Bar regulators are determined to avert an ‘Enron-style loss of independence’ in the profession, as the liberalisation of legal services gathers momentum, Bar Conference 2011 heard.

Patricia Robertson QC (pictured), a member of the Bar Standards Board (BSB), said the body has no desire to ‘duplicate what’s on offer’ from the Solicitors Regulation Authority.

Though the BSB will become an entity regulator, potentially bringing solicitors with higher-court rights under its wing, it firmly intends to remain very much a ‘niche’ player focused on advocacy and specialist advice, she said. She expects most barristers to remain self-employed.

Robertson, addressing a packed session on entity regulation, was updating barristers on the board’s policy on alternative business structures. In requiring a majority of managers to be qualified advocates with higher rights, and placing a 25% limit on non-lawyer managers, it intends to ensure that the ‘balance of power’ in the business remains with the lawyers, she stressed. External ownership will not be permitted, though the 25% threshold may be varied in exceptional circumstances, for example where a barrister wants to make their spouse a co-owner.

‘We believe barristers should not have to change their primary regulator to form an [alternative business structure],’ she said. ‘That would lead to the fragmentation of the bar.’

Litigation could supplement the services the entity offered, she said, but only as an ‘add-on’ to advocacy authorisation, thus ‘maintaining the advocacy focus’.

Baroness Ruth Deech, the BSB’s chair, was more blunt. ‘If we don’t provide for entity regulation at all, barristers will just go for SRA-regulated entities and the bar could disappear,’ she warned. ‘If you don’t want to do it that’s fine. It’s there with a view to keeping the bar as a separate profession.’

Deech described liberalisation as the legacy of a ‘Thatcherite onslaught’ on self-regulation, while observing that in 2012 the government is obliged to conduct a five-year review of the Legal Services Act.

Commenting on the absence of Legal Services Board representatives at the event, she underlined the need for ‘those who care about the bar to ensure its separateness’.

Stuart Borrie, a partner at K&L Gates who advises professional practices on strategy, told the session he was aware of some ‘very prestigious chambers’ which are considering setting up an ABS.

BSB-regulated entities would be able to compete with solicitors for work from in-house legal departments, he said. A ‘one-stop shop’ would also give such entities the option of employing their own solicitors on fixed terms.

Referral fees, banned under the bar’s conduct code, are effectively permitted if an ABS is created, he pointed out, because there is then a choice over how money coming into the firm is distributed and barristers are therefore ‘incentivised to bring work in’.

On the downside, he pointed to the potential for upsetting relationships with solicitors and conflicts of interest.

Meanwhile, Marcus Staff of the Chancery Bar Association speculated that an entrepreneurial barrister could approach a leading City firm (he cited White & Case), offering to be the single manager of ‘White & Case Barristers’, into which the law firm could invest capital as a loss-leader to buy in quality and try to dominate one section of the market.

‘What remains to be seen is if BSB rules will make it possible for that sort of business to be organised,’ he said.