Rule Book: profession's core principles strengthened; use of Chinese walls clarified


The rewritten solicitors' rule book moved a major step closer to reality last week after the Law Society Regulation Board approved the final amendments to it.



They included one change to the conflict and confidentiality rules sought by six large City firms, although their second proposal was rejected.



The Solicitors Code of Conduct was originally approved by the Law Society Council in September 2004. It has since been wending its way through the Legal Services Consultative Panel (LSCP), which advises the Lord Chancellor on whether to approve it - amid complaints about the slowness of the procedure.



The board backed a series of changes to the code deemed necessary to win the support of both the LSCP and the Department for Constitutional Affairs (DCA). They will now go to the council, after which senior judges and the Office of Fair Trading will take a look before approval by the Lord Chancellor.



Among the changes made at the behest of the LSCP were a strengthening of the core principles of the profession, so as to make them 'regulatory principles enforceable in their own right'. The panel explained that this 'would reinforce the emphasis on principles-based regulation'.



Following the City firm lobbying, the rules now clarify that in the case of sophisticated clients, informed consent to the use of Chinese walls can be obtained in standard terms of business letters.



However, the board's rules and ethics committee rejected the call to amend the definition of 'interest adverse' - where a firm cannot act for one client if it has an interest adverse to another client (or former client) in relation to which it holds confidential information, unless certain safeguards can be put in place.



The firms, represented by Clifford Chance's Chris Perrin, asked for negotiating situations to be excluded. The committee decided that there was an increased risk to the client whose information was being protected if there was a leak where a client and a former client were in negotiations.



However, it was 'not entirely unsympathetic' to the position and agreed to look again in the future.



Further amendments requested by the DCA emphasise the level of client protection required when acting under the conflict exemption and using Chinese walls.



However, there remain isolated disagreements. The board was told that the LSCP objects to abolition of the ban on solicitors 'tying in' advocacy services with the litigation services they are providing.



While the Society's view is that such a restriction is not justified, given that solicitors are free to 'package' other services, the LSCP argues that, although the client might be happy at the outset, as the case progresses they may feel disadvantaged if the option to instruct a barrister has been removed.



Neil Rose