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City Desk
19 October, 2005  
Lawyers and money

Bret Walker SC, one of the Sydney Bar n’ Grill’s finest, sees dangers in the growth of mega-firms and the inexorable slide of the legal profession into a business. The business services part of the law should leave the profession and join up with their spiritual affiliates – the bankers, accountants and financiers


imageThe Sydney bar’s most celebrated silk of his generation, Bret Walker, last night (Tues, Oct 18) said that perhaps the time has come for the biggest law firms to leave the legal profession and join those with whom their aspirations are more directly connected – the management consultants, accountants, finance brokers and merchant banks.

He said that the “business services part of the legal profession”, the lawyers closest to the big money of their business clients, have “nothing really to do with the general corpus of law and no real interest in the administration of justice”.

“Excessive proximity to business clients, and their money, seems to have produced elements of imitation unlikely to enhance professionalism.”

Walker, a former president of the NSW bar and the Law Council of Australia, was delivering an address in the NSW Banco court hosted by the St James Ethics Centre.

His talk was entitled, “Lawyers and Money” and one of his central themes was the rise of the big firms and the slide of legal practice into a business. This, Walker said, “brings about intolerable conflicts of interest and duty, old in kind but new in magnitude”.

There was an array of vintage Walkerisms that confronted much of what normally is regarded as the force of nature:

“If we pinch ourselves, it will be remembered that not long ago the leading firms in this country, big by the standards of their times, had so few partners and staff by the standards of our time that they would not even be considered as mid-tier firms.

Were they able to conduct the largest and most complex litigation, minister to the most important property and commercial transactions, that their clients required? Could they carry out the legal research and inculcate the learning and scholarship needed to advance the law and win the hardest cases in the highest courts for their clients? Were they good lawyers? Were they undervalued as members of society and as professionals? Did they live in penury?

I suggest the answers to these questions utterly vindicate those many solicitors – fortunately, still a majority – whose practices are conducted through what are condescendingly called small firms.

The answers to those questions certainly do not support the truth of slogans such as ‘grow or die’. They do not substantiate the claim that only mega-firms have the capacity, whatever that means, to provide the services required by mega-cases.”

He contended that large firms are not the sole repository of all the attributes necessary for the deployment of learning, integrity, imagination and loyalty to clients.

If large teams are from time to time required “why not form ad hoc alliances?”

“It would be demeaning to justify big firms getting bigger so as to provide lots of IT, word-processing and photo-copying. Those activities are no more professional than stationery is the business of a bank – they are means that can be bought in from time to time. And they should be bought in, as a matter of ethics, at the lowest cost reasonably available for the appropriate quality, so as to avoid disloyalty to a client.”

He proposed an “expedient” to defer the intolerable conflicts that arise in partnerships over who is and isn’t bringing in sufficient revenue, and that is for …

“lawyers to join their business clients lock, stock and barrel not only the modest degree of corporatising already permitted, but out-and-out commercialising with publicly raised equity capital. Why should their own IPOs not become a new kind of professional achievement for lawyers?”

His finale was a cry for an older, gentler scale of values:

“When Teddy Roosevelt took on the Rockefellers and their ilk, Standard Oil must have appeared to be a natural growth of business conducted with appropriate self-interested vigour.

There are probably still many who think anti-trust policy should never have made it into the statute books in the United States or anywhere else. As you may have gathered by now, I’m not one of those.

Industrialists and money need curbs and controls especially in relation to size and domination. So too, lawyers and money.”

There was much else besides upon which Walker deliberated in his St James Ethics Centre speech. Some snippets will suffice for now, but you can download the full oration here.

Imitation

“The useful service of mercantile interests, in the public interest, poses conflicts and embarrassment for the legal profession, in ways that are not new but are newly urgent. Traditional restraint and constraints are freshly needed, but may not be adequate in their traditional forms. Imitation of clients is universally rejected when lawyers represent criminals, but is massively growing in the case of lawyers advising on and representing the interests of money, that is money lawfully obtained and used.”

Class actions and litigation funding

“In hindsight, it is not surprising that the noble if flawed tradition of spec briefs – no win, no pay – has flowered, or exploded, into the frankly entrepreneurial industry of litigation funding, usually associated with what are inexactly dubbed ‘class actions’.

No one who has advised or appeared on either side of these models of modern litigation could be unaware of the fertile soil they present for conflicts of the most venal kind. Who are the clients? Who is the master of the case? What does it mean, socially and professionally, for litigators to spur into action those whose claims were neither pressing nor large, but who belong to a formidably large group of similarly unenthusiastic pseudo-litigants?

Apparently, it produces major litigation, enthused (if one should use that divine metaphor) by the money it promises for funders and lawyers. But who is to say, and on what grounds, that this kind of money for lawyers does not, in reality, provide justice where formerly access to it was too expensive? The High Court will soon be looking at these questions.” [See Campbells Cash and Carry v Fostif.]

Personal injury

”[F]or some time to come lawyers will be handicapped, even more than by usual cynical responses, in their efforts to advocate the claims of injured people to fair compensation by money damages.

This may well delay the preferable solutions to the so-called insurance crisis – leaving the least well placed victims no better off. The utopia of prosperous insurance companies – for who nowadays wishes them to teeter on the edge of insolvency? – covering the legal (and moral) obligations of wrongdoers to a proper compensatory extent is more distant than ever.

Even the competition policy that permitted lawyers to advertise has been displaced in governmental resistance to personal injuries litigation as a business. Lawyers and their money have some measure of responsibility for this decline in civil decency.”

Tax

“A former Bar President cannot depart the topic of legal fees without reliving shudders about lawyers and the flouting of taxation obligations which are meant to come – as surely as death to us all – from the receipt of professional income. Because it is lawyers, not just barristers, or New South Wales.

There is a kind of reassurance of proper values being not quite moribund to be had from the grim reflexion that this was, and correctly, seen as the worst scandal in the Australian legal profession since convicts ceased to have a right of practice in penal colony days.

Lawyers have no better immunity than anyone else from the undemanding requirements to render annual returns of income and to pay the tax due on it.

If anything, the publicly funded system in which all lawyers – not just litigators – work makes it all the more intolerable that some lawyers resist meeting such reasonable obligations.”