Higgs report set to curtail solicitors on client boards

NON-EXECUTIVE DIRECTORS: lawyers must be independent

Solicitors who sit on the board of client companies could find their positions becoming untenable under provisions contained in a government-commissioned report released this week.

The Higgs report into the role and effectiveness of non-executive directors puts forward a definition of 'independence', and says at least half of the board should meet this test.

Under the guidelines, non-executive directors cannot, among other things, have had a direct or indirect business relationship with the company for the previous three years.

John Bennett, a partner at City firm Berwin Leighton Paisner, said: 'This report will make it more difficult for lawyers who are non-executive directors to show that they are independent.'

He added that lawyers who advised companies could easily find themselves compromised if they also sat on the client's board.

'It is dangerous for individuals to wear more than one hat in this situation,' he said.

However, he said the report could be of benefit to lawyers looking for roles with non-client companies.

The new regulation stated that independence meant non-executive directors could not hold cross-directorships with linked companies, meaning more positions would be available to people wanting them.

The report, which received a warm welcome from the government and is set to be implemented by 1 July, also found that around 3% of directors in listed companies have a legal qualification, compared to 21% with accountancy backgrounds.

Victoria MacCallum