Barristers - new corporate vehicle is good news
Jordans are pleased to see the Bar Council allowing chambers to take steps to allow barristers to incorporate. This will allow them to compete more effectively in the legal market. “Alternate business structures are being used across the professions. It’s good news that barristers can now also take up these opportunities” says Kathleen O’Reilly, Jordans Head of Internal Legal Services.
A report recently commissioned by the Law Society indicated that an increasing number of in-house general counsel is going to barristers directly for advice rather than external law firms. “This confirms our experience” adds Kathleen. “We needed to ensure compliance with the new Companies Act 2006 for the constitution of the companies we incorporate. I undertook this process with counsel from chambers. We had used counsel before in relation to issues of concern with the new Act. I knew our clients would gain assurance from this guarantee of quality.”
Now, it will be even easier for barristers to obtain work directly from potential clients with the new but somewhat unglamorously named corporate vehicle “ProcureCo”.
Who will ProcureCo benefit and how will it work?
ProcureCo is a corporate entity established for the purpose of obtaining business for barristers. It is anticipated that it will be an adjunct or bolt-on to chambers. Thus, chambers can set up ProcureCos for a diverse range of work including, for example, international work, City advisory work, ADR and mediation, arbitration and Local Authority work. It will enable the Bar to contract directly with clients for work with the facility thereafter to instruct other professionals to perform parts of the work which the Chambers does not wish to or cannot perform.
Guidance (by Field Fisher Waterhouse) has been issued and Nicholas Green QC, Chairman of the Bar Council has written in detail to all barristers explaining how the new model will work.
ProcureCo will be a procurer of the barristers’ legal services and act as an agent for the barristers. The guidance is at pains to point out that the work will not be carried out by ProcureCo rather that ProcureCo as its name suggests will procure the relevant legal services required. At the current time ProcureCo cannot provide reserved legal services as the Bar Standards Board does not regulate entities, only individuals.
The following diagram may assist:
(Reproduced from Field Fisher Waterhouse’s guidance)
It is considered that the Panel Participation Agreement (the PPA) is the most important of all the documents. It concerns the relationship between the members of Chambers and the corporate vehicle. There are also terms to be included or addressed in the contractual relationship between ProcureCo and, for example, the Local Authority.
Suggested articles of association have been compiled by Field Fisher Waterhouse after consultation. The guidance explains that these articles have been drafted with the aim to keep the main governance arrangements set out in the PPA. The guidance also stresses that it is up to the barristers involved to ensure that they deal with all conflicts issues and regulatory issues that may arise in an appropriate manner.
How do I incorporate? Electronic versus paper filing
The articles of association produced by Field Fisher Waterhouse envisage a company limited by guarantee. This is seen as a vehicle that will more easily deal with issues of conflict.
However, the guidance says that it could be a company limited by shares or even a limited liability partnership. There are no requirements for the entity to be regulated in a particular way and so these last two entities may more easily allow for external investment at a later date. The guidance also gives some indication as to issues to consider in terms of who should be the members and directors of such companies. It makes clear that this is ultimately up to those setting up the company.
Kathleen adds a word of warning to those wishing to incorporate. “The process of incorporation is in some respects complicated. With the move to encourage electronic filing, the paper based forms are looking ever more cumbersome. To incorporate you must file at Companies House an incorporation form (IN01), memorandum of association setting out subscriber details, articles of association (if providing your own) and the fee. The paper version of the IN01 comprises 18 pages and must be circulated for signature as well as the memorandum.
By incorporating electronically, the information can be more easily collated and transferred. Also, the use of security codes negates the need to obtain signatures from all the officers and subscribers concerned. The benefits of electronic incorporation are clear and it is significantly quicker but you do have to be set up with Companies House to be able to undertake it. It is possible to use agents such as Jordans to do this for you.”
For more information on setting up ProcureCo to meet your requirements, please contact Wendy Rees on 0117 918 1344 or email companyformation@jordans.co.uk.
To read more visit the Bar Council website at http://www.barcouncil.org.uk/
