An increasing number of clients are eyeing up the Bar as a cheaper alternative to law firms. Claire Ruckin investigates whether direct instructions are the way forward

As clients and lawyers alike look to snip off a few excess pounds here and there, it was inevitable that the well-trodden path of referrals between the Bar and instructing solicitors would come under scrutiny.

Although the long-hoped-for influx of litigation work as a result of the recession may have remained elusive, the majority of top sets and private practice firms are at last noticing an upturn in their contentious workload. However, with limited work to be had and clients under pressure to keep outside legal spend to a minimum, solicitors have been aggrieved to find an increased number of would-be clients skipping the middleman and going straight to barristers.

Certainly, instructions going directly to the Bar is not a new phenomenon – in fact, it was the generally accepted practice in the 19th century. But with lower overheads and often cheaper hourly rates – coupled with an increase in international disputes, meaning many clients are not as au fait with the English and Welsh legal system – direct purchasing is on the increase.

A boon for barristers

Outer Temple Chambers is one such set to have noticed an increase in approaches from clients who perceive the Bar as providing more economical advice, particularly in areas such as employment, professional negligence and commercial litigation. Director Christine Kings also believes that clients directly instructing chambers are becoming better informed and more willing to take on larger organisations than previously. The set was recently contacted by an individual with a potentially large commercial claim against various defendants across Europe, the Middle East and the US.

Kings comments: "We have noticed in some areas of work that more members of the public and more in-house solicitors are coming to us directly rather than through a solicitors firm. Barrister overheads are much cheaper. Many in-house solicitors still don't realise that they can come to counsel directly."

Fountain Court head of chambers and former Bar Council chairman Timothy Dutton QC has also noticed an increase in the level of direct instructions, but is waiting to see whether this is purely by dint of a general increase in commercial work in recent months: "In-house solicitors and clients such as large companies, institutions and regulators have come to us directly for a long time when they think it appropriate, although this has increased recently, especially for advisory work."

Elsewhere, One Essex Court also receives regular instructions directly from in-house legal teams, especially from gas, energy and oil companies and from a variety of regulatory bodies.

One Essex Court senior clerk Darren Burrows believes direct instructions are a "significant market" for chambers. He comments: "For certain aspects of work there are undoubted savings that in-house lawyers can make by coming to the Bar directly, in part due to cheaper overheads and less administration costs, but also because of the smaller scale of the teams being engaged, which in many cases may only be a single individual."

He adds: "This practice might increase with financial pressures and company credit controllers cutting budgets, but the extent of any increase will also depend on the type of service required and the extent to which the in-house legal department can handle aspects that might ordinarily be dealt with by a law firm."

Building relationships

In a related move, a number of chambers are now cultivating relationships with major banks, which have long been the bread and butter of leading commercial law firms.

One notable example has seen Barclays working to strengthen its relationships with a number of top sets under similar terms as those it asks its panel firms to comply with, such as sending secondees to the bank. It also requests that sets work on a fixed-fee basis and offer conditional fee arrangements.

The bank is keen to stress that it is not trying to out-manoeuvre its traditional law firm advisers. It says it wants to build more sophisticated relationships with certain sets rather than sending one-off instructions. Barclays is particularly looking to up its relationships with chambers in areas it feels it has in-house expertise, such as money laundering, for which outside solicitors are less necessary.

It is understood that if sets comply with the bank's terms then they could receive block instructions, particularly in areas such as professional negligence.

Fountain Court is among those that enjoy relationships with a number of in-house teams at major banks that instruct the set directly. Fountain Court director of clerking Alex Taylor commented: "This is an innovative initiative from Barclays, which has started to progress into building deeper and more sophisticated relationships with the Bar; I am delighted we are involved. This experience will help us not only with our highly valued relationship with Barclays, but with other clients, too."

Sceptical solicitors

Not surprisingly, many instructing solicitors are less than impressed about any increase in instructions going directly to the Bar. Although many acknowledge that there are circumstances where this route undoubtedly saves clients money, they question chambers' ability to take on larger mandates and work in some practice areas.

Mark Humphries (pictured), the former head of advocacy at Linklaters and now director of litigation boutique Mark Humphries Limited, comments: "When clients encounter very serious disputes, they tend to turn to their usual solicitors who are familiar with their business. But for less serious disputes, when the economic environment is challenging and costs are under greater scrutiny, it is inevitable that in-house lawyers will seek to control costs in whatever ways they can. Direct instruction to the Bar is one obvious way of reducing costs."

One major issue recognised by both barristers and solicitors is the restrictions on resources at chambers, which simply do not have the manpower that the larger City firms are able to offer.

Barlow Lyde & Gilbert dispute resolution partner Andrew Horrocks says: "I have noticed some clients going to very good members of the junior Bar because they can get cheap hourly rates. The Bar has lower hourly rates and lower overheads compared to law firms. Clients in general want to save money."

He adds: "The flip side of low overheads is a lack of backup and resources that the big litigation firms have – we are seeing a number of referrals from the Bar to us for this reason."

Fountain Court's Dutton comments: "In some cases, clients have the equivalent of a litigation team in-house, so it is expected that they would come straight to the Bar. However, for larger scale litigation it is still widely recognised that there is a necessity to bring in a solicitors firm."

Call to clients

Sets that have seen the benefit of this new line of work are keen to see more of it come their way. Some chambers are vigorously marketing themselves, finding ways around the somewhat archaic rules on advertising laid out in the Bar's notoriously strict – and some say outdated – Code of Conduct.

Although barristers can place adverts regarding their rates and services, they cannot make any indication of willingness to accept instructions or imply any intention to restrict who instructions may be accepted from. But clients' attention can be drawn to services.

Outer Temple Chambers' Kings says: "We put adverts in the industry press targeting those that had lost their jobs when the City was making redundancies. We received work off the back of that for our employment and professional negligence teams."

But many at the Bar query how this could impact their long-term working relationship with solicitors firms, which still remain their major line of work.

One clerk warns of the potential dangers involved: "Clients are coming to us direct but we are not outwardly admitting this because our main clients – solicitors firms – might think we are directly competing for their business and in turn we might see a withdrawal of work from them." Direct instructions will certainly alter the barrister-solicitor dynamic if it means either party could instruct the other.

But while direct access is on the increase – and for some chambers it has been a welcome new source of income in a contracting market – a revolution is some way off. As One Essex Court's Burrows observes, frequently clients find it hard to shun tradition, preferring to play it safe with the routes they know. He says: "For certain aspects of work, in-house counsel have to be brave enough to break with tradition and come straight to the Bar. Going down the traditional route of instructing a good law firm may initially also act as an insurance policy in itself if something goes wrong and they find themselves in front of their board, so it's understandable that some still choose the comfort of the safe and established way of doing things."

However, law firms and chambers alike will continue to feel pressure from in-house counsel to cut costs. And with several large clients circling as attitudes towards direct instructions changes, there is a sizable slice of the market to be had by those chambers willing to take the risk.

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One-stop shopping

Bar Council chairman Nicholas Green QC (pictured) is urging chambers to offer clients a one-stop shop to help them compete with solicitors to win work from clients.

The groundbreaking initiative would see individual chambers encouraged to set up business units, called 'procurecos', which would be used as a means of winning work direct from companies and public bodies, cutting out the solicitors who generally serve as middlemen between chambers and clients.

Each procureco would bring together barristers with solicitors and other professions like accounting firms, effectively enabling chambers to offer a single point of contact for clients at a cheaper rate than solicitors.

Each procureco would effectively operate a number of panels for different professions and would source rather than supply work, allowing solicitors and barristers working under the umbrella units to remain regulated as individuals by the Solicitors Regulation Authority and the Bar Standards Board (BSB) respectively.

Green comments: "The Bar has a cost advantage compared to many firms of solicitors. Last year we thought procurecos might just apply to the publicly funded Bar but we realised this is something the commercial Bar can take advantage of as well." The new structure is currently waiting for approval from the Legal Services Board.

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