Saturday, December 15, 2012

How the New Regulation of the Legal Profession Worked Out...

I've been trying to characterise what regulation in the UK meant for the legal profession, so I want to try out my version of what happened here to see if it makes sense.

The archetypal profession has been a self-regulating entity with state sanction. This was the case of the legal profession. Because of the mess the legal profession, or at least part of it, got itself into, government said something had to be done.

The combined effect of the Clementi review and government's Legal Services Act 2007 was to propose a fundamental shift in regulatory emphasis formulating a new symbolic order. Instead of self-regulation, external regulation would be imposed on an intransigent legal profession. Ineluctable almost.

If we turn to the Heinz-Laumann thesis on the legal profession, they suggest that the profession is divided not by work or specialization but client type. This led to the hemisphere categorization of the profession into individual and corporate hemispheres. All kinds of effects flowed from this--status tensions, lack of autonomy and so on.

Returning to the UK we see that the problematical element of the legal profession was the individual hemisphere not the corporate. However, since the legal profession likes to view itself as a homogeneous unit it is difficult to reregulate segments of it. So, in effect, the whole profession buys into the idea of change.

Apparently so whereas in fact something else happens. As the legislation is being debated intensive lobbying by a newly invigorated corporate sector results in the Smedley review suggesting corporate large law firms need special attention. This is followed up by the Law Society which asks the grand establishment figure of Lord (David) Hunt to review the legal profession. He takes on board Smedley's views and with the cooperation of the corporate firms creates a new risk based ideal called AIR (authorised internal regulation).

This is adopted. The force of it is that risk based entity regulation puts the onus on the firm. Which firms are best suited to assume this risk? The large ones, of course. But not the individual sector. They are too small and too erratic. They are the ones that people complain about--not the big firms.

With a clever stroke a new arrangement comes into play. With AIR the large law firms have recreated self-regulation within the apparent ambit of external regulation. The inability of the small firms to retaliate or counter these moves leaves them exposed to the chilling effect of external regulation augmented by the long stop of the Legal Ombudsman to sanction the malefactors (but not the big firms).

Thus we have external regulation for those firms that need it and self-regulation for those firms that seem not to. It shows the sophistication and power of the corporate law firms and their capability to create new symbolic orders. And in order to reinforce this distinction new institutions come into existence such as CityUK (headed by Clifford Chance's senior partner, Stuart Popham) and the Managing Partners' Forum (headed by newcomer DLA Piper's chairman, Nigel Knowles), both headed by the leaders of the world's biggest law firms.

That's my story.....

(If you wonder what the last line means, watch the Australian movie, The Castle. You won't regret it. One of the best law movies ever made.)


Sunday, December 09, 2012


A slight hiatus while I go to India, but not for the cricket. I will be at the GLEE* project conference, "The Future of Corporate Business in India and the Role of the Legal Profession."

I will blog and tweet from the conference.

(*GLEE=Harvard Globalization, Law and Emerging Economies project)