Speaking last week at an event hosted by the Law Society, justice minister Jonathan Djanogly stressed the importance of alternative business structures (ABS). He said: “I believe that the changing legal landscape should lead to a reinvigorated and more competitive legal services sector. The introduction of ABS in particular will allow for greater flexibility of professional services provision and businesses better equipped to respond to commercial pressures.”

The Legal Services Act 2007 reformed the way in which legal services are regulated in England and Wales. It allows for ABS, which will enable law firms to explore new ways of organising their businesses to be more cost-effective, permit different kinds of lawyers and non-lawyers to work together, and allow for external investment. Non-legal firms such as insurance companies, banks and estate agents will have the ability to link with legal firms by forming ABS firms and offering integrated legal and other professional services. The claim is that allowing new providers into the marketplace should lead to innovation and price reductions. This should result in more people being able to access legal services. Firms that are interested in developing new business structures will need to apply to the relevant licensing authority for a licence. While there is no obligation on a firm to become an ABS, competitive pressure might influence a firm’s decision.

In just over a year the first ABS firms will open for business. An efficient business model involving a small number of qualified lawyers, overseeing many paralegals, has already taken hold in fields such as conveyancing and personal injury, where much of the work is routine and process-driven. This trend will grow as non-lawyer providers enter the market next year, and the paralegal will become of greater importance. Though in essence they are people doing legal work without a full legal qualification, a core problem is that there is no accepted definition of what a paralegal is. Many legal practices could not survive without them, but their work is often undervalued and unrecognised. Another claim for ABS is that it will be easier to hire and retain high-quality non-legal staff, and ABS firms will be able to reward non-legal staff in the same way as they reward lawyers.

The ‘Guardian’ reports that, in a first for the UK, the Law Society of Scotland, in association with the Scottish Paralegal Association (SPA), has formally launched its registered paralegal scheme, introducing across the board competencies and adherence to a code of conduct for paralegals working with solicitors. Collette Paterson, deputy director of education and training at the society, says more than 120 paralegals have already applied to the scheme, which will not only help to credit the work they do but also introduce set standards and provide a defined career path, possibly linking up in time with the route to qualifying as a solicitor. The Law Society of England and Wales is reported to be currently investigating whether there is scope for it to develop a paralegal qualification.

More details can be found at:
http://www.justice.gov.uk/publications/docs/abs-fact-sheet.pdf
http://www.lawscot.org.uk/paralegals/
http://www.scottish-paralegal.org.uk/

Despite reservations expressed by the Office of Fair Trading (OFT), the Bar Standards Board (BSB) is currently piloting an aptitude test that assesses analytical and critical reasoning, and fluency in the English language. Reasons given by the BSB for introducing the test included the belief that the standard of admission to such an expensive course is too low, particularly regarding fluency in English, concern that too many students are taking the course with no realistic prospect of pupillage, and the wish to reduce the numbers of Bar students to manageable proportions.

The BSB conducted a voluntary pilot last year, in which 182 people took part. A second pilot is compulsory for all those starting the course this month, which is intended to provide a more detailed examination of the suitability of the proposed test as well as enabling the necessary sampling and analysis to ensure that the test is fair for all applicants. The BSB hopes that the aptitude test will be fully implemented for those starting in 2012. According to website Legal Futures, Nigel Cooper QC, chairman of the bar professional training course sub-committee, said: “The BSB wishes to ensure that the aptitude test is fully piloted prior to its introduction and is therefore proceeding cautiously. The first pilot was a limited exercise, designed to consider the general suitability of the test. A second pilot will now be conducted in autumn 2010, as planned, to enable more detailed testing and the accurate setting of the pass threshold. This is necessary due to the need to ensure the aptitude entry test will be fit for purpose before it is finalised and becomes an absolute entry requirement.” In its report to the Ministry of Justice last year, the OFT said that the BSB’s aptitude test was overly restrictive and anti-competitive, would have a significant effect on competition and its aims could be achieved by a less restrictive route.
 
It now appears that the Law Society is playing catch up with the BSB and is considering an aptitude test for entrants into the Legal Practice Course (LPC). Legal Futures report that the Society has appointed a consultant to investigate whether to require prospective students to pass a test before being allowed to start their vocational training. The proposals have been developed by the society’s education and training committee, at the request of chief executive Des Hudson, because of the increasing disparity between the number of LPC graduates and the number of available training contracts. Details of the consultancy project are still being finalised, but it is hoped that a report will be received by late 2010 or early 2011. The aim is to stem the tide of students flooding into the field only to find once they have finished the LPC that there are simply no jobs. It is argued that such a test would stop students from incurring large expense (the LPC can cost up to £12,500) in return for little reward, and help law firms maximise the value of the time invested in training. The OFT’s suggestion was that the BSB test should be optional rather than compulsory, and that could apply to any test for the LPC. Ultimately any LPC test would be for the Solicitors Regulation Authority to introduce, but if students still chose to take the LPC despite the test suggesting that it might not be for them then that would be their responsibility.

The full text of the OFT report “Application by the Bar Standards Board to Amend its Training Regulations” is at:-http://www.oft.gov.uk/shared_oft/reports/professional_bodies/oft1086.pdf

“Let’s not forget that the bankers are the next-door neighbours of the politicians. Most people can see the picture: the bankers grease the politicians’ palms, the politicians bail out the bankers with public funds, the bankers pay themselves fat bonuses and loan the money back to the public with interest. It’s essentially a crime spree that benefits a social elite at the expense of many millions of victims.”

Much of this radical rhetoric will be agreed by many people, even if all disapprove of the source and condemn utterly its actions and threats. It comes from the leaders of the extreme Real IRA in an exclusive interview with the ‘Guardian’. Remarkably, on the same day that this interview was published, that doyen of the capitalist system, the Governor of the Bank of England, Mervyn King, came up with much the same analysis. Braving the lion’s den of the TUC conference he told delegates that bankers and policymakers were responsible for the financial crisis and admitted that the financial sector and politicians were to blame. He expressed his anger at bank bonuses and pay and declared that banks should never again be allowed to get into a state where they damage the prospect of recovery. He sympathised with delegates and the wider public at their anger at the bonus culture that still pervades the banking sector. He said: “When large bonuses are paid to people in organisations that only two years ago were bailed out by the taxpayer, it becomes somehow harder to understand.”

He placed the blame squarely on the financial sector for the economic crisis of 2008, claiming that the structure of financial sector bonuses had encouraged excessive risk-taking. He admitted that the Bank of England, along with the financial sector and other policy-makers, had let go of the steady growth, low inflation and low unemployment that was in their grasp. “We let it slip,” he told delegates. “We that is, in the financial sector, and as policy-makers – not your members, nor the businesses and organisations around the country which employ them.”

He concluded that it was vital the government set out a clear plan for reducing the deficit, adding that that it was perfectly reasonable to debate the precise speed of deficit reduction. What he did not say was that, although the acknowledged culprits are the bankers and politicians, it is not them who will pay the price. Widespread cuts will cut a swathe through public expenditure and employment. In the legal field this will include swingeing cuts in the legal aid budget, the closure of 157 courts, the loss of training contracts, and much more, all at a time when demand will be greatest. There seems to be clear evidence that the poorer sections of society will suffer disproportionately from the cuts, but it was ever thus. In the words of the old song, “it’s the rich what gets the money and the poor what gets the blame.”

Bribery and corruption, as a subject, is much in the air at the moment with the current focus on betting scams in cricket and other sports. So it is perhaps appropriate that legislation is set for a radical change when the Bribery Act 2010, which received Royal Assent in April as one of the last pieces of business by the previous government, comes into force on 1 October.

The new Act is widely seen as a response to the BAE Systems case, where the prosecution against the defence company was dropped after the intervention of Lord Goldsmith, then attorney general. Earlier this year, BAE agreed to pay £300m in fines after signing up to a plea bargain with Britain’s Serious Fraud Office and the US department of justice. But the case has had a long-term impact on Britain’s reputation as its position in the international “corruption index” has slipped to 17th, behind Japan, Hong Kong and Austria. A survey in 2006 by Control Risks, a consultancy, estimated that a quarter of UK-based international companies have lost business to corrupt competitors in recent years, while figures from the World Bank suggest that bribery adds up to 10% to the total cost of doing business globally.

The Act is intended to make it significantly easier for enforcement agencies to bring successful prosecutions, including against UK corporate entities, in respect of corruption offences committed at home and abroad. The Act introduces four new statutory offences – giving or receiving bribes, bribery of foreign public officials and failure of a commercial organisation to prevent bribery by persons working on their behalf. This last offence is entirely new and is a strict liability offence. The Act will have a considerable impact on foreign companies who do business in the UK, particularly those which have a place of business in the UK and/or UK employees. It is not limited to acts of bribery committed in the UK by British citizens or commercial organisations. It extends to acts committed anywhere in the world by UK corporates or individuals if the act of bribery would amount to an offence in the UK.

Penalties for individuals under the Act will be more severe than they are at present. The maximum term of imprisonment is increased from seven to ten years, in line with other fraud offences. There is also the prospect of an unlimited fine for individuals or commercial organisations convicted of the two general bribery offences or the offence of bribing a foreign public official and for organisations convicted of the offence of failure to prevent bribery. The only defence to a corporate entity’s liability for bribery committed by an individual acting on its behalf is that “adequate procedures” designed to prevent bribery are in place. The Secretary of State will issue guidance as to what “adequate procedures” are.

The current laws, contained in a combination of statutes dating back to the 19th Century and the common law, will be abolished when the new Act is brought into force. The Act, however, does not have retrospective effect so will apply only to offences committed after it comes into force. In the meantime the old bribery laws will have continuing relevance.

The full text of Bribery Act 2010 can be found at:

http://www.legislation.gov.uk/ukpga/2010/23/contents

Explanatory Notes are at:

http://www.legislation.gov.uk/ukpga/2010/23/pdfs/ukpgaen_20100023_en.pdf

A Call for Evidence is a consultation paper containing proposals for change and new policies, which invites the public to comment within a given time period. The Ministry of Justice has recently announced two such consultations on European Commission initiatives.

The first seeks views on the EC’s Green Paper on potential changes to contract law. Published on 1 July, it sets out a number of proposals for progressing towards a European Contract Law for consumers and businesses. The Green Paper is based on the premise that the variety and divergence of contract laws operating in each of the EU Member States hinders the smooth operation of internal markets and makes dispute resolution across EU borders difficult. It looks at whether such situations require a European Union level response and details seven possible approaches ranging from maintaining the status quo through to the creation of a mandatory common code of contract law.

Justice Minister Lord McNally said: “The Government wants to hear views to ascertain whether changes to cross-border contract law are needed and to assess what the impact of each of the European Commission’s options will be. It is important that the Government provides a well-evidenced response to the European Commission and I encourage all those with an interest to share their views.” Closing date for contributions is 26 November 2010. The full text of the EC Green Paper can be found at:-

http://ec.europa.eu/justice_home/news/consulting_public/news_consulting_0052_en.htm

The second Call for Evidence seeks evidence about how the European Data Protection Directive 95/46/EC and the Data Protection Act 1998 are working, and their impact on individuals and organisations.

The Directive was conceived and negotiated during the early 1990s. This was at a time when computer technology was primitive by today’s standards and the internet was in its early stages. Since the Directive came into force, the last fifteen years have seen great advancement in technology, leading to more sophisticated ways of conducting businesses. The purpose of the Call for Evidence is to seek information about areas of the Directive (and therefore the DPA 1998) that may be out of date or could be improved, and also those areas that are working well and should be retained. With the growth of cross-border direct marketing and e-commerce, increasing numbers of marketers are gathering, processing and managing the personal data of individuals from across Europe and elsewhere. All of this increases opportunities for personal data originating in one country to be processed in another. And, with these advantages, there are also a number of risks, such as the potential to misuse personal data overseas in countries with less robust legal frameworks, causing substantial damage.

At the same time as launching this Call for Evidence, the Government has published a provisional post implementation review impact assessment of the Data Protection Act 1998, on which MoJ would also welcome comments. The full text of this review can be found at:

http://www.justice.gov.uk/consultations/docs/post-implementation-review-impact-assessment-2010.pdf

Closing date for substantive contributions is 6 October 2010, and the full text of the Call for Evidence can be found at:

http://www.justice.gov.uk/consultations/docs/dpa-call-evidence-02-07-2010.pdf