The Swedish Bar Association is divided over controversial proposals to relax Bar rules governing how many bidders a law firm can represent in an auction.

The organisation has been forced to push back a decision about relaxing the rules because board members could not reach an agreement.

While the majority of the board was in favour of sticking with current rules – which allow firms to represent only one bidder – disagreements mean it is now considering a compromise solution.

This could allow law firms to apply to the bar association to represent more than one bidder in particular cases as long as they meet certain requirements.

Bar association board members were due to vote on proposals to relax the rules during a meeting last month but now hope to reach
a decision in early autumn, allowing any changes to come into effect by January 2009.

A high-level working group set up by the association, including lawyers from RydinCarlsten, Vinge, Linklaters and Mannheimer Swartling, has come up with the compromise.

The issue has been highly controversial in Sweden where, unlike most jurisdictions, including the US, the UK and other European regions, law firms cannot represent more than one bidder in auctions.

Leading firms – including Vinge, Linklaters and Mannheimer – have called for the rules to be relaxed, arguing that they do not have the same ability to compete as firms in other countries. However, mid-sized firms are strongly against relaxing the rules, fearing any move to do so could lead to them losing market share and would breach ethical codes.

Anne Ramberg, general secretary of the Swedish Bar Association, told Legal Week: "Unfortunately this has become a very heated issue. We want to reach a solution that all parties can accept but also which does not weaken the ethical standards of the legal profession. Following a boost in the Swedish M&A market, a great deal of work has gone to the mid-sized firms. They now risk losing this to the major firms."

Chris Perrin (pictured), executive partner at Clifford Chance in London, said: "The way it works normally is by exception to normal conflict rules; but it is now the practice to permit it in all major financial centres in the world. It has never caused any problems in the UK."