While sir David Clementi jokingly issued a ‘health warning’ that his report was only for England and Wales, Grania Langdon-down finds that his recommendations are likely to become a template for change across the world

As bar leaders at the recent International Bar Association’s annual conference in Auckland in October pointed out, Sir David Clementi’s recommendations could have significant ramifications for Commonwealth jurisdictions, with authoritarian governments potentially viewing any move away from self-regulation as a licence to tamper with their legal professions.

In recent years, there has been a growing global focus on the regulation of lawyers. Australia’s legal profession has already been through major changes, with more on their way in some states, while legislation is being debated in the likes of New Zealand and South Africa. In Europe, competition-related pressures are bearing down hard.


Jonathan Goldsmith, secretary-general of the Council of Bars and Law Societies of the European Union (CCBE), says there are two audiences for Clementi. ‘One is the common law world. People from Africa and other parts of the Commonwealth have said that Britain is the mother of the common law world and what happens in England will be very influential, with their governments likely to use it as a template.


‘I know that in other parts of the British Isles – Scotland and Northern Ireland – and in the Republic of Ireland, the legal profession believes that what happens in England and Wales will spill over to them.


‘The other audience is in Europe. It is no secret that we fear there is a move – not necessarily co-ordinated – to attack self-regulation in the liberal professions. As a result, other European jurisdictions will be looking very closely at his report and what follows on from it.’


Mr Goldsmith says national competition authorities meet regularly under the aegis of the European Commission and swap developments. ‘I would be astounded if the UK competition authority didn’t mention Clementi in that context.’


The European Commission is currently pushing for the liberalisation of the ‘liberal’ professions in five main areas – fixed prices, recommended prices, advertising restrictions, entry restrictions and reserved tasks and business structure regulations (that is, multi-disciplinary partnerships (MDPs)). It is in the last of those that England and Wales – traditionally a very liberal jurisdiction in comparison with others – may be affected. But a CCBE paper to its last plenary session also highlighted examples of national competition and related developments happening across Europe:


  • Denmark – a committee is looking into legal professional rules, such as the monopoly on legal representation in court cases and ownership of law firms;



  • France – the commission has requested a review of French publicity rules, while the rule that essentially prohibits MDPs has been temporarily suspended;



  • Germany – the Federal Ministry of Justice has published a draft Bill that would open the market for legal services to a range of other providers, such as banks and insurers; and



  • Finland – usually considered the most liberal jurisdiction of all, is considering tightening professional regulation to ensure the proper functioning of the legal system, in direct contrast to what is happening in other jurisdictions.



    • Across the other side of the world, Australia is also watching Clementi closely, despite already being further down the track. Barrister Stephen Southwood is president of the Law Council of Australia, a policy and advocacy body that represents 40,000 legal practitioners across the country. He says Sir David’s report has the potential to affect other common law jurisdictions considerably.


    Mr Southwood says Australia’s legal practice model legislation has had an enormous effect on freeing up business structures. In New South Wales, law firms can incorporate as companies, with external ownership and non-lawyer managers. However, the company will have a legal director who has ‘onerous responsibilities to ensure compliance with all the rules and to make sure the way the company acts doesn’t prejudice client rights, either by way of legal professional privilege or otherwise’. So far, the change has not resulted in any transfer of ownership away from lawyers – ‘I don’t think most entrepreneurs see legal companies as the best pick on the block,’ he says.


    Regulation is left to each state jurisdiction so it is still ‘a little idiosyncratic’ as to which body deals with discipline, for example.


    When it comes to complaints handling, he says: ‘It is very important for public perception that there is one gateway for complaints to be made. Secondly, there must be members of the public on the tribunals investigating complaints and there must be public reporting of the resolution.’


    As far as the independence of the profession is concerned, Mr Southwood says professional bodies must continue to determine training, certification and ethical rules.


    IBA executive director Mark Ellis sees the main driver for change as the ‘increasingly global belief in the benefits of opening markets to competition and an element of deregulation.

    ‘The Clementi report is the British strand of this global trend and, because of the widespread respect in which the British profession is held, it will attract worldwide interest and is likely to influence how other countries move forward.’