City law firms that float on the stock market in a post-Clementi world could fall foul of foreign regulators, a leading European lawyer warned last week.

German lawyer Heinz Weil, a former president of the Council of Bars and Law Societies of Europe (CCBE), also criticised English lawyers for not standing up more to Sir David Clementi.


Addressing a meeting on the global implications of Clementi at the International Bar Association's (IBA) mid-year meeting in Lisbon, Mr Weil said the proposals raised 'major questions of principle', such as ultimate regulatory power being vested in an unelected legal services board (LSB).


He insisted that plans to open up law firms' capital will have 'global consequences', and foreign regulators would have to look at whether firms that accept external capital would be allowed to trade in their countries.


Speaking to the Gazette, Mr Weil explained: 'If a law firm is listed on the Stock Exchange, there is no doubt this would be contrary to the basic principles of the profession in other [European] member states.' Minority ownership would be less of a problem, he conceded.


Mr Weil said Clementi's name and recommendations are well known in Germany and its ministry of justice. Despite claims at the session that the report is specific to English conditions, Mr Weil said this is not understood elsewhere.


'The way in which the English [legal] bodies have reacted to Clementi has not been very helpful,' he added.


Former Law Society President Peter Williamson, who is Chancery Lane's IBA representative and spoke at the meeting, said afterwards that the Society would make every effort to ensure that the Clementi legislation would not cause firms problems abroad. He added: 'We thought it right throughout to co-operate with Sir David and the outcome broadly reflects the Law Society's response to his consultation.'


Top Japanese lawyer Akira Kawamura - chairman of the IBA's bar issues commission (BIC), which organised the debate - described Clementi as 'the most important issue' for bars globally.


BIC vice-chairman Malcolm Wallis, a former chairman of the South African Bar, suggested the report's underlying message was that the government wanted to regulate the legal profession. 'That is but a short hop and skip to the government wishing to control the legal profession,' he claimed.


However, David Hobart, chief executive of the Bar Council, said the LSB is 'quite a modest' proposal and that the system would collapse if either the Law Society or Bar Council declined to be a front-line regulator. 'The government needs the legal profession to make this work,' he insisted, adding that the government was 'irritated with Clementi' for not going into detail about the costs of the new regime.