THE GAZETTE'S TEAM OF STAR-GAZERS GOES TO THE FRONTIERS OF THE ISSUES LIKELY TO AFFECT THE PROFESSIONThe coming year promises to be one of great change in the legal profession, whether it be for City high-flyers or village sole practitioners.The previous 12 months will be remembered as, among other things, the year in which the Human Rights Act 1998 became law, Clifford Chance became the world's largest law firm, solicitors' indemnity insurance returned to the open market, Claims Direct and its clones popped up on television screens every few minutes, salaries for young lawyers in the City went crazy, and rights of audience opened up fully.As our look ahead at the year shows, one of the most obvious landmarks in 2001 will be the reform of criminal legal aid on 1 April, with the introduction of the criminal contract - assuming the Legal Services Commission can persuade solicitors to sign it - and the pilot Salaried Defence Service.
Lord Justice Auld's review of the criminal justice system is set to report early in the new year.The Auld review is not the only one to look out for; the reviews of tribunals and company law should keep many lawyers interested, while the Office of Fair Trading's review of the professions could have serious implications for solicitors and barristers alike.April too will bring with it implementation of the Limited Liability Partnership Act 2000.
It could be a big year for partnership with the Law Commission's proposals to reform partnership law and the possible introduction of 'legal practice plus', which will allow law firms to appoint non-lawyer partners.Government plans to introduce a compulsory sellers' pack, moves towards electronic conveyancing, and the decision by bulk conveyancing firm Marsons to withdraw from residential work, all give high-street solicitors the opportunity to take the initiative in the property selling game.The National Land Information Service - which will bring all property searches together at the click of a mouse - should start operating in a limited fashion in the next few months.This could lead to a secure communications network between solicitors for the exchange of documents before the end of the year.And there will be plenty more to tax the mind and the patience such as: the transfer of responsibility for law firms' financial services work from the Law Society to the Financial Services Authority; confirmation that part II of the Family Law Act 1996 concerning no-fault divorce is to be ditched; introduction of the Trustee Act 2000; and the evolution of the conditional fee market.Law Society reform should also be a feature of 2001 once the results of the recent consultation exercise are examined and put before the Society's ruling council.
The Office for the Supervision of Solicitors (OSS) enters a new phase too, having met the government's target of reducing its caseload to 6,000 by December 2000.But many of these crystal-ba ll predictions might not happen if there is a general election in the spring and a new government is elected.
Even if the law does not loom large in any campaign, lawyers will, from the top of the government to the president of Plaid Cymru and dozens of ministers, backbenchers and candidates, the profession will continue to make the news.AMBITIOUS FIRMS ARE PRIMED TO OPEN NEW FRONTS IN EUROPE -- AFTER A YEAR CHARACTERISED BY MERGERS, ANNE MIZZI TIPS THE MOVERS AND SHAKERS FOR 2001New Year's day is always a popular day for a law firm wedding.
This year's highest profile blushing brides are Linklaters and Warner Cranston, which both plumped for swarthy foreign grooms.It is an appropriate way to follow a year littered with international mergers.
And early signs indicate the vogue for cross-border link-ups - mainly in Europe as firms seek true pan-European coverage - shows no sign of abating.UK firms are now getting the sort of reputation abroad that used to be reserved for the law firms associated with the Big Five accountants.
The Anglo-Saxon invasion has hit hardest in the German and Dutch markets this year, while Italian and Spanish firms have also fought hard for their independence.
Battles have also broken out in Scandinavia and eastern Europe.
The onslaught will continue.Eversheds is aching to get its teeth into Germany, Italy and Spain, now that it has established a unified management and financial structure.
And Lovells has already made headway in Germany, the Netherlands and Italy in 2000, and is said to be in advanced negotiations with a Spanish firm.
DLA is another firm making no bones about its expansionist intentions.Theodore Goddard is expected to advance into Germany and Italy in the coming months and Osborne Clarke OWA and SJ Berwin are going great guns in Germany and Scandinavia.
If the close liaison between Herbert Smith and Germany's Gleiss Lutz Hootz Hirsch is anything to go by, a merger between these two top-level firms should not be far off.Following Linklaters' merger with alliance firm Oppenhoff & Radler, the only remaining top tier firm in Germany is Hengeler Muller Weitzel Wirtz, a firm which is firmly in bed with Slaughter and May - although both say they are just good friends.
Slaughters shows no sign of ditching its 'best friend' strategy.
But by deigning to develop its own international network, keeping its profitability up and remaining independent, it remains the most eligible and prestigious magic circle firm for a New York cruiser.While Europe is top of the agenda for many firms, others have set their sights across the pond.
Clifford Chance became the first UK firm to merge with a US firm a year ago, followed by Titmuss Sainer Dechert.Ashurst Morris Crisp hit the headlines when its merger with Latham & Watkins collapsed last year - showing the cultural perils of attempting to bite off more than can be chewed.
Firms that opt for a much larger or much smaller option are more likely to be successful is the lesson to be learned from last year's matches.
Warner Cranston joined forces with Pittsburgh firm Reed Smith.
The growing band will soon be followed by Rakisons, which is merging with Steptoe & Johnson.The scramble for mergers with the best international firms shows no sign of slowing.
For those firms in alliance or friendship arrangements, the name of the game is to shore up those relationships and ward off rival interlopers.BATTLE WITH 'BIG BROTHER' LOOMS AS HUMAN RIGHTS MARCH ON - EMPLOYMENT AND PRIVACY ARE TWO AREAS WHERE LEGISLATION MAY BE TESTED, SAYS JEREMY FLEMINGFollowing the introduction of the Human Rights Act 1998 last year, many practitioners in this field will be looking to see the Act bed down more fully this year.Of the many areas into which the Act will continue to impact, employment is likely to be the biggest.Sara Leslie, head of the human rights and discrimination unit at Irwin Mitchell's London office, says one area where further clarification will be forthcoming is the vexed issue of whether sexual orientation can be included as part of sexual discrimination.An employment tribunal in Scotland this year established this, but the case is now being appealed.
Ms Leslie says she would not be surprised if this case ends up in the House of Lords by the end of the year.Another area to watch, she predicts, is privacy in the workplace.
She says it is likely that there will be a challenge by employees working in the public sector, relating to electronic surveillance by their employers.There are, she says, a number of cases emerging from dismissals for improper use of the Internet that might raise this issue.
She also maintains that - depending on which public sector bodies find themselves caught up in an action - privacy may also come into conflict with the Official Secrets Act, which would make for an interesting battle.Issues of privacy will certainly make for high-profile news in the City where security over information has been tightening.
Sales of anti-surveillance equipment went up last year, and Ms Leslie says: 'There is a wall of secrecy around City employees, who are scared to raise issues.'The issue of privacy will also be raised when judgment - expected early this month - is given in a case brought by Jon Venables and Robert Thompson, the killers of James Bulger.The two boys have sought permission for an injunction preventing the press from disclosing their identity and whereabouts when they are released from prison.
The case is a key showdown between the competing articles of the European Convention on Human Rights protecting privacy on the one hand, and freedom of expression on the other.Another group under the spotlight is the victims of crime.
There is currently no clear remedy under existing common law for those bringing an action against the police for their failure to act, or their negligent acts.
This situation could change during the course of the year.The European Court of Human Rights in Strasbourg has already established - in the Osman case of 1999 - that the UK police's immunity from civil suits is incompatible with the Convention.A spokesman for Bhatt Murphy, London-based specialists in litigation against the police, said: 'We are looking forward to the stripping away of current blanket immunity of the police, in respect of negligence claims brought against them by victims of crime.'LAW FIRMS TO MOVE INTO THE BRAVE NEW WORLD OF MDPs -- SUE ALLEN EXAMINES HOW LINKED PARTNERSHIPS COULD CHANGE THE LANDSCAPE OF LEGAL PRACTICEAfter years of waiting, it looks as if the Law Society will finally take its first tentative steps towards allowing multi-disciplinary partnerships (MDPs) this year.The first model to get off the blocks will be 'legal practice plus'.In December, Society President Michael Napier went as far as to say that he hoped firms would be able to opt for legal practice plus before the end of 2001.The legal practice plus model would see non-solicitors joining firms as partners and entering into a contract with the Law Society, agreeing to be bound by its professional rules (see [2000] Gazette, 15 December, 1).Paul Venton, chairman of t he Law Society's MDP working party, says that although questions surrounding the preservation of legal professional privilege remains a challenge, he hopes they will not 'derail the process'.Linked partnerships, a second scheme devised as an interim step towards full MDPs, is stalled, pending a full review of the Law Society's rules, specifically that on fee-sharing.Linked partnerships would build on the existing alliance model, allowing firms to link with other professional firms, for example accountants, and to enter a fee for the first time.Alison Crawley, the Law Society's head of professional ethics, says she hopes a solution can be found to deal with fee-sharing so that linked partnerships can come in at the same time as legal practice plus.How far the Society goes with changing the rules could, in effect, change the face of legal practice.
The Law Society could do away with the rules altogether, which would, for example, allow Sir Richard Branson to take a franchise on high-street firms branded under Virgin Law, or the changes could be less radical and allow fee-sharing just with professional firms, she explains.Mr Venton says linked partnerships raise more complicated questions, such as passive investment.
Banks and accountants could effectively own the businesses, which brings into question how solicitors can be ring-fenced to ensure the independent provision of legal services.As the Law Society takes its first steps towards allowing MDPs, the same cannot be said of the rest of Europe, where a more restrictive attitude prevails, as indicated by the generally negative disposition of the Council of Bars and Law Societies of Europe.But pressures are all around: the European Court of Justice will this year hear a challenge mounted by Big Five accountancy firms PricewaterhouseCoopers and Arthur Andersen against the Dutch Bar's ban on MDPs.
Then there is interest from regulators, such as the Office of Fair Trading and even the European Commission.
Above them is the World Trade Organisation, currently investigating cross-border legal services.
A ban on MDPs must be shown to be proportionate to achieve justifiable policy goals.Elsewhere, Canada and Australia will push forward with MDPs while the American Bar Association - which voted against them last year - is likely to have to revisit the decision, perhaps as early as this summer.COUNTDOWN TO JUDGMENT DAY OVER CONTRACTS -- SUE ALLEN ON HOW RELUCTANT SOLICITORS MAY SCUPPER CRIME TIMETABLECriminal contracting will undoubtedly continue to dominate the horizon of publicly funded work this year.Although redrafted contracts arrived on solicitors' desks before Christmas, the real crux will come when firms are asked to sign on the dotted line - scheduled for early February.On 26 January, the consultation period on remuneration rates and pay structures will end.
There are no additional funds and the consultation is looking at redistributing existing funds.If criminal solicitors are to get their first pay rise since 1992, then any additional money will come from the Lord Chancellor's Department, not from the Legal Services Commission.
Any decision to increase the budget will have to be soon if the commission is to have time to amend rates before April.What would derail the timetable would be firms refusing to sign the contract.
At the end of last year, Law Society President Michael Napier wrote to firms urging them not to sign until the contracts were thought to be 'fair and workable'.Rodney Warren, chairman of the Society's access to justice working party, has stated, often and loudly, that sticking to the timetable is not the concern of practitioners.'We, as lawyers, don't give a damn about the timetable, if there is going to be a new working arrangement, it has got to be done fairly and properly, however long that takes,' he said recently.Richard Collins, head of the commission's criminal defence services, concedes that although the decision on dates rests with the government, the commission would have to make a judgement on whether or not to ask firms to sign if it looked as if many were going to refuse.'It is highly unlikely that we will send out the contracts if they are not going to be signed,' he says, adding: 'I still feel that it is all deliverable and that we have already come a long way.'Next year will also see the introduction of individual contracting in high-cost cases - those with costs above £150,000 or likely to last more than 25 days in the Crown Court.
A rolling-out of contracting for Crown Court work is scheduled for 2003.A further seismic shift in the practice of criminal law will also come when the Salaried Defence Service comes into being.
The commission hopes that its first three pilot offices will be running by April.
Six offices are planned for the full four-year pilot.Although other practice areas will be less affected by changes to public funding this year, the final part of last year's civil legal aid overhaul will also take effect in April when all remaining work will come under contracts for fully certificated work.FSA GETS TOUGH TO CLEAN UP MONEY LAUNDERING SUSPICIONS -- THE FINANCIAL SERVICES ACT 2000 WILL HERALD SWEEPING NEW POWERS, DISCOVERS JEREMY FLEMINGWhen the Financial Services Act 2000 comes into force next year - the exact date has not yet been set - one area that will be strongly affected is money laundering.
Currently, the British money laundering regime consists of various Acts (Drug Trafficking Act 1994, Criminal Justice Act 1988, Prevention of Terrorism Act 1989), which criminalise assistance in, and failure to report knowledge or suspicion of money laundering.In addition, the money laundering regulations require law firms and other businesses to put systems into place to detect and prevent money laundering.
These protect individuals from 'failure to report' offences, provided that they report to an appropriate person - the money laundering reporting officer (MLRO) - within their businesses.The MLRO then reports to the National Criminal Investigation Service (NCIS), in the event that there are suspicious transactions.
This makes the current system reliant on the level of disclosures and the efficiency of NCIS.
NCIS has regularly complained about the lack of disclosures it receives from law firms.The FSA will issue new money laundering rules and monitor their compliance.
These will be published in the near future following a consultation period.
The FSA's financial crime liaison unit will connect more strongly with NCIS.Businesses' - including law firms' - MLROs will be required to produce annual reports on their procedures and these will be available to NCIS.
In addition, the FSA will have investigative powers which it can use if NCIS believes that an organisation wilfully fails to report suspicious circumstances.Currently, lawyers can only be prosecuted for failing to report drug-trafficking offences; however, plans to unify all money-laundering regulations, announced last month, means that this exposure could be widened.
Also a reasonableness test for suspicion is planned, rather than the current test of actual susp icion.Another threat to lawyers comes from the second money laundering directive currently before the European Parliament.
Reporting obligations are likely to be extended to planning or carrying out financial transactions where legal proceedings are not involved, although probably not to initial advice, as originally planned.There is much to play for as the money laundering regime goes through the cleaners this year.THOROUGHBREDS WARY OF LEAP OVER LIMITED LIABILITY HURDLE -- MAJOR LAW FIRMS HAVE RESPONDED CAUTIOUSLY TO PARTNERSHIP LEGISLATION, WRITES JEREMY FLEMINGThe Limited Liability Partnerships Act 2000 is scheduled to come into force on 6 April - to coincide with the end of the financial year.
however, there are doubts that the likes of Companies House will be ready in time.
Nonetheless, law firms have been on notice for some time about its impending arrival, and the potential pros and cons of using the new business vehicle.There is, however, no clear sign of how many will make the jump, at least before they see how others are coping with it.Jeff Triggs, a partnership specialist at City firm Slaughter and May, says: 'I'm not sure that LLPs are quite the panacea that they're being touted as.
The largest firms are unlikely to take them up immediately.' Mr Triggs predicts that medium-sized firms may be the first to make the leap.Tony Sacker, a partnerships expert at City firm Kingsley Napley, says that although many law firms 'keep their cards very close to their chests', it is more likely that the large accountancy firms will be the first to become LLPs.The primary benefit of LLPs is, obviously, limited liability for the partners not involved in a claim.
Firms will have to balance their desire for this against the publicity requirements and corporate restructuring demanded by the Act.
'Ultimately,' says Mr Sacker, 'accountancy firms have larger professional negligence claims and it's therefore more worthwhile for them to become LLPs.'If the larger firms are backward in coming forward, what of smaller practices? Tony Twemlow, a partnerships lawyer at Liverpool firm Cuff Roberts and former president of Liverpool Law Society, says some smaller firms may be tempted into becoming LLPs, not because of the chances that the vehicle will give their businesses, but as a means of damage limitation.He explains: 'Here in the north- west many smaller firms are genuinely worried that they could go bust following the legal aid reforms.
It could be that firms which fall into this category look to LLPs as a means of protecting partners against the worst.' One area of interest is the effect that LLPs will have on the insurance of partnerships.
Practitioners will be watching to see whether some partnerships - especially smaller ones - underwrite themselves for less as LLPs than they did as partnerships.Whether or not firms opt to become LLPs, the legal world will certainly be changed next year by what Mr Sacker describes as 'the arrival of a new animal'.
He says that across all departments of all firms, lawyers must acquaint themselves with this new animal: how to sue it; how to contract with it; how it is taxed; how it is run.
LLPs will be a major player on the legal landscape of 2001.
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