Opportunistic city lawyers who over-charge their clients face tough new rules aimed at tackling the excesses and mismanagement of corporate law firms, under proposals to be published this week. The crackdown on the City's legal profession comes after growing concerns that regulators have failed to deal with abuses at multi-million pound law firms.
Clients have told a review led by former Tory cabinet member Lord Hunt of Wirral that lawyers are guilty of over-charging, failing to provide objective advice and breaching commercial confidentialities. New figures show City law firms are emerging from the recession with big rises in profits since the start of the year. Research by PriceWaterhousecoopers found that profits per partner at the UK's largest law firms was up by as much as 41 per cent. The average partner's earnings in the top 10 biggest law firms rose by almost £30,000 to £181,000.
Lord Hunt's report, on the regulation of the legal profession, will outline a tough new approach to governance of City firms. It is expected to endorse recommendations made by a former Ministry of Justice civil servant, Nick Smedley, whom Lord Hunt asked to investigate regulation in the City. He concluded that the current regulatory framework for City law firms undertaken by the Solicitors Regulatory Authority does not "address the true risks".
The City has been hit by a number of scandals involving corporate law firms in recent years. In 2005, a top City lawyer was jailed for eight years for stealing £5.8m from clients' accounts to fund a "life of opulence".
The sums plundered by Michael Fielding, 63, a partner in the London firm Lawrence Graham, had been almost beyond comprehension, Judge Geoffrey Rivlin QC said at Southwark Crown Court. "Put simply, of its type this case could hardly be more serious... it is off the financial scale," he said at the time. The court heard that Fielding had used his "immense intellectual capacity" to hoodwink clients.
In 2007, Barry O'Brien, a former head of corporate finance at Freshfields Bruckhaus Deringer, was fined £9,000 and agreed to pay £50,000 in costs over his conflicted role in Philip Green's aborted takeover of Marks & Spencer.