be available to help cut the cost of regulation.

Law Society chief executive Desmond Hudson told the Solicitors' Association of Higher Court Advocates annual conference on Saturday 'we'll have to look at whether solicitors need to have client accounts', and said that the Law Society considering options to give solicitors a choice of what they can do.

The fact that solicitors hold client money adds to regulatory risk and therefore the cost of regulation, Hudson said. This needs to be reduced to allow solicitors to compete in the changing legal and regulatory marketplace.

While there is no alternative in the context of residential conveyancing, he asked if, elsewhere, 'we need the cost and risk that client accounts represent?'.

Hudson said that in the past the client account was needed to the lack of sophisticated banking systems. The facility had been a 'phenomenally important factor in the national and international success of solicitors as men of affairs', giving them the ability to deal with transactions, but he said that times had changed.

The Bar Council has developed a scheme to allow barristers to hold client money through a third-party escrow account, allowing barristers to offer a full range of legal services without breaching their code of conduct. Launching the scheme earlier this year, bar chair Michael Todd QC said the move would create a 'level playing field' with solicitors.

Hudson praised the scheme, which he said would give the bar an advantage, but said that their 'client account lite' may not be as simple as the bar thinks.

Elsewhere in his speech to the conference Hudson said that the Law Society is now 'committed to the practical demonstration and periodic revalidation of advocacy skills' but he was not yet convinced that the proposed quality assurance scheme for advocates (QASA) is 'ideal or sustainable'.

'We think the prospects for the success of the scheme remain uncertain, that the role of judicial involvement is unwise, that even the arithmetic behind the planned judicial assessments suggest the scheme is unworkable,' he said.

If his fears are realised, he said the implications for solicitor advocates are 'very serious'. The scheme's gestation, he said, had been 'long and tortuous' and he feared that its arrival would be difficult too.

Hudson added: 'We should not forget that some have sought to use the scheme as a means to clear out competitors and seek some competitive advantage.'

On the suggestion from the bar chair that all advocates be regulated by the Bar Standards Board, Hudson said: 'In common parlance: are they having a laugh?'

He said: 'Why would we - a professional and skilled group of individuals - want to be regulated by people who have said that solicitor advocates are often ill-prepared, exercise lack of independence from the client, viewing the case more from what their client wanted to say, than the judge would find attractive and engaging.'

'I will not have solicitor advocates stigmatised, unfairly treated or insulted,' he said.

With solicitors gaining higher court advocacy rights, Hudson said one of the key functional planks supporting the division of the profession by two separate titles has already been removed. He suggested that in time, the distinction between solicitor and barrister would become more blurred.

Hudson accepted that the bar has a 'significant role' in the market for legal services. He said it provides high-quality advocates to solicitor firms of all sizes, sometimes at short notice and that barristers are relied on by many smaller firms.

But he went on to cite some of the problems with the bar. 'Has anyone here not experienced the frustration of a clerk telling you, at very short notice, that the barristers with whom you and your client have worked and are relying on can no longer do the case?

'It is hard to think of any other environment, other than the theatre, where this would be regarded as acceptable customer service. And actors do not deal with cases which affect people's reputation and liberty,' he said.

Hudson concluded: 'I can see no sensible argument against more and more barristers practising in Solicitors Regulation Authority-regulated entities and more higher and lower court advocacy undertaken by barristers and solicitor advocates of the firm conducting litigation - it makes sense to keep all costs firmly under one roof.'