From October 2011 alternative business structures (ABS) will be permitted in England and Wales. But this major reform faces a challenge before the European Court of Justice because mainland bars suggest, with some force, that this is unethical.
The President of the Council of the Bars and Law Societies of Europe, Jose-Maria Davo-Fernandez forecasts that if a City firm with other European offices accepts external capital, as will be the case here when the scheme is effected, the issue will be taken up in Luxembourg at the European Court of Justice. Article 11 of the Establishment Directive permits Member States to bar from their jurisdictions any law firm that is not completely run by lawyers if it is deemed contrary to public policy to permit them to operate.
Lawyers who are employed in organisations where they are managed by non-lawyers will be well aware of the pressures to which they are subjected when their managers wish to pursue a course when the lawyer advises it has no proper legal basis. Injection of outside capital may well put lawyers under intolerable commercial pressure not to observe the rule of law.
The German bar authorities have already warned of the illegality of ABS in their country, and the American Bar Association is known to be decidedly cool towards the idea.
