The cultural values the US has adopted from the UK are many and deep. That includes, of course, our legal system. What law student does not remember “The Rule in Shelley’s Case” and other precedent derived from English Common Law? (What was the holding in Shelley’s Case, anyway, and was Shelley male or female?) No matter. The point is: with all this commonality, how can the regulatory schemes governing the practice of law in the two countries be so radically different? It has not always been this way but, since the passage of the Legal Services Act of 2007 by the UK (Australia adopted similar legislation almost a decade earlier), lawyers in the UK and US operate under entirely different regulations. How significant is this difference? Answer: very and becoming more so by the day. Why?
A Very Cursory Overview of the Legal Services Act
Perhaps the most remarkable aspects of the UK’s Legal Services Act of 2007 are: (1) the Clementi Report which serves as its foundation and legislative history; and (2) that it was enacted in the first instance. Sir David Clementi, a former Deputy Governor of the Bank of England with a distinguished career in business, conducted a two- year, exhaustive study of the British legal delivery system, examining both the retail and corporate ends of the market. His conclusions were stark and pulled no punches: that in both segments of the market, clients were not being well-served by the self-regulated legal profession; that law was a monopoly; that the legal delivery system was broken and needed to be repaired; and that client interest should be accorded primacy over lawyers’ (self-) interest. After considerable back-and forth, legislation was passed that fundamentally changed existing regulations (still in place in the U.S. save for DC) that: (1) permitted inter-disciplinary practice; (2) allowed non-lawyer (“outside”) investment in law firms; (3) sanctioned non-lawyer management and equity ownership of law firms; and (4) established a process by which firms could become “Alternative Business Structures.” [Read more…]