To share or not to share?

Following his comments in last week's News Analysis, Edward Nally puts the case for feesharing short of multi-disciplinary partnerships

Multi-disciplinary partnerships may be some way off without either primary legislation or a change to the Law Society charter.

But while the Law Society Council wrestles with that particular alligator, solicitors could still close the gap with other professionals by sharing fees.

But for that to occur our own professional rules must be relaxed.From consultation responses it is clear that many practitioners see the issue as a direct clash between commercial pressures and the retention of professionalism.

With the ban in place, many say the profession is purer and safer from external pressure.

For example, claims farmers may not take a share of fees from solicitors, and through that means perhaps take a share of a client's damages.

Conveyancers, it is said, are not the puppets of the financial institutions.

And without the ban, commercial firms that might raise capital by ceding a share of profits to an institution, could find commercial partners less forgiving than solicitor partners when a profit dip occurs.Although these arguments are well rehearsed and have much merit, there is another side.

Many law firms are screaming for the opportunity to be entrepreneurial.They see the restrictions as being against the public interest because they hold solicitors back in an ever more competitive marketplace.

Some argue that there are occasions - particularly in relation to major project work - where the ability to share fees between different consultants might enable solicitors and other professionals to provide an overall lower fee to clients.

Some even argue that if the Law Society fails to take action now, the provision of legal services to private clients will shift from a regulated legal profession to an unregulated business which will constantly evolve to to avoid regulation.I wonder what the public thinks about the ban? Even if people are aware of it, they might be mystified at the logic behind prohibition.

How is it in their interests?The Law Society's rules review will maintain core duties on all solicitors.

These will underpin the need to maintain independence, reinforce the need to act in the best interests of clients, and spell out the need to avoid conflicts of interest.

The reputation and integrity of the profession will also be a fundamental core duty, but the Society's working party takes the view that it should not stop there.It has concluded that further safeguards would be necessary.

For example, a fee-sharing arrangement should not amount to a partnership with a non-lawyer.

Separately, there must be a full and proper disclosure to the client of the existence of a fee-sharing arrangement, and if the payment is related to clients' affairs, transparent disclosure of the amount of the payment.It might also be said that fee sharing should only be allowed with certain specified professionals, perhaps where there is a recognised model of regulatory control on the other professionals concerned.

And there could be additional safeguards - such as a maximum cap on the percentage of fees or gross profits paid to third parties, and that principle could extend to the amount of any introduction or referral fee permitted.This is easily one of the most difficult topics the Law Society Council has to face when it debates the issue in March and beyond.

It may be one of those issues where there is no right or wrong answer.Whichever way the decision goes, many will be upset.

Change is never comfortable, but if resisted there is a feeling of stagnation.

My view is that the profession must be brave and start walking down that long tunnel in the direction of the bright light at the end.

I don't believe that it is the express train coming in the opposite direction.Edward Nally is chairman of the Law Society's regulation review working party