Law firms could find themselves forced to hire teams of lawyers that they do not want when they take on new clients under 'ridiculous' employment rules that will come into force next month.
The extension of employment transfer rights would also make it difficult for clients to get rid of lawyers who give poor service, and could call into question the value of panel reviews, experts warned.
Under the new rules, professional services will now be caught by the Transfer of Undertakings (Protection of Employment) regulations (TUPE). Dedicated teams of lawyers who spend most of their time acting for one client would automatically transfer to the new law firm if the client decides to switch legal services providers. The lawyers would have the right to be employed under the same terms and conditions as before, including salary, bonus and holidays.
While the employees could opt out of TUPE if they do not want to be transferred, employers cannot. If a firm refuses to take on the extra staff, it could be sued for unfair dismissal.
TUPE expert Dr John McMullen, a partner at the Leeds office of Watson Burton, said: 'If a company that has an in-house legal department decides to wind that up, and put all its work with a law firm, there would be possible grounds for the employed solicitors to say they want to join that law firm.
'If you had an organised grouping of solicitors at a law firm devoted to one client, and that client said "I do not want this law firm, I will appoint law firm X", then TUPE 2006 could apply so that - contrary to what the client is expecting or wanting - it may find that the lawyers would have the right to turn up at the newly appointed law firm. The definition of "organised group" can be just one person.'
He added that the rules could lessen the benefits of panel reviews: 'If a client wants to change law firm because it has a problem with the quality of service, this could be quite irritating. TUPE is going to make it difficult to solve a problem with poor service.'
Carol Williams, head of legal at Northern Foods, said: 'This is an issue that clients will have to bear in mind in the future if they want to change their panel firms. The situation will be the same as for other services, such as cleaning. But professional services are about just that - it is often a question of service levels and individuals.'
Simon Henthorn, solicitor-advocate at City firm Reynolds Porter Chamberlain, said: 'This has not been thought out properly. For the big clients who have these dedicated teams, for example in magic circle firms, it will restrict their freedom of competition. It seems ridiculous that [clients] will be forced by the regulations to employ the same staff who provided [a poor] service.'
According to Sarah Linton, an employment partner at US firm Bryan Cave, the government had mooted an exemption from TUPE for professional services firms - but this was eventually ruled out.