Solicitors could tell watchdog: 'We're off the case'

Giving corporate lawyers the right to inform regulators when they cease acting for a client might fulfil the profession's obligations to blow the whistle on dubious client dealings, top practitioners told last week's International Bar Association conference, held in Durban, South Africa.

Richard Fleck, City firm Herbert Smith's worldwide practice partner, told a session on the role of lawyers as gatekeepers that there was 'some merit in developing a structure of reporting the fact of ceasing to act rather than the reason'.

This would alert the regulator to the possibility of a problem, which it could investigate.

At present, non-contentious lawyers cannot inform regulators unless they deal with them in their work for the client.

Margaret Tayhar, a partner in the Paris office of top US firm Davis Polk & Wardwell, said the idea of 'waving a red flag', as delegates described it, should be taken up by law societies and bar associations.

Mr Fleck said it could be achieved by a change in professional rules or by legislation.

The idea received initial support at the session.

Irish solicitor John Fish, president of the Council of Bars and Law Societies of Europe (CCBE), said it was interesting idea which deserved further study.

Speaking to the Gazette this week, American Bar Association (ABA) president Alfred Carlton said it was 'something we want to look at'.

The session mainly concentrated on the effect of the US Sarbanes-Oxley Act and concerns that the Securities and Exchange Commission may seek considerable powers to regulate lawyers.

Mr Carlton - who was not in Durban - said the ABA was about to enter a 'constructive dialogue' with the SEC about the Act to ensure that it did not impinge on state disciplinary systems for lawyers.

It is thought that if the ABA does not receive a satisfactory response from the SEC - the chairman of which, Harvey Pitt, has questioned the effectiveness of the disciplinary systems - it could launch a legal challenge to that aspect of the Act.

Delegates said the profession must respond to this threat.

'Strong bar leadership and effective self-regulation is the way forward,' said Stephen Revell, until recently the US managing partner at City giant Freshfields Bruckhaus Deringer.

Mr Fish said: 'All this year has proved how important the core values of the profession are.

Bars have a significant responsibility to ensure we maintain the highest standards.'

Ms Tayhar told the session that US lawyers had become 'arrogant' and that competition in the US had led to an erosion of standards, which in turn had led to the current crisis facing the profession post-Enron.

'Economic competition has led to some in the US prostituting themselves, and that includes, I'm sad to say, American lawyers,' she said.

Mr Carlton said: 'I'm not ready to indict my fellow lawyers.

If they have transgressed, they will be called to account.'

Session chairman Willem Calkoen of top Dutch firm Nauta Dutilh, said European lawyers had also been arrogant and that they needed to follow ethical rules better than they have done in the past.

Neil Rose