Sharing the spoils

Should solicitors begin a brave new world of fee sharing with non-lawyers or should they practise in an exclusively lawyer profession? Stephen ward considers the pros and cons of cutting up the cake with other professionals

Partnerships expert Richard Turnor sees proposals to allow fee sharing with non-solicitors at a fork in the road, with two possible paths ahead.

Mr Turnor, of City firm Allen and Overy, says: 'The first would maintain the purist principles of no fee sharing with non-lawyers.

This would mean a small, specialised legal profession.' The consequence of following this route would be that most property work, for example, would be done by non-lawyers.

'They would scrap and compete and have commissions and conflicts of interest and the rest of it.

But at least you would have a pure legal profession which is unsullied by it all.' The other path is for lawyers to mix it with the rest.

'You would then have a profession which is sufficiently flexible to provide a broad range of services, and compete in providing that range of services, and is still sensibly regulated, and where the consumer is adequately protected.' And he suggests that the underlying relevance of the latest Law Society proposals - in a discussion paper considering a rule change to permit fee sharing - is that it pushes the profession firmly down route two - a route he, the Society, and most law firms seem to prefer.

As Quentin Poole, managing partner at Wragge & Co in Birmingham, says: 'I favour the idea of relaxing the regulatory corset.' Fee sharing within a firm, or linking firms of lawyers with firms of non-lawyers in a fee sharing arrangement, would not require legislation, so although it would take the profession less far down the competitive route, it would mean the choice could be made more quickly, within months rather than years.In the shorter term, according to Edward Nally, a partner at Lancashire firm Fieldings Porter, and chairman of the Law Society's regulation review working party, the main initial opportunity which the rule change would permit would not be in the City but among the smaller firms.

Nr Nally says: 'If you have a town or small city where a solicitors' and an accountants' firm want to put together a one-stop professional shop, that will be facilitated by this arrangement.' It is a way for the two firms to offer something more than a referral or recommendation, but stopping short of a partnership between them.

'You could preserve the insurance risk for each profession,' he says.

The pace of change will be gradual, even for small firms, he predicts, with no overnight revolution if the rule change is put through.

'I don't see everybody rushing into it,' he says.

'A number of people will make a virtue of staying away from such arrangements.' But he predicts there will be converts who say: 'This is a sparky new way of delivering legal services.'Mr Nally's view of his own medium-sized firm, is somewhere in between.

'I can see opportunities, but I can't see us wanting to move to any completely unregulated environment.' Any partnership would be with other professionals, who have their own disciplines and insurance.

For example, he rules out a link of this kind with a retailer.

Nigel Boardman, managing partner at City firm Slaughter and May, is equivocal about how much fee sharing would affect larger firms.

He can see the logic of the one-stop shop in the high street.

'I can understand that for my own personal matters it might be nice to go to someone who can provide everything in one place, as an individual that's an easier thing to buy.

'The larger corporates tend not to operate on that basis and will segregate their buying [of legal services from other services] - so it's not something I would see as being highly probable for us.' Mr Boardman agrees that some medium-sized firms might form alliances with accountancy firms.

But he says: 'Effectively, they already can do that.

De facto, they can offer a joint price.

I don't think there is anything they can't do.

It's just a question of a bit more paperwork before they do it at the moment.' He adds there will be a limited number of corporate clients interested in a one-stop shop.

'I'm sure on the spectrum there will be some corporates who will find it attractive.

But I would have thought they don't see much difference except technicalities between the current arrangements and arrangements which could be put in place,' says Mr Boardman.

Mr Poole agrees with Mr Boardman that the impediments to the existing tied accountancy law firms are not that onerous.

If those firms are going to succeed in the legal arena - and he maintains they will - they will do so even without the rule change.

'The rule prohibiting fee sharing is not holding back tied accountancy law firms such as KLegal and Andersen Legal.

But it may speed up the change though, by making those arrangements easier to administer,' he says.The other main area where the relaxation of fee sharing would be likely to have an impact on the structure of the profession would be to allow non-lawyers to be given equal status within the firm, Mr Nally suggests.

Mr Poole says this could be an early consequence for many big law firms.

'Clients are undoubtedly of the mind-set that they like to deal with partners,' he says.

'We have an increasing number of areas where we are providing a professional service which goes beyond purely the law.' He cites the human resources practice offered by Clifford Chance.

'Then there are tax-planning areas,' Mr Poole points out.

'The idea of us having accountants or other professions in partnership is feasible.

I can see that definitely coming up the tracks.'From our point of view, it would give career progression to those people, and deal with the fact that currently lawyers are not able to share profits with non-lawyers.

We also have some senior people now in non-legal capacities supporting lawyers.

We might have a director of finance or marketing, people who are getting fairly indistinguishable from partners.' It would be tidier and produce a greater incentive for those people if they could be characterised as partners, he says.But others, such as Mr Boardman, think the effect would be a technicality rather than a sea change.

He says: 'In essence, you can already achieve just about all of that with performance-related pay.

I'm not sure you would be significantly changing what you are able to do.' For Slaughters, 'it's not something which is on our agenda.'If the law firms are largely unenthusiastic about linking with accountants, will the acceleration down the competitive path - outlined by Mr Turnor - ultimately mean lawyers being overwhelmed by the larger accountancy firms? The consensus among successful law firms is that there is room for all, even if and when multi-disciplinary practices are allowed.

Mr Turnor says: 'It will be driven very much by clients.

Some clients will be happy to go to an accountant and a lawyer separately.' Mr Poole says the accountancy law firms will stand or fall according to whether they offer something attractive to the market.

'Our attitude is "good luck to them", 'he says.

Law firms such as his will be keeping their options open.

'If we conclude that not only is their model successful but that it is impossible to succeed outside it, then we would look to that model.

But I personally think there's room in this world for more than one successful strategy,' he adds.Stephen Ward is a freelance journalist

Fee sharing may help smaller firms by making it easy for provincial accountants and solicitors to set up one-stop practices

Tied accountancy law firms 'will stand or fall according to whether they offer something to the market'