Examination of Witnesses (Questions 260-279)
MR DES
HUDSON AND
MS SARAH
LEE
10 FEBRUARY 2009
Q260 Chairman: Ms Lee, do you have
any comments on what Mr Hudson has said?
Ms Lee: I think Mr Hudson has
summarised it very accurately. In particular the need for short-term
secondments from law firms around the jurisdiction is critical
to the development of experience and career and business development
of law firms.
Mr Hudson: If I may offer an example,
we run something called International Lawyers for Africa. Every
year about 30 or so lawyers from Africa come over here and spend
about three months with firms in England and Wales, but predominantly
London. I think that interchange has two benefits. First, it is
a jolly good thing that we help lawyers in those countries to
gain experience of international law in leading global firms,
but, second, we are also socialising them to choose to use English
law and firms in international activity. They might choose to
do that in New York or Singapore, so there is a mix of moral good,
if you like, with our own informed self-interest about wealth
creation from this sector which has an important role to play,
along with accountants and so on, in the international competitiveness
of the City of London.
Q261 David Davies: Mr Hudson, you
have talked about the importance of allowing legal firms to be
able to select the best talent.
Mr Hudson: Yes.
Q262 David Davies: You have referred
to entrepreneurial overseas lawyers. Can you tell me how many
British lawyers are currently out of work?
Mr Hudson: I can give you some
estimates. We estimated that in 2008 some 2,500 solicitors were
made redundant and I expect at least that number during 2009,
but, if I may say so, I do not believe that necessarily goes to
the issue. There is no point my saying that today I am an unemployed
conveyancing solicitor and so I will become an international expert
in insolvency. You just cannot do that. Therefore, access to skills
across the globe is very important for a very small sector of
the profession. The point we make about the movement on short-term
secondments of staff from overseas offices or overseas associates
is critically important.
Q263 David Davies: I understand that,
but can you not see that from where politicians of all parties
sit the problem is that there are people in related fields who
are losing their jobs and yet you are asking us to support rules
that will make it easier for people to come from other countries
to take those jobs?
Mr Hudson: I am asking you to
maintain our ability to compete in fast-moving, highly competitive
global markets, and it is not mutually exclusive. Let us put to
one side examples such as International Lawyers for Africa and
talk about someone who comes from my office in Shanghai to work
in my London office. That may well be an individual who has a
particular set of skills in Chinese law. It is not something I
can do, even though I might want to use a displaced solicitor
working in a completely unrelated domestic environment. I understand
the pressures and the wish to see every possible solicitor who
wants to practise to be able to do so fully and in the best way
possible, but there is a different range of skills and jobs. I
believe that we have a very open market which is an advantage
to every solicitor in this country.
Q264 David Davies: To take your analogy,
you want to use somebody who has knowledge of Chinese law in order
presumably to do business with a Chinese company or public body.
I am simplifying it. That person does not necessarily need to
move from Shanghai to London in order to do that. You can pick
up the telephone and engage that person to undertake work for
you without having to employ the individual, surely?
Mr Hudson: I understand that point,
but I do not want to give you the impression that these people
are moving over here permanently. We are talking very much about
a flow of people around various offices and associate firms. It
is building that network of understanding of how the thing operates
that is crucial to how any of our major firms are able to provide
a level of service that is effective in this marketplace.
Q265 David Davies: It appears to
be one-sided to me. The Chairman has already pointed to difficulties
in India that face British lawyers who wish to set up there. I
believe there are huge difficulties facing British lawyers who
wish to set up outside countries that share our legal system,
that is, former Commonwealth countries. I do not think that it
would be very easy for a British law firm suddenly to set up shop
in China. You seem to be asking for it to be all one way and to
allow anyone from anywhere in the world to come and set up shop
in Britain even though British lawyers do not have the same advantage
elsewhere and are losing their jobs at the rate of 2,500 a year
according to your own estimates.
Mr Hudson: I think the position
is very different from the picture you paint. For example, some
of our international negotiations in India are delicately poised.
I believe that we have an advantage in those discussions because
we act in a very open way. Moreover, I believe that acting in
that way and having a very open market is good for UK Plc and
UK solicitors. At the beginning of 2008 probably more than 2,000
solicitors in the City of London alone worked for American-owned
firms. I would exhort you to preserve that openness as a sensible,
informed move because to go back to a protectionist position would
be to shoot ourselves in the foot.
Q266 David Davies: They work for
American-owned firms but they do not work in America.
Mr Hudson: That strikes me as
a very good thing.
Q267 David Davies: Your Chinese solicitor
can work for you in China but he does not necessarily need to
come to London.
Mr Hudson: With respect, what
we are not talking about here is dragging these people over to
appear in Islington Magistrates Court. They will not be dealing
in the domestic markets but the international markets of which
we are speaking, so I believe that the impact of bringing a lawyer
over from Shanghai, to use my example, on a short-term basis will
not have any impact on what I call indigenous or national-based
law.
Q268 Mr Winnick: Ms Lee, leading
on from the questions put by David Davies, in their brief The
Law Society say that the position on lawyers up to now has not
posed "a significant risk of abuse of the immigration system"
and gives the impression, rightly or otherwise, that lawyers should
be exempt from the points-based system. Why is it so important
that lawyers should be recruited in the manner described by Mr
Hudson? For example, can you describe the particular type of legal
and financial firms which require lawyers to come into the UK
and which otherwise would pose problems for firms such as yours?
Ms Lee: If I may talk again about
secondment where lawyers are recruited externally to come and
work in firms like mine for short periods, the advantage is that
they get an educational experience so that when they go back to
their jurisdictions they understand how international legal work
operates. Most importantly, those opportunities for lawyers to
come to English law firms are often done on a reciprocal basis
so that English lawyers also have the opportunity to work in other
jurisdictions in law firms with which we have close relationships.
It is a two-way process in terms of short-term secondments. There
is career development and educational opportunity for English
lawyers as well as lawyers in other jurisdictions.
Q269 Mr Winnick: Do you operate on
an international scale?
Ms Lee: The Slaughter and May
model is different from some of the ways in which other law firms
operate. We operate the "best friends" model whereby
we have close relationships with law firms in different jurisdictions
where we need to develop very close relationships with them because
the kind of advice we give is often concerned with cross-border
deals where legal advice is required from many different jurisdictions.
We are English lawyers and we cannot provide that advice on our
own and therefore we need relationships with other law firms so
we have access to their legal services. One of the ways in which
we develop those relationships so there is cross-referral of business
and advice is by the secondment programme whereby we exchange
lawyers so we and they can understand the kinds of deals that
our clients require us to work upon.
Q270 Mr Winnick: If the points-based
system is in operation—undoubtedly it will apply to lawyers—do
you believe that great harm will be done to your profession as
a result of the way you operate?
Ms Lee: If there is an inability
to have secondments and the development of opportunities between
international law firms I think that could be harmful to the kind
of work we do.
Q271 Mr Streeter: As someone who
was in training as a lawyer with Clifford Chance about a thousand
years ago I am very sympathetic to the arguments you make. It
may help the Committee, Mr Hudson, if you indicate the major cities
in which some of these law firms are located these days.
Mr Hudson: I suspect that you
would be looking all of the major capital centres: Frankfurt,
Paris, New York, maybe Los Angeles, Hong Kong and Shanghai. Our
law firms would be very prominent in the Gulf. We would like to
see our firms operating in Mumbai. Recently, Singapore granted
a number of licences to begin the opening up of its market. A
handful of licences were granted to international firms to open
offices in Singapore and one might say that English firms got
more than their fair share.
Q272 Mr Streeter: These lawyers are
not coming over here to do probate in Leicestershire, are they?
Mr Hudson: That is absolutely
right. If you want to come here to practise as a solicitor in
Basingstoke and do my will or convey my house you have to qualify
under the rules of The Law Society and Solicitors Regulation Authority.
You have to pass the sort of exams that you and I passed many
years ago. This is a very different state of affairs. We are talking
about people coming over into predominantly big corporate city
firms in highly regulated circumstances within either explicitly
owned offices or a network of co-operating firms. They are in
a different market from the consumer market, if I may put it that
way, to which you refer.
Q273 Mr Streeter: How responsive
has the UK Border Agency been to the concerns you have expressed
over the past few months, and how good has it been in issuing
clear guidance so you know exactly where you stand and how to
interact with it?
Mr Hudson: I have great sympathy
with UKBA because I would not start from where they have to start.
We find them very receptive, but there are significant problems
in creating the sort of flexibility and changes that we believe
are needed. The previous witnesses referred to the fact that this
was an online system. We all know what it is like trying to do
what we want to do online. If the drop-down box does not give
us the option we seek it is hellishly difficult. Very often when
we talk to UKBA about the need for changes they find there are
logistical problems in changing the system. The Law Society made
an application in August of last year to become an overarching
body and constantly it finds itself with colleagues in UKBA coming
across problems that were not anticipated and not dealt with within
the system. There is an effort to try to help but there are real
problems with the guidance. To give some obvious examples, for
them to be able to issue practical and effective guidance they
have to understand a myriad of issues and industries. For example,
we have experienced problems in the guidance they have issued
which confuses the position in Scotland and England. It is entirely
understandable, but it does make a difference. It is very problematic
and I believe there is a long way to go, not because of any objection
on its part, before clear guidance is available from the UKBA.
Q274 Ms Buck: What is your firm's
experience of applying for sponsorship particularly under tier
2? How many law firms have applied for sponsorship and what has
been their experience?
Mr Hudson: I think it has been
very mixed and rather problematic not least because the system
has a number of difficulties but also because of some particularities
that you might say apply to lawyers. It is very important to a
law firm that its reputation is of the highest possible standard.
You will know that ratings are given to a T2 sponsoring company.
It might be A or B. In our own experience when making an application
we may say that we have a problem and we are told not worry and
we should just stick in the nearest thing. It is said in the right
spirit but for a law firm that is problematic given the civil
and criminal sanctions that the firm might face. But it is also
of particular significance if you are downgraded from an A to
a B category sponsor. If I am Bloggs & Bloggs, a firm of international
lawyers, and am pitching to do some work for AIG, which is effectively
owned by the US Government, and it does a due diligence check
and finds that I have been graded as B rather than A as a tier
2 sponsor that has significant potential implications for me as
an international law firm.
Q275 Ms Buck: What is the answer?
What would be the preferred system?
Mr Hudson: No one suggests that
lawyers should be exempt or given special treatment. What we need
to do is continue the work that UKBA is doing as rapidly as possible
to try to make it much clearer and give us the flexibility that
I think is of value to UK Plc and the English legal profession
operating in international markets.
Q276 Chairman: How many law firms
have had their applications to become sponsors turned down?
Mr Hudson: I do not know that
number. My understanding is that no applications have yet been
refused. I am not sure that many have been successfully processed.
Q277 Mrs Dean: What new powers will
the UK Border Agency assume under the sponsorship arrangements?
Mr Hudson: The things that concern
me are the very ill-defined and rather vague rights of entry and
inspection of documents. We must all be concerned about authorities
having power to come in and go through the files of a law firm.
The files and papers that they can look at are not explicitly
limited to those matters relating to, say, sponsorship. Let us
say I am acting as a solicitor for a prominent Member of this
House who is the subject of police investigations and I have a
file on it and I also have some people from the Abu Dhabi office
working in my office. I think we would all be very concerned about
the powers of UKBA to go through my files. I do not suggest impropriety;
I suggest that there is vagueness and lack of definition that
needs to be urgently resolved.
Q278 Mrs Dean: What do you believe
is the answer?
Mr Hudson: I suggest that their
powers need to be exercisable by reference to looking only at
papers relating to an issue concerning an individual who is being
sponsored. I would like to see a rebalancing of the wholesale
transfer of liabilities to sponsoring employers and some arrangements
as to what conditions must be satisfied by UKBA before it can
exercise those powers of entry.
Q279 Gwyn Prosser: Ms Lee, Mr Hudson
has referred to the danger of technical breaches by the sponsor
resulting at worst in criminal prosecution which would be an obvious
concern. Do you want to tell us a little more about that? Have
there been discussions on the specific issue that for a technical
breach, perhaps the filling in of a form incorrectly, a law firm
in particular could be subject to criminal proceedings?
Ms Lee: My understanding is that
the penalties are very stringent even for technical breaches and
there are severe consequences, both civil and criminal. My understanding
is that the UKBA has said in discussion that the way they will
approach these breaches is to look for adherence in spirit rather
than the letter. As lawyers we all want to comply with the letter
of the regulations and there is a concern that there is an ability
to impose stringent penalties for technical breaches.
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