Law: Close, but not that close: A solicitor is challenging restrictions on mixed practices by linking up with a Big Six accountancy group, says Roger Trapp

JUST setting up a new law firm in the current climate would have been enough to get Colin Garrett noticed. But the way he did it is also attracting attention.

For when Garrett & Co opens its doors in July it will be closely associated with a Big Six accountancy firm, Arthur Andersen. It will be based in a spare area of Andersen's offices off the Strand and will link up with the network of law practices that the international accounting firm has been building up across Europe.

Andersen's acquisition of firms such as S G Archibald in France and Freihalter Kruger & Co in Germany is not unique. Other big international firms have followed a similar trail, with KPMG Peat Marwick reckoned to be in the lead and Price Waterhouse not far behind. But observers see the Garrett move as a significant challenge to the existing UK ban on solicitors joining multi-disciplinary partnerships and a sign of things to come.

While there is some co-operation among smaller firms, some of the large City practices are predicting increased competition from the Big Six accountancy firms.

Both Mr Garrett and Roy Chapman, Andersen's UK managing partner, deny that they are trying to get around the Law Society rules to set up a de facto multi- disciplinary partnership. But while he stresses that Garrett & Co will be an independent firm, Mr Chapman anticipates that it will be referred work through the accountancy practice's Continental network.

For his part, Mr Garrett expects the proximity to Andersen - the premises at one end of the Surrey Street building will have a separate entrance - to bring in some instructions. 'Obviously, if John Talbot is appointed receiver of a big company, he'll use an outside legal adviser, but if Andersen wants us to review contracts, we'll do that for them,' he says.

Mr Garrett also points out that Britain is not the only country where mixed partnerships are restricted. In some Continental states, auditors and tax practitioners have to be kept apart, while in others accountants and lawyers cannot work together. There is, however, a developing trend towards companies finding, for instance, their tax advisers and lawyers under the same roof. The Andersen network abides by local rules, he says.

There is certainly no problem on the Andersen side. The chartered accountancy profession has long favoured the idea of its members linking up with others. Jack Maurice, secretary of the chartered accountants' joint ethics committee, which represents the English, Scottish and Irish institutes, says that accountants have formed partnerships with surveyors and Lloyd's brokers. He adds that by-laws have been passed to allow similar links with solicitors should the Law Society change its stance.

Although Mr Chapman feels this is unlikely to happen soon, such a move may not be far off. Five years after it last raised the subject, the Law Society has just issued its members with a consultation paper on multi-disciplinary partnerships. The reason, says a spokeswoman, is that 'a lot of water has passed under the bridge since then' and the issue has never really gone away.

In particular, the 1990 Courts and Legal Services Act lifted the legal ban contained in the 1974 Solicitors Act on members of the profession sharing profits with outsiders. But the document Striking the Balance, issued by the society in 1988 in response to

the Green Paper that led to the 1990 Act, did not prompt a decision on the issue and the work has continued.

There does appear to have been some movement. In 1988, the main worries centred on conflicts of interest, client confidentiality and handling of complaints. Now, however, regulation is the prime concern. And as part of the consultation exercise there is a discussion paper which suggests that some of the worries in this area could be met by a change of approach to regulation.

What this amounts to is that the Law Society is dropping its traditional insistence on having control of regulation of mixed partnerships in favour of more than one professional body organising disciplinary matters. This might yet be difficult for the solicitors' body to swallow. But it is under growing pressure to fall in line with other professions.

The Government, prompted by the Office of Fair Trading, is regarded as being in favour of the principle of multi-disciplinary partnerships. Sir Gordon Borrie, the OFT's former director-general and a keen advocate of them, recently published advice to the Scottish Secretary on the subject. Although the current situation could not be said to be anti-competitive, it would help competition if solicitors were allowed to join members of other recognised

professions, he said.

Such an attitude is certainly music to Mr Garrett's ears. Attempting to play down the controversy, he prefers to see the venture in terms of his own personal goals.

As head of the 30-strong in- house legal team at 3i for the past nine-and-a-half years, he has, in effect, been running a fair-sized commercial firm. But he felt he had been doing the same job - he previously worked at Shell International - for too long and wanted a change of direction. 'I'm 50 and I feel I've got one big challenge left,' he says.

Friends who knew that Andersen was planning to fill the UK gap in its burgeoning European network put the firm in touch with Mr Garrett - and the search is now under way to find a handful of people to join him in what he acknowledges is a tough task in the present circumstances. So far, there have been 300 applications for the four jobs on offer.

This is partly a reflection of the large number of redundant solicitors combined with a drop in the number of partners being appointed. 'But there are some who want to do something different and exciting,' says Mr Garrett. He is hoping to open for business in the summer with a mixture of experienced partners and assistants just short of partnership level so that he can leave them to get the work done while he develops new business.

Despite the current economic gloom, he sees a gap for a small firm that offers a company/commercial, employment and commercial property service - even if it does not have the extensive back-up and support of the larger players.

'Obviously, we're going to start in a modest way,' Mr Garrett says. 'We're not going to be doing massive takeovers. We're going to be doing the sort of thing that needs only one person at a time.'

He is adamant that, provided he has the right people, it is not important where they are working. Arguing that the multi-disciplinary discussion has been over- blown, he says the central point is whether people want solicitors to continue to do legal work: 'I don't think it matters whether you work for Arthur Andersen, Shell or the local borough council. The people who are trained to do the work should be doing it.'