IBA 2012: former president of American bar dismisses 'risky' ABS model
The immediate past-president of the American Bar Association has strongly denounced alternative business structures, arguing that non-lawyer investment in law firms compromises the client's best interests and undermines professional independence.
William T (Bill) Robinson III gave the strongest indication yet that the US will not bend soon to pressure for liberalisation, pointing to the jurisdiction's Model Rules of Professional Conduct to underpin his arguments.
Robinson was speaking at a panel session on ABSs at this year's International Bar Association conference. Also on the panel were Solicitors Regulation Authority chief executive Antony Townsend, former Law Society president Bob Heslett and Christina Blacklaws, director at Co-operative Legal Services.
Though stressing that he was not speaking on behalf of the ABA, Robinson said his views broadly reflect the consensus among US lawyers. 'What you need to understand is that from the US perspective, the Model Rules start and end with a focus on the interests of the client,' he said. 'There is a strong sense that in the ABS approach there is an inherent conflict of interest. Investors invest to make money and, as we say, "he or she who has the gold makes the golden rule". They don't bring a higher quality of practice or integrity.'
He added: 'If there is one investor in a firm and that investor is Walmart, it is not unrealistic to expect that investor to communicate what is to be done and that will be in the investor's best interests. That is why we are not stepping up to this.
'Another concern we have is the continuing attack on the legal profession and its independence across the world in the name of consumerism and bringing the price down. The reality is that specialised training and years of extra education are necessary to impute the required discipline and time to protect the client. Profit as an influencer of human choices under pressure is just too much of a risk.'
Robinson acknowledged the potential benefits of ABS status to lawyers and law firms, but said he had 'yet to hear how the interests of the clients are enhanced'. He also raised the spectre of government interference in the profession to protect shareholder interests, 'just as the Securities and Exchange Commission has intervened to protect corporations'.
He added: 'They will come in behind the investors and tell us what to do; we will have become not a profession, but commerce'.
In the US, ABSs would also have to clear other practical hurdles. 'What about exit strategies? In the US lawyers cannot be required to sign non-compete agreements, it is up to the client to decide whether to waive privileged, confidential information.'
Robinson also dismissed the claim that liberalising ownership will enhance access to justice, an argument made by Co-operative Legal Services. He said: 'In the US there is no money in access to justice and pro bono; it's an overhead that derives from commitment and professionalism. I am perplexed as to how having investors involved enhances access to justice. Too much pro bono inhibits return on investment.'
Responding, Christina Blacklaws described it as an 'insult' to suppose other professionals who might co-own firms adhere to lower professional standards. However, an inquisitor from the German bar questioned using the Co-op as an exemplar of ABS status, pointing out: 'The Co-operative is more analogous to a trade union owning a law firm that will provide services to its members. That is very different from a third-party investor seeking a return on their money.'
In her address, Blacklaws pointed to the rigour of the SRA's ABS licensing process and joked: 'We have seen very little evidence of the mafia or al-Qaida applying.' Co-operative Legal Services now has 48 licensed managers and expects annual turnover this year of £45m, placing it among the top 75 legal firms.
Townsend meanwhile, expects the number of ABSs approved, which recently hit 30, to double by the end of the year. There are about 100 more applications 'in the wings', some of which may come to nothing. 'We are beginning to see the evolution of a more dynamic market,' he said.
Heslett, meanwhile, was notably more muted about ABSs, saying: 'I think the changes are extremely limited. The Co-op may raise standards on the high street but I don't think the major firms [in England and Wales] will ever get involved.'
International interest in following the UK and Australia's lead on ABSs is clearly limited. Fewer than 50 of the 5,000 delegates registered at this year's conference attended the session.