Einstein and the Legal Practitioners Law
2007
As Einstein might well have said, the speed of a ping pong ball hit across a net by a lawyer at 20mph during a game played on a train, itself traveling at 80mph, has a good deal to do with the location of the observer. To the lawyer on the other side of the net the ball will appear to be traveling at 20 mph; to the lawyer on the platform (assuming the ball is hit towards the engine) it will appear to travel at 100mph, writes Anthony Travers, CEO of Travers Consulting.
Thus may Einstein’s theory of Relativity explain the confusion reportedly expressed by certain members of the legal profession in relation to the provisions of the draft of the Legal Practitioners Law that are designed to deal with the practice of Cayman Islands Law outside of the Cayman Islands (see Cayman Observer article mid February).
For a proper understanding of the intended effect of the new Law much indeed depends on the position of the observer. That is not to say that lawyers may not fully understand the rules of ping-pong; but rather that this aspect of the new law, (and I am not commenting here on the qualification or disciplinary sections the need for which is unanswerable), must deal with the perspective of a number of quite differently positioned observers.
First and foremost it must deal with the position of the Cayman Islands Government. It may well seem wrong to the Government. and, particularly to the Financial Secretary, that a law firm outside of the Cayman Islands can represent itself as entitled to practice Cayman Islands law (the websites of the relevant firms are instructive) without payment of a work permit fee to the Cayman Islands Treasury, without payment of a practising certificate fee, and without the profits of its practice in that foreign office, derived it should be noted from the attraction and excellence of the Cayman Islands financial industry, supporting the economic and social infrastructure of the Cayman Islands.
The position that the new Law should establish to redress this imbalance equitably is that such foreign firms, and the lawyers practicing within them, should contribute in respect of these matters to the same extent economically as a local Cayman Islands based firm (which has no foreign office).
It may also seem wrong to the Chief Justice and those charged with responsibility for the discipline of members of the legal profession that an attorney can give advice on Cayman Islands law in, say, Hong Kong without the need to be admitted in the Cayman islands or the need to acquire a practicing certificate and without, it necessarily follows, the sanction of its suspension for wrongdoing or incompetence.
It may also seem wrong to the Cayman Islands law firm, without a foreign office, that is obliged to pay local Cayman Islands licensing fees, work permit fees, and to bear the costs of supporting the Cayman Islands Law School by taking on and training articled clerks and integrating them with the local profession, that a law firm practicing Cayman Islands law from a foreign office need undertake no similar level of endeavour or expense to burden its profit and loss account.
From the perspective of that foreign law firm it may well seem wrong that anything should be done to redress the foregoing imbalances and that of itself may explain certain recent comments.
That said as to the issues, even the casual observer with no fixed position should be forgiven a degree of confusion as to the intended effect of the first draft of the law as circulated. Clearly specific provisions suggested to remedy these imbalances have been lost somewhere in translation, albeit that (necessary) consultation continues.
Those charged with that responsibility may wish to consider the reintroduction of the following provisions. Firstly and foremost the stated imbalance cannot be redressed in favour of the Government and the local law firm (which has no foreign office) unless there is included a specific and relevant definition of what constitutes the practice of Cayman Islands law.
This, it is suggested, should be more relevant to the provision of telephonic and email advice in relation to hedge funds, private equity, structured finance and derivative structures than one which appears more appropriate to a Dickensian notion of that which lawyers in Victorian England did to each other with quill pens.
Any advice on Cayman law or legal structures should be caught, as should the formation of any Cayman legal entity. In this latter respect the accountants lobby has already had some negative effect; but the formation of a company is no less a matter requiring qualified legal
advice (at least if it is done properly) than the signing of an auditors report is a matter for a qualified and licensed accountant.
With the relevant definition of practice of law established it is a simple matter, as indeed is suggested by the new Law, to render its practice an offence, whether inside or outside of the Cayman Islands, without the attorney in question holding a duly issued practicing certificate. But it should go further; no foreign law firm should be authorised to represent that it practices Cayman Islands law unless it falls within the included definitions, (they are there for a reason) of “affiliate” of a “recognised firm”.
Put another way only an affiliate of a Cayman Island firm, as defined, should be entitled to practice Cayman Islands law from a foreign office. In that way the Cayman economic infrastructure is in some way supported. It follows also that provision should be included to preclude any person from relying on unauthorised Cayman Islands advice, whether by an unlicensed attorney or an unauthorised foreign firm, in any legal proceedings, whether brought within or outside the Cayman Islands.
That deals with the necessary regulatory aspect but, in addition, to redress the imbalance in favour of the Government and the local law firm the fee for a practicing certificate when issued to a non resident attorney should be of the same amount as would equal the fees paid by a local law firm for both a work permit fee and a practicing certificate (abated admittedly in the former respect if the nonresident practicing attorney is Caymanian).
The current draft of the new Law does not appear to recognise the importance of regulating the foreign law firm, in addition to the non resident attorney. In the event of abuse sanction against the individual attorney may be difficult. The foreign law firm must therefore be held accountable and indeed by the way of licensing fee attributable to the foreign law firm the economic playing field will be leveled in favor of the local law firm. If the foreign law firm represents itself as practicing Cayman Islands law it should be willing to stand alongside the local firm as a fully contributing corporate citizen.
No doubt legislation is urgently needed to redress these imbalances and not merely to protect of the reputation of the Cayman Islands and its economic standing. There is now a further reason. If we consider the history of other jurisdictions no doubt should exist in the mind of any observer, regardless of his or her position, that a mandatory roll over policy will, albeit imperceptibly, accelerate the exportation of expertise and the performance of services related to the Cayman Islands financial industry. In that context the proper licensing of and economic contribution by foreign lawyers of foreign law firms practising Cayman Islands law from foreign offices will, as Einstein might have said, become relatively more, not less, important.
