LSRA to bring client benefit

LSRA to bring client benefit


Gibraltar’s legal profession is experiencing one of its greatest shake-ups in 50 years, while events have brought it into the international spotlight, Ray Spencer reports


The jurisdiction’s legal profession has grown significantly since the 90s, largely the result of expansion in financial services and eGaming, as well as burgeoning property development in more recent years, all requiring support from attorneys.

Extensive use has been made of government legal drafting services supported by lawyers in private practice to prepare new and updated statutes to cover EU directives and emerging markets. In recent years, the workload has intensified from the BREXIT issue, which affects Gibraltar as being part of the UK’s membership of the EU.

But from May all 300+ lawyers – working in Gibraltar law firms, government departments, official bodies and, for the first time, within businesses – must be registered to receive practicing certificates from the embryo Legal Services Regulatory Authority (LSRA), a recently-created statutory body responsible for the registration and regulation of the jurisdiction’s legal profession.

At present, there is no complete list of lawyers: the Gibraltar Courts Service in November identified 245 people – barristers and solicitors in a fused profession for court appearances (unlike England where only barristers are able to do so) – working in some 40 law firms. The Bar Council (now known as the Law Council) list from January 2019 gave 156 names as members, including some from the private sector.

Founding Chairman of the LSRA, Sir Peter Caruana QC, a former Chief Minister for 15 years and arch litigator, revealed his initial budget of £480,000 would be met from a tariff of varying annual fees ranging from £300 to £1,250 for individuals, including business in-house lawyers. Law firms will need to pay £1,000-£2,500pa dependent on the number of practice partners.


All being regulated

“The Bar Council has never been more than a representative body of lawyers – almost the lawyers’ trade union – but it is not essential, nor mandatory, to be a member although most lawyers are,” Caruana declared. He added: “We will be publishing a list, and although we have not discussed it, I cannot imagine that a register and role of certificated lawyers should be anything other than public, certainly by May when the 2020 practicing certificates are issued.”

David Dumas QC, one of Gibraltar’s most senior lawyers with a wealth of experience of the legal profession and its practice, including serving for many years as chairman of the former Bar Council – has the task of forming the LSRA. As chief executive, the ex-Hassans partner, is ensuring money laundering and other staff are in place as well as “an outreach programme to the wider legal profession”.

As Caruana put it: “There is a supposition that lawyers will be familiar with the new legislation, but it can’t be assumed; the outreach will be privately and through the media to ensure that people comply with the registration process.”

Over the next three years Dumas will sift any complaints made against lawyers to establish their veracity, prior to more detailed consideration and adjudication by the six-strong LSRA Board made up of a mix of appointees external to the profession and lawyers, including the Law Council chairman at the time.

“My aim is to ensure that this new LSRA regime gets off to a good, credible start and that consumers, who may have complaints against lawyers, realise appreciate and perceive this is not the inmates running the asylum, and if they make complaints that they will be investigated in a timely and effective fashion, and [if appropriate] proper redress will be given” Caruana declared. “It [the LSRA] has got to have credibility from birth.”


Conduct code

According to Caruana, “there are more than 20 cases in the pipeline ranging from the “unmeritorious ones to complaints that may be meritorious, but relate to completely unimportant matters, to the more important things”.

Also coming into effect under the Law Services Act 2017, being progressively enacted, is a new Code of Conduct for lawyers based on the New Zealand model (where there is also a fused profession allowing solicitors and barristers to attend the Supreme Court). He declared: “Why reinvent the wheel”?

The LSRA chairman, explained: “The new Code will more clearly and explicitly set out what most prudent lawyers probably would be adhering to already. It’s not that lawyers have to behave to a different standard. It is a more robust, tighter and better system for the legal profession and for consumers in the sense that it is resourced, with a dedicated, properly funded regulator that should respond more quickly and efficiently.”

Melo Triay, senior partner of Triay & Triay (T&T), first promoted changes to lawyers’ regulation in 2012 when chairman of the former Bar Council. “It is something that we have needed since the profession became so big”, he said. “Under the old system, law firms had to, interalia, comply with the Solicitors Accounts Rules and file an annual report certified by an auditor that said the client account was properly managed with client money kept separate from the firm’s. Complying with these rules and obtaining professional Indemnity insurance cover would result in the issue of practicing certificates; it was the minimum form of regulation”, Triay explained.

“Now we expect the Regulator to be more ‘hands on’ and not so dependent on whether a client makes a complaint or not. Previously, when complaints were made they were dealt with by the Admissions and Disciplinary Committee, which operated on a pro bono voluntary basis; it was inherently cumbersome and a little slow – hopefully, under the new system complaints will be dealt with effectively and expeditiously!”

Marcus Killick, chief executive officer at ISOLAS, noted: “The LSRA changes will be evolutionary and incremental. Bringing the legal profession into the same standing as auditors, financial services and gaming companies, with a degree of regulatory oversight, is beneficial to the jurisdiction. It will give clients a greater feeling of protection and encourage law firms to move further in the direction of treating their clients fairly.”


Changing status

He suggested all regulators spend 80% of time dealing with 10% of licence holders, “who may occasionally lapse”. However, the importance of a regulator to in-house counsel was less clear-cut, Killick felt, “because they effectively acted for a single client, rather than a multiplicity of clients as with law firms”.

ISOLAS morphed in 2017 from a traditional partnership into a Limited Liability Partnership (LLP), mirroring the set-up at most English law firms, which “has been good for us: the business discipline and feel that being a limited partnership brings to a legal practice” tended to draw the 13 partners more closely together, he maintained.

T&T last summer became one of very few law firms locally to transform its partnership into a limited company as allowed under new LSRA rules, which bought welcome limited liability and taxation benefits, Triay observed.

Hassans, Gibraltar’s largest law firm celebrates its 80th anniversary this year and has also formed a limited company, but is delaying implementing changes to its organizational structure until the LSRA comes fully into force.

Ian Felice, a Hassans partner in the corporate and commercial team, confirmed: “Limited liability is a strong driver when you have joint and several liability personally under a partnership, because the larger one gets the greater the potential exposure.” The firm, with 92 fee earners, including 38 active partners, in September consolidated four offices around the Rock into over 5,000 m2 on seven floors at Madison, part of the new Midtown development.

Felice revealed his firm’s business “grew around 5.5% in 2018-19, despite seeing the bubble of excitement in the fintech field reversing the expected big growth seen a year earlier.

Yet there remains a solid workflow from that sector and we are advising on four new Distributed Ledger Technology (DLT) enterprises and four token sales projects, making 17 Initial Coin Offering (ICO) enterprises handled so far.”

Felice who recently assisted Vietnamese-based, Rooke Investments, to purchase the Gibraltar interests of Danish-owned, Jyske Bank, reported: “Probably over two thirds of our work has an international dimension – working with clients that are international in nature and on work that doesn’t have a Gibraltar element.”

Commercial and residential real estate work had been “very busy and remains our bedrock, as well as private client and commercial structuring work.” Fellow tax partner, Grahame Jackson, disclosed: “We have seen a substantial increase in queries from private clients in relation to their tax position since the introduction of the Spanish/UK (including Gibraltar) Tax Treaty and also the Double Taxation Agreement with UK and we have held seven seminars on this subject attended by over 500 people.”


Work widening

Income at ISOLAS in 2018-19 had seen “low double digit growth – 10-15% up in a year” – with strongest areas being in DLT and commercial transaction-based work, “including gaming, where there has been considerable activity, and in property which shows no sign of abating”, Killick declared.

He detected that despite warnings from government, industry and trade bodies a number of firms did not recognise exactly what was required under EU-wide GDPR (General Data Protection Regulation), which became law a year ago. “For some firms it has increased costs – people did not want to spend the money, or decided to put it off for as long as possible.”

Michael Nahon, Hassans’ GDPR expert, recounted a surge in work and was “beginning to see bigger fines across the board for privacy failures, which only serves to emphasise the importance of compliance with GDPR. It is especially true in a digital market where trust is an essential component of doing business electronically.”

T&T business is “steady year on year and very similar to the past 3-4 years”, declared Triay, adding: “Business is tough in these uncertain times, so I regard maintenance of last year’s levels as acceptable and in some cases might be actual growth. Commercial, property and private client work play “a significant part, but also litigation is a big aspect. There is always litigation in Gibraltar and there are big trust, commercial and negligence cases currently going on”, Triay intimated.

Andrew Cardona, a specialist personal injury and medical negligence barrister at Phillips, a medium-sized nine-lawyer firm, concurs. “We are growing steadily, adding one lawyer each year to the team,” he said. However, as a committee member of the former Bar Council he’s concerned at “the situation that has been happening quite a lot over a long time, where cases in Gibraltar, on Gibraltar law, being not only led by English counsel, but also by English solicitors – and they are not regulated”.

From spring however, English lawyers will also need to be registered with the LSRA. “It’s not a matter of protectionism, but a matter of regulation”, Cardona insists. “Part of the problem is with smaller firms that may not have senior advocates of their own: instead of instructing local advocates, they may look elsewhere and it may be in part due to fear of losing their clients.”

UK and other EEA counsel can visit Gibraltar for specific cases and be called to the local Bar ad hoc, but from May they must be registered with the LSRA: six or seven overseas QCs have obtained permanent access.


No closed door

Caruana wants the LSRA “to consider the extent to which there is recourse to barristers from the UK and the extent to which that is having an adverse effect on the development of advocacy in the local Bar, and whether there is anything that should and could be done.

“On the one hand the case can easily be made that people should be free to bring in specialist counsel if they want to, but on the other we have to be sure that we are not thereby making it so easy and commonplace that local lawyers – young and old – are not able to cut their teeth so that eventually, the advocacy Bar in Gibraltar would simply die on its feet, becoming just part of the UK,” he held.

Small countries had faced similar access issues, but “very few have the open door policy that we still have”, Caruana observed. [In the Channel Islands for example, only locally qualified solicitors and advocates can appear in the courts.] “It’s not a question of shutting the door, but it is a question of regulating and permitting access in a way that does not kill the local Bar for the future”, Caruana opined.

Even so, Triay pronounced that because legal work in Gibraltar is so varied, practitioners tend not to specialise and “the level of knowledge is necessarily less in specialist fields: it naturally results in London Silks being instructed for complicated or other cases requiring a degree of expert specialization; it is impossible to be a specialist or expert in everything”.


Briefs review

Two barristers were appointed Silks last summer – Nigel Feetham, a Hassans partner specialising in insurance, was only the second non-litigator to become a QC and Christian Rocca, who early in 2019 became Gibraltar’s first Director of Public Prosecutions in charge of the day-to day running of the Criminal Prosecution Service.

But that fourth QC ceremony since 2011 raised another issue – how many Silks there should be – when Chief Justice Anthony Dudley, declared a limit of 24 QCs on the Rock had been reached, given that no more than 10% of lawyers in private practice can be appointed! He called for a “measured and constructive debate” on whether the rules remained appropriate.

Doyen of Gibraltar’s legal community, 90 years old Louis W Triay, QC, is believed to be the oldest practising lawyer in the world and is founder and now consultant at the jurisdiction’s fourth largest law firm, TSN (formerly Triay, Stagnetto, Nash), where he specialises in trust and tax law.

“There is a view that in a fused profession and with senior partners of some of our law firms not being litigators, they too should be able to become QCs,” Caruana noted. “I believe it should be only for practicing court lawyers, yet I see the force of those who say that you can’t appoint QCs as a percentage of all lawyers – whether they go to court or not – and then only appoint that percentage that go to court: it’s polemic.”


Foremost authority

Barristers and solicitors wishing to practice in Gibraltar must first attend a 24 week, part-time Professional Certificate of Competence in Gibraltar Law course to ensure understanding of differences from English law. The 23 students on the current course bring the total to 95 since November 2015.

Gibraltar’s lawyers gained an unexpected work boost last summer when Port and Law Enforcement agencies detained a crude oil super tanker, the Grace 1, on the grounds it was believed to be acting in breach of EU sanctions against Syria. A day earlier (“rather fortuitously” as a local barrister remarked), the Gibraltar government published an enforcement Notice against the vessel and its cargo under the Sanctions Act Shipping Regulations. The Act, prepared by the government Law Office, came into force in March, but was instigated as part of BREXIT preparations.

After six weeks of diplomacy and international legal wrangling and with Triay & Triay representing the Attorney General (AG) Michael Llamas, at the Supreme Court, Gibraltar’s Chief Minister, Fabian Picardo, received assurances from Iran and the owners of the oil that the released tanker and its cargo would not be taken to Syria; the vessel departed under the changed name, Adrian Darya, (however, media reports suggest that after some weeks, the cargo was eventually off-loaded to Iran)!

Nevertheless, as a result of the Grace I incident, the jurisdiction has become the foremost EU authority on implementation of sanctions-busting legislation. As pointed out by the AG at the opening in November of the 2019-20 Legal Year: “Our jurisdiction came under the international spotlight like few times before. It was a truly intense month. We upheld the rule of law in difficult circumstances.” Hassans acted for the Captain of the Port and Phillips for two of the ship’s crew.


Gender focus

Llamas added: “The Grace 1 served as a further reminder of the importance of our geographical location and the exposure it gives us to world affairs of the highest order. It is one of the reasons why the Government has continued to pursue its programme for the enactment of legislation in the area of security.”

As part of International Women’s Day in March, Hassans held an event attended by 100 clients and staff, including Samantha Sacramento, Equalities Minister and [since the November General Election] also Minister for Justice, to discuss diversity, inclusion and general equality issues. She told Gibraltar International: “Gender equality is a new phenomenon in Gibraltar for the past few years and that has been a contributory factor to getting the conversation going and people feeling empowered to recognise situations that may not be fair and then doing something about it.”

Whilst in government, Sacramento, a qualified barrister, who has not practiced for six years, admitted there were comparatively few female lawyers – “just look around” [59 of 245 lawyers listed on Gibraltar Courts Service website] – and she said while information gathered last year on the gender pay gap identified all within organisations having more than 20 employees, “next time, I expect it to be broken down into professions and common work positions”.

Gibraltar’s most senior female lawyer is Gillian Guzman, a Hassans Partner specialising in employment law, who was appointed the first female QC in 2014 and aged 39 years, she was then also the jurisdiction’s youngest Silk.

Minister for Justice and legislative authority for the three years prior to standing down at the recent general election, Neil Costa, in October returned to private practice and joined ISOLAS litigation and dispute resolution team.