Making money pay

In a continuing series, Michael Orton-Jones, chairman of the Law Society's financial and investment business working party, discusses its role in focusing on both regulation with the establishment of the Financial Services Authority and more recently the production of a strategy for the continuing development of the solicitors' profession in this fieldThe existence of the financial and investment business working party is a tribute to the tenacity of west country solicitor Bryan Wordsworth.

He was recruited to the Law Society committee system early in the 1990s to represent the views and interests of solicitors involved in financial services work.

He quickly recognised that the Society gave insufficient recognition and attention to this area of practice and lobbied hard for a single body to be responsible.

Mr Wordsworth served as the first chairman of the working party from its establishment in 1996.The terms of reference of the working party are:l Development of the way in which the profession provides financial and investment services and the promotion of those services to the profession and the public;l To ensure that as large as possible a proportion of the profession is providing and profiting from financial services work;l To consider proposals for the revision of the rules made by the Law Society Council regulating the profession in the conduct of investment business.With traditional areas of practice under threat from other professions and reductions in government legal aid funding, financial services could be one bright prospect for the profession.

The market for financial services in the UK is immense but the legal profession's share of that market is negligible.

At present, only about 250 firms provide discrete investment business, generating annual fee income in excess of 20 million.

The key role of the working party is to expand the profession's market share.The passage of the Financial Services and Markets Act 2000, the establishment of the Financial Services Authority (FSA) and the impending transfer to it of responsibility for the regulation of those firms providing discrete investment business, have led the working party in recent years to concentrate on regulatory developments.

The working party has provided the Society with the ammunition with which to lobby on behalf of the profession.

Indeed, the Society has achieved a remarkable success.

Solicitors providing mainstream investment business services will in future be directly regulated by the FSA.

However, for the majority of firms that limit their activities to non-mainstream investment business, an opt-out has been agreed by the government for members of the Law Society as a designated professional body.

Solicitors will continue to be able to provide investment business services provided that they are incidental to their legal work without being subject to dual regulation by both the Law Society and the FSA.

This will enable solicitors to continue to provide a full legal service to clients without an undue regulatory burden.The working party also has an important role in representing the interests of practitioners in relation to rules governing investment business laid down by the Law Society itself.

In this respect the objective is to ensure that regulation is not merely imposed for the sake of regulation and that solicitors are not placed at a competitive disadvantage by their own professional body by contrast to other professions active in financial services.With the regulatory framework now clear and the final implementation of the Financial Services and Markets Act - involving the transfer of full powers to the FSA at midnight on 30 November - the working party can now turn its attention to the production of a strategy for the development of solicitors involved in providing financial services.That strategy must begin to address the profession's reluctance to be involved in financial services, to enhance the Society's role in supporting those solicitors already involved in financial services and to encourage more of their fellow practitioners to become involved.

Solicitors need to restore their reputation as men and women of business and to realise that to provide proper and complete advice to clients, they should be able to help them with their financial interests.The working party has already achieved much by co-ordinating the efforts of the various staff involved in financial services and in streamlining the availability of information which can be provided to those solicitors who approach the Society with an interest in possible involvement in financial services.