BSB regulatory expectation of chambers series: Associations

Associations – definition, practical risks and appropriate measures

Earlier this year, the BSB introduced its Regulatory expectations of chambers webpage which set out the specific regulatory matters with which they expect barristers to comply through chambers.

One of these topics is Associations: this involves the relationship which barristers have with their chambers* but also extends to the arrangements which barristers might have outside of chambers – and yes the BSB still expects chambers to have knowledge of and ensure their barrister tenants/members report all associations to the BSB. The BSB state  “we are particularly keen to ensure that these arrangements are reported to us so that we can assess the risks to the public profile.”

Cynically, this could be seen as an attempt by the BSB to ‘delegate’ some of its responsibilities to chambers. The BSB would defend this by confirming that it is a barristers responsibility through chambers to ensure compliance with the BSB Handbook.

*For an introduction to the role of chambers see the first two paragraphs of my earlier blog

What is an association?

The definition of an Association is defined in the BSB Handbook as where:

(a) BSB authorised individuals are practising as a chambers; or

(b) BSB authorised persons are sharing premises and/or costs and/or using a common vehicle for obtaining or distributing work with any person other than a BSB regulated person, in a manner which does not require the association to be authorised as an entity under the Legal Services Act 2007.

Barristers have an obligation to declare to the BSB any association (on more than a one-off basis) they have in accordance with rule C80.

Naturally, the most obvious association is with chambers, and that should be automatically reported through MyBar and is often shown on the BSB Barristers’ register – unless the barrister elects not to have a published practising address. Barristers are also obliged by rule C80 to declare any other chambers they are members/tenants/associates of as it is not uncommon for barristers to be members of more than one chambers.

As to other types of association, given the definition in the BSB Handbook above, any ongoing (even if occasional) arrangement for the introduction of work will be considered an association by the BSB and therefore needs to be declared by all barristers entering into such arrangements.

The BSB’s position

The Association section of the Regulatory expectations of chambers  webpage, makes it absolutely clear, that the BSB considers that this definition includes introducers and intermediaries. This leads to other considerations which are dealt with below under “Other Factors” and in the practical example.

The BSB states that it requires this declaration so that they can assess and manage the risks to the public.

Rules C79-86 of the BSB Code of Conduct sets out further requirements which require that barristers:

• Ensure that practising in an association does not impact on their compliance with their regulatory obligations
• Disclose in writing to clients before they accept instructions or make a referral, any commercial interest they have in any organisation to or from which they are making or receiving referrals
• Keep a record of all referrals made or received for review by the BSB on request
• Have a clear agreement in place with any organisations they receive from or make referrals to, about conflicts of interest and any other relevant matters
• Take reasonable steps to ensure that clients are not wrongly led to believe that a third party is regulated by the BSB or another approved regulator (as per the Legal Services Act 2007 (LSA)) when they refer a client to a third party which is not a BSB authorised person or authorised non BSB person (such as a solicitor)
• Ensure that they do not have a material common interest in any organisation which gives the impression of or may reasonably be perceived to be an LSA regulatory body
• Do not act as supervisors of an immigration advisor for the purposes of section 84(2) of the Immigration and Asylum Act 1999 (as amended) (IAA 1999) where the Office of the Immigration Services Commissioner (OISC) has refused or cancelled the adviser’s registration or where the adviser is:
  • Disqualified
  • Prohibited or suspended by the First-tier Tribunal (immigration)
  • Permanently prohibited from practising  and removed from the relevant register by an approved regulator or designated professional body under the IAA 1999
  • Currently suspended from practising by an approved regulator or designated professional body under the IAA 1999

Material common interest is not defined in the definitions section of the BSB Handbook but instead, rule C84 confirms that a material common interest will be where “an objective observer with knowledge of the salient facts would reasonably consider might potentially influence your judgement.”

This definition is open to wide interpretation and therefore, care should be taken by barristers to consider all associations in which they are involved as to whether any benefit they receive from the association could be consider a material common interest.

Of course, none of this overrides the important rule that barristers must not accept or pay referral fees.

What does BSB expect from (barristers through) chambers  

The BSB states that even though the primary obligation to report associations rests with individual barristers, they expect chambers to ensure that barristers do notify the BSB if they are aware that barristers enter into associations. Therefore, if chambers becomes aware of an association then it seems that the chambers will at the very least be required to advise the barrister to notify the BSB of that association. However, what is not sure from the new web page is how far a chambers have to go and what is meant by “we expect chambers to ensure that their barristers do notify the Bar Standards Board if they enter into an association. And we would expect a barrister with governance responsibilities within chambers, such as Head of Chambers, to notify the Bar Standards Board of any association involving the use of chambers’ premises or resources by non-authorised individuals.”

This requirement raises the following important questions for all barristers operating through chambers and for the chambers entities themselves where they are separate legal entities.

• Does this mean that a chambers must require the barrister to confirm to them that they have advised the BSB and provide copy correspondence?
• What is a chambers meant to do if a barrister does not confirm to chambers that they have notified the BSB?
• How is a chambers meant to deal with this on a contractual /governance/ constitutional basis?
• What impact would this failure to declare either to the BSB have on other members of chambers?

Unfortunately, the BSB is silent on these points so each chambers will have to decide these factors for themselves which is not supportive of  regulatory consistency and certainty in the profession, particularly as these factors do impact upon purchasers of legal services.  

The BSB has updated the Regulatory expectations of chambers  webpage which states that it is currently undergoing a review of the market on third party intermediaries and the associated rule structure including associations and they expect to be able to provide more information on the market and barristers’ responsibilities within a year.

Other factors

Material common interest

As set out above, as a risk management measure (in accordance with CD10 and competence 4.2 of the Professional Statement for Barristers), it is strongly advisable for barristers to consider all associations in which they are involved as to whether any benefit they receive from the association could be objectively considered a material common interest in line with the definition above.

Introducers/intermediaries

In Public Access cases, there are potential further considerations as barristers will need to consider where a matter is received from an introducer, whether the introduction is also classed as being from an intermediary. If so they will need to determine what notice needs to be given to them in accordance with the BSB Code of Conduct.

The definition of intermediary states: “any person by whom a self-employed barrister or BSB entity is instructed on behalf of a client excluding a professional client who is not also the client save for an intermediary in the context of a referral fee which includes a professional client.”

In accordance with rule C127 of the Public Access Rules, the client care information required by the rules must also be sent to the intermediary as well as specific confirmation to the client of the fact that the intermediary has provided the introduction and that the barrister has no liability for the intermediary and that the intermediary is the client’s agent and not the barrister’s agent.  

Referral fees

It would seem wrong to mention introducers and intermediaries without mentioning the linked topic of referral fees and interestingly, very recently, I was asked by a senior and well respected barrister to analyse and confirm his perception of a proposal that had been made to him for a “legal way around referral fees”. The barrister quite rightly identified that the very detailed suggestion was not a compliant suggestion and asked me to confirm this setting out the specific rules so that he could reply to the proposal in a detailed and compliant manner. 

As all barristers no doubt know, rule C10 of the BSB Code of Conduct specifically prohibits the payment of referral fees.

This is defined by the BSB Handbook as “any payment or other consideration made in return for the referral of professional instructions by an intermediary. For the avoidance of doubt, a payment for the provision of a particular service or for some other reason, and not for the provision or referral of professional instructions is not a referral fee for the purposes of this definition.”

The BSB’s 2019 guidance note on Referral and Marketing Arrangements makes it clear that any payment made to an introducer which is linked to specific referrals or number of referrals is likely to be considered a prohibited referral fee. Clearly, this includes payment on a case by case basis whether by fixed fee or a percentage basis. 

This BSB guidance also makes it clear that chambers payments (specifically clerking and admin fees) are exempt from being considered referral fees as the payment is for services provided to the barrister and not for referral of the work.

However, the BSB state that where on the face of it, a payment appears to be related to referrals, the barrister will need to demonstrate that the payment is genuinely made in return for a service other than the referral. They will also consider whether the client has been informed of the fee paid to or by the barrister and has had the opportunity to challenge it.

If these services do not include the usual chambers and clerking type services such as diary management services, billing and fee related services and other clerking and admin, and case management services on an ongoing basis throughout cases, then they are likely to be considered as prohibited referral fees, putting the barrister in breach of the BSB Code of Conduct.

Additionally, barristers must declare all such arrangements on more than a one-off basis as associations to the BSB.

So how might this impact in practice for the various parties?

Summary

As we can see, the topic of Associations is surprisingly complex and raises reporting obligations and consideration of other matters which risk breaches of the BSB Code of Conduct. 

We will continue sharing our thoughts on the other BSB regulatory expectations of chambers so follow us on Linked In to keep up to date.

If you would like to discuss this topic further or find out how Beyond Compliance can help you or your chambers ensure you meet your regulatory obligations or conduct due diligence, please contact us at hello@beyond-compliance.co.uk or call us on 0121 288 5227.