Annual Remuneration Conference 2008 - Conference Report

THREE hundred delegates attended this year’s Annual Remuneration Conference at the Hotel Russell in London on Saturday 21st June. This year’s proceedings were focused on looking to the future: the twin legacies of Sir David Clementi’s review of the regulation of legal services, culminating in the Legal Services Act 2007, and of Lord Carter’s Legal Aid Procurement Review were reviewed and delegates were challenged to consider how they would run their businesses now that the context of the legal services market had fundamentally changed.


Tim Dutton QC, the Chairman of the Bar, welcomed delegates to the event and set out the many important and contentious issues currently facing the Bar and the work being undertaken in relation to them. Michael Bowes QC set out the work specifically being undertaken by the Bar Council’s Remuneration Committee, and its various sub-groups.

Professor Stephen Mayson discussed the future of the Bar as a referral profession. He suggested that barristers have consistently been given a clean bill of health but that this could not be relied upon; a referral profession needed referrals and, whatever future direction the Bar takes, those referring business to it will be changing. The current business structure of solicitors’ firms was seen by many as expensive. For procurers of services such as the LSC, the market could be viewed as ineffective. There was no doubt that some would regard the ability to form Legal Disciplinary Partnerships (LDPs) as an opportunity. Whilst the model might seem problematic, it was likely to reduce the number of referrals to the Bar.

As well as LDPs, there would be other new entrants to the market: the AA, HBOS and the Co-op had all already set up legal services arms and the infiltration of these Alternative Business Structures (ABSs), the oft-mentioned Tescolaw, was likely to have a profound effect too. Given that ABSs would be permitted to be 100% owned by non-lawyers, both the approach and culture of the provision of legal services was likely to change as well as a reduction in the usage of lawyers except for ‘reserved legal activities’. He emphasised that the Bar would have to continue to deliver value and nurture existing business relationships if it was to prevent professional attrition in a new world where there would be greater choice for the users of legal services and a permissive regime for delivery mechanisms for suppliers. [The article on which Professor Mayson’s presentation was based was published in the July edition of ‘Counsel’.]

Professor Martin Chalkley discussed the positive steps the Bar could take to deal with the inevitable changes in the future, the challenges of which it must meet with imagination in order to survive. He emphasised that for the Bar, getting the methods of payment right was almost more important than the level of payment. Traditionally, he argued, the Bar had been concerned with ensuring that it received a decent slice of the cake on offer; instead the Bar should focus on the size of the cake rather than the size of the slice. The good news was therefore that the self employed status of barristers and the referral nature of the profession need not be squeezed out in the new look legal services market, but the Bar had to give real thought to current remuneration schemes. Whilst, from the market’s perspective, advocacy would continue to be viewed as a scarce and valuable resource, there was no doubt that the threat to the Bar from ‘big business’ would increase.

It had been generally shown that remuneration schemes based on hourly rates sustained quality but drove up costs. Fixed fee regimes ensured lower costs but low quality. Although there was often some attraction to the security offered by hourly rate systems, in reality they often became a prison for service deliverers, bringing with it micro-management of those actually doing the work and removing all aspects of ‘professional discretion’. He therefore suggested that the Bar needed to give greater consideration to the pricing of barristers services rather than time in order to understand the value of those services and set their price.

During the lively question and answers following the keynote session, Professor Mayson emphasised that his presentation should not be considered a pessimistic view of the future: while there might be an oversupply of providers of ‘reserved legal services’ currently, the Bar had to indeed rise to the challenges of providing genuine value and offering different services. Professor Chalkley agreed that there were indeed, in his view, other unexploited markets for the Bar to explore.

There was general consensus that legal practitioners’ contributions were currently undervalued by government and that some point the international standing of the system in England and Wales would be adversely affected. Professor Mayson emphasised that that this was all the more reason why lawyers should not be disconnected from those who paid the fees and that the Bar had to clear where, how and why it added value. He also referred to the ‘delicate legal ecosystem’ and the fact that those tinkering with it did not appreciate the possibility of the ‘butterfly effect’ that tinkering could have.

Concluding the morning session, Jalil Asif (supported by Bar Council Treasurer Andrew Mitchell QC) presented an extensive history and explanation of the on-going effort and rationale behind the New Contractual Terms of Work, currently being developed by an Implementation Committee, reporting to the Bar Council’s Remuneration and General Management Committees: Formerly, the Bar worked on a non-contractual honorarium basis. In 1988, the Terms of Work and the Withdrawal of Credit Scheme were introduced to provide a degree of protection for the Bar. Until 1998, the Law Society assisted with this protection by making it a matter of misconduct for a solicitor not to pay a barristers money owed for work done. However, in 1998, this ceased, although a Withdrawal of Credit notice made against a solicitor by the Bar Council was still accepted as prima facie evidence of misconduct. The removal of this protection led to the introduction of Contractual Terms of Work in 2001, offering the ability of the Bar to sue for outstanding fees. At about this time, the Law Society took the view that the Withdrawal of Credit Scheme was anti-competitive. Geoffrey Vos therefore began negotiations with the Law Society over the development of joint contractual terms of work.

In June 2003, the Law Society withdrew from these negotiations. The Bar Council, however, consulted the profession on its own individual terms of work. In late 2004, the joint negotiations with the Law Society resumed and by November 2005 it was approved in principle to move forward with them. However, to do so entails associated amendments to the Code of Conduct. In particular, it will be important to determine how the new terms relate to the cab-rank rule, to ensure that this rule is not diminished but also that the Bar is not forced to take instructions on unfair terms. The new terms are themselves quite long so the Implementation Committee spent 4-5 months looking to see if they could be reduced to just core terms; but this proved problematic. The proforma terms have largely been agreed. The remaining issues being addressed are:

1. Whether or not to make the terms mandatory – there are major problems in making the terms mandatory in relation to competition law. However, it is believed that the major incentive to use the new terms will be the fact that barristers who do not will not be able to fall back on the replacement to the Withdrawal of Credit Scheme or use the Bar Council’s fees collection service.
2. The pros and cons of moving from a system of rolling fee notes to invoicing - Positives for invoicing include:

  • easier to understand for many clients
  • easier to challenge fees
  • can enforce payment against invoices rendered
  • can charge interest on outstanding invoices

The main negative in relation to invoicing is the potential knock-on effect in relation to VAT treatment i.e. it becomes payable when the invoice is rendered not when the fee is received. 3. Solicitors may begin to try to insert clauses enabling payment to the barrister only when they are paid by the client. 4. Limiting professional liability to the client could be incorporated. The new terms should have been introduced in the autumn of 2008. They should now be implemented in summer/autumn 2009. Further publicity and training will be forthcoming for the Bar. It is the firm view of the Implementation Committee that the introduction of contractual terms with the accompanying invoicing and ability to charge interest is a key element in the Bar becoming more business like in the future. The afternoon provided four practical workshop sessions covering criminal law, family law, civil and CFA work and financial issues. The Remuneration Committee would like to thank Greg Dickinson QC, Alexandra Healy, Gary Brown, Lucy Theis QC, Stephen Cobb QC, Martin Seaward, Richard Clayton QC and Richard Vallat for facilitating those sessions. Many issues were aired, discussed and clarified and all feedback from delegates has been very positive. The Remuneration Committee would also like to thank the sponsors for this year’s event: Bar Squared, InQuista Law, Iris Meridian and Place Campbell for their support of this year’s event. If you have any questions or comments relating to this year’s conference (particularly in relation to the New Contractual Terms of Work as that session ran out of time on the day) then the Bar Council Secretariat would like to hear from you, please e-mail: remuneration@barcouncil.org.uk

The 2009 Annual Remuneration Conference will again be in London.

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