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Legal Practitioners Bill - Frequently Asked Questions

FAQ on the Legal Practitioners Bill, 2016 (the "Bill")

 

1              Why do we need the Bill at the present time?

The Legal Practitioners Law (2015 Revision) (the "Current Law"), was first enacted in 1969 when there were fewer than 30 lawyers. Today we have close to 700 lawyers. Developments with respect to the circumstances in which law is practised have changed significantly since the enactment of the Current Law. The jurisdiction of the Cayman Islands is now a sophisticated financial services center in which the services offered by lawyers are a crucial component to its continued success. With the exponential growth in the number of lawyers admitted to practise in the Islands and the establishment of foreign offices by local firms, new challenges in the regulation of the legal profession have also emerged.  The Current Law therefore has several shortcomings that need to be addressed as a matter of urgency.

 

2              What is the current regulatory regime relating to the practice of law outside of the Cayman Islands?

2.1          The Current Law does not regulate the practice of Cayman law outside of the Cayman Islands.

2.2          A number of attorneys currently practise Cayman law at affiliates[1] of qualified law firms[2]  .  There are also attorneys in a number of foreign law firms with no connection to Cayman who hold themselves out as practising Cayman law.   In addition, many firms with no connection to Cayman have begun practising Cayman law.

2.3          Currently the practice of law is not defined which makes it difficult to claim any breach. The Bill defines the practice of law.

2.4          Similarly, the practice of law overseas is currently not regulated. The Bill now regulates all attorneys practicing in foreign offices.

 

3              What has CFATF and FATF to do with the Bill at the present time?

3.1          The Bill includes provisions that address the Financial Action Task Force ("FATF") recommendations, which are part of the global regulatory for the financial services industry.  In 2017, the Caribbean Financial Action Task Force ("CFATF") will access Cayman on its adherence to FATF recommendations – one of which effectively requires lawyers to be regulated.

3.2          When passed, it will allow the legal profession to demonstrate adherence to the FATF recommendations in order for the jurisdiction to achieve a satisfactory assessment.

 

 

4              How does the Bill regulate the Profession?

4.1          The Bill establishes the Cayman Islands Legal Practitioners Association ("CILPA") and provides that all attorneys are members of CILPA.

4.2          CILPA council ("Council") shall comprise of:

(a)           8 members who are resident in the Cayman Islands;

(b)          5 Council members must be Caymanian; and

(c)           3 of the 5 Caymanians must be those who qualified locally (i.e. completed Articles in the Cayman Islands).

4.3          Responsibilities of Council include promoting the qualification, training and development of Caymanians as attorneys.

 

5              How does the Bill enhance the reputation of the jurisdiction?

5.1          With the passage of the Bill, the regulatory bodies of countries in which qualified law firms and affiliates operate can seek comfort from the fact that foreign attorneys who practise Cayman law are regulated in the Cayman Islands.

5.2          Regulatory regimes in some jurisdictions require that each foreign attorney practising in such jurisdiction will need to be registered there and part of that registration process includes filing a current practising certificate from his or her home jurisdiction.  The Bill seeks to address this issue by allowing for attorneys in foreign offices to be admitted in Cayman and to obtain practising certificates.

5.3          It is quite feasible that attorneys overseas who are not on the active roll in any jurisdiction, or those who do not hold current practising certificates in any jurisdiction, may hold themselves out as practising Cayman law outside of Cayman.  The Bill seeks to address this shortcoming.

5.4          The Bill also includes criteria for determining whether or not a person is a fit and proper person to be admitted and to practise as a Cayman Islands attorney-at-law.

5.5          The current law does not define the scope of the practice of law.  It also has no specific provisions relating to regulating the conduct and discipline of attorneys.  In this regard, Cayman is not meeting international standards.

5.6          By including a Code of Conduct, the Cayman Islands will now become eligible to apply for recognition by the Law Society of England and Wales.  This in turn will allow Cayman qualified attorneys to become eligible for starting the process of admission in England and Wales (subject to a qualifying exam).

5.7          The passage of the Bill will allow the legal profession to demonstrate adherence to the FATF recommendations in order for the jurisdiction to achieve a satisfactory assessment by the CFATF.

 

6              Does the Bill make it easier to hire more junior foreign qualified (non Caymanian attorneys) in foreign offices?

6.1          No, it does not. Under the Bill, a foreign qualified attorney (who is not a Caymanian ) needs to:

(a)           have a foreign qualification in a recognized jurisdiction AND be

(A)          3 year PQE before 1 Jan 2019;

(B)          4 year PQE after 1 Jan 2019;

(b)          be in good standing in such jurisdiction;

(c)           pass an exam set by the Legal Advisory Council; AND

(d)          undertake 4 months Mini Articles under the supervision of a Cayman admitted attorney with 5 years PQE, 3 years of which must be as a Cayman attorney.

 

7              Does the Bill make it cheaper to hire non Caymanian attorneys in foreign offices of qualified law firms?

7.1          No. The Bill makes it more expensive to hire foreign attorneys since they must have at least 3 years PQE[3]/4 years PQE[4]

7.2          Foreign qualified attorneys cannot practice Cayman Islands law as paralegals in foreign offices.  Accordingly, the foreign offices cannot be staffed with non Cayman admitted foreign attorneys who work as paralegals.

 

8              How do foreign offices enhance job opportunities for Caymanians?

8.1          Foreign offices of Cayman law firms secure work that would not otherwise come to the Cayman Islands.  Cayman’s dominance as the leading offshore finance centre has much to do with Cayman law firms being industry leaders in setting up overseas offices.

8.2          Foreign offices increase the volume of business flowing into the jurisdiction, which in turn creates job opportunities both in the private and the public sector.

8.3          Foreign offices create further jobs for Caymanian attorneys (in and outside of Cayman) and opportunities for other Caymanians to work in supporting roles and further opportunities for Caymanians (including Caymanian Articled Clerks) to gain experience abroad.

8.4          A number of Caymanian attorneys work/have worked in foreign offices.

8.5          The Bill now allows foreign offices to provide an opportunity for Caymanian Articled Clerks to serve a portion of their term of Articles overseas and thereby gain international exposure.

8.6          The Bill requires all firms that hold work permits, and also firms with foreign offices, to submit a Business Staffing Plan.

(a)           The Business Staffing Plan shall contain details of how a law firm intends to comply with Law Firm Best Practice Guidelines (set out in Part 2 of Schedule 2 of the Bill).

(b)          Law Firm Best Practice Guidelines include obligations to detail:

(i)            Recruitment and retention;

(ii)           Training and Development – appropriate support for those within the firm who are studying for professional qualification;

(iii)          Performance Management – clear written statement of role;

(iv)          Remuneration and Benefits – to be clearly communicated;

(v)           Dealing with Problems – written grievance procedure; and

(vi)          Career Development – basis for promotion and communication of such criteria to attorneys.

8.7          Responsibilities of Council include promoting the qualification, training and development of Caymanians as attorneys.

 

9              Does the Bill benefit the Cayman Islands?

9.1          All attorneys admitted to practise will need to pay an annual practising fee.

9.2          Modern statute and Code of Conduct governing the legal profession in the Cayman Islands and the practice of Cayman law worldwide.

9.3          The regime under the Bill allows for Cayman to continue in its dominant role as the leading offshore financial centre (including the opening of further offices with Cayman teams in other new jurisdictions) thereby enabling the continued growth of the firms inside and outside Cayman.

9.4          The Bill creates an economic and control anchor by requiring that the voting control of the firm be held by Caymanians or persons ordinarily resident in the Cayman Islands.  This framework should allow multi-jurisdictional firms to operate with a Cayman practice whilst ensuring that the actual legal teams practising Cayman law within and outside of the Cayman Islands are controlled by Caymanians or persons ordinarily resident in the Cayman Islands.

9.5          All firms must ensure[5] that no non-Caymanian will practice law in a foreign jurisdiction IF A > B+C+D, where:

(a)           A = # of Non-Caymanian attorneys in another jurisdiction with the Qualified law firm and any Affiliates

(b)          B = # of Caymanian attorneys worldwide with the Qualified law firm and any Affiliates

(c)           C = # of Non-Caymanian attorneys in Cayman with the Qualified law firm and any Affiliates in the Islands.

(d)          D = # of trainee attorneys with the Qualified law firm and any Affiliates.

 

10           Can a foreign office be staffed by foreign qualified attorneys who hold the title of paralegal?

10.1       The Bill prevents all non Cayman admitted attorneys from practising Cayman law.

10.1       Foreign qualified attorneys cannot practice Cayman Islands law as paralegals in foreign offices.

 

11           Will this result in work being diverted to foreign offices, thereby depriving local attorneys of work?

11.1       Most work done in overseas offices is work which would go to another jurisdiction if the Cayman law firm was not there.  Much of the secured work is funneled back to lawyers in the Cayman office.  Therefore, the foreign offices actually increase the level of work done in Cayman.

11.2       Under the Bill only an attorney admitted in the Cayman Islands can appear before a court, judicial or quasi-judicial tribunal in the Islands.  Accordingly, it is quite unlikely that a Cayman admitted attorney working in a foreign office would handle this type of work.

11.3       To the extent that the non-resident attorney is to work in the Cayman Islands, he would be subject to the work permit provisions of the Immigration Law in the same way as any other person.

 

12           What is being done to ensure that a foreign qualified attorney has sufficient knowledge of local laws and regulations?

12.1       Foreign qualified attorneys are required to undertake ‘mini-articles’ by working under the supervision of an attorney who has been practicing for 5 years with at least 3 years being Cayman law.  This requirement does not currently exist in relation to foreign qualified attorneys newly admitted in Cayman.

12.2       All foreign qualified attorneys admitted after 1 January 2019 will need to pass a Cayman Islands law examination.

 

13           Does the Bill have grandfathering provisions?

The Bill allows foreign attorneys at an affiliate of a qualified law firm AND who meet the admission criteria in Cayman to be allowed to continue to practice Cayman Law for 12 months.

 

14           Is the "Practice of law" defined?

The Bill defines this and significantly expands what is considered practising Cayman law and its scope is now worldwide.

 

15           How does the Bill deal with code of conduct for attorneys?

15.1       The Code of Conduct (the "Code") set out in Part 1 of Schedule 2 provides a clear set of modern rules for attorneys to follow.

15.2       All attorneys must observe the Code.

 

16           Are there any accounting requirements in relation to client accounts, etc. under the Bill?

16.1       Council has the power to make rules relating to client accounts and the manner in which law firms deal with client money held by them in a fiduciary capacity.

16.2       There is no requirement for law firms to be audited.

 

17           How does the Bill deal with discipline within the legal profession?

17.1       The Bill provides for the establishment of a "Professional Conduct Committee" consisting of 5 members:

(a)           2 members of Council;

(b)          2 attorneys who are not on Council; and

(c)           a person with a professional qualification, not being an attorney, approved by the Attorney General.

A least 3 members must be Caymanian.

17.2       If there is a prima facie case to answer that the conduct may have amounted to serious professional misconduct or the committee has been unable to make a finding because the attorney did not cooperate, it is then elevated to the "Disciplinary Tribunal".

17.3       The Disciplinary Tribunal is made up of: (i) Chief Justice or a judge; (ii) 2 attorneys or former attorneys nominated by Council (one of whom must by Caymanian).[6]

 

18           Does the Bill deal with discipline of non-resident attorneys?

18.1       A non-resident attorney, as a Cayman Islands attorney-at-law, is subject to the disciplinary procedures in the Bill.  Accordingly, the non-resident attorney can be suspended from practice or be struck from the Court Roll or be subject to any of the other disciplinary sanctions set out in the Bill.  This may also, depending whether such attorney is qualified and admitted to practise in another jurisdiction, result in such attorney being reported to the relevant regulatory body of that other jurisdiction. This in turn could lead to disciplinary action by such jurisdiction. For example, a solicitor qualified and admitted to practise in England and Wales would be required to disclose such matter to the English Law Society and could then be subject to sanction under their rules..

 

19           Why does the preamble to the "Law Firm Best Practice Guidelines" in the Bill read that it is not a mandatory code of practice?  If this is not a mandatory code does it have any teeth? What is the penalty for non compliance?

19.1       Part 2 of Schedule 2 of the Bill sets out the Law Firm Best Practice Guidelines ("LFBPG").  The LFBPG is based on the International Bar Association ("IBA") Law Firm Governance Initiative – Best Practice Guidelines.

19.2       The preamble to the BPG is based on the preamble to the IBA guidelines. The highlighted sentences below from the preamble to the IBA guidelines are also included in the preamble to the LFBPG included in the Bill.

19.3       The preamble to the IBA guidelines read:

"These guidelines attempt to identify certain general principles and standards that may help law firms manage their practices in a way that will achieve these objectives. Some of its points may be of more relevance to larger firms, or to those with a broader element of international work. Some may fit more naturally in certain cultures and less so in others. Some may need to be adapted over time to reflect changing conditions and concerns. There will be few firms (if any) that will adopt every provision. But all law firms should benefit by thinking about the extent to which each of the guidelines applies to them and could make them more effective and successful.

 

The points dealt with below are, in general, expressed in terms of obligations, almost as though they represent a mandatory code of practice. This is not the intention. It is more of a checklist of issues to consider. It is inevitable that most firms having considered the possible adoption of all of the suggestions will decide that some of them are not applicable. There is nothing wrong with that. The process of considering their applicability and of challenging accepted wisdom or traditional thinking has a value in itself."

 

19.4       All law firms holding work permits or with a foreign office are now required to submit a Business Staffing Plan ("BSP") under the Immigration Law (2015 Revision) which contain details of how a law firm intends to comply with LFBPG.

19.5       The purpose of the BSP is to ensure that when recruiting staff a law firm accepts a commitment to provide opportunities for Caymanians.  A BSP "shall contain":

(a)           reasonable provisions to give Caymanians access to legal profession, including training and development and equitable progression within the law firm;

(b)          contain details of how the firm intends to comply with the LFBPG;

(c)           contain a provision that if an attorney who is not Caymanian is proposed as a partner but is denied a work permit, the law firm will not for a period of 2 years apply for a practicing certificate to allow such attorney to practice Cayman law as a partner in an affiliate of the law firm (Section 76(4)

19.6       Managers "shall ensure" that non-Caymanian attorney is not promoted or re-designated or appointed as a partner without providing the BSP Board a declaration regarding the effect such promotion or re-designation or appointment would have on the opportunity for advancement to that level of Caymanian attorneys within the law firm who may have qualifications to advance to that level.

19.7       Offences for misrepresentation in the BSP about the LFBPG:

(a)           It is an offence under Section 104(1) of the Immigration Law (2015 Revision) to file a misleading BSP:

"104. (1) A person who-

(a) in connection with the carrying into effect of any of the purposes of this Law, makes, causes or allows to be made any return, statement or representation which is false in a material particular and which he knows to be false or which he does not believe to be true;

(b) without lawful excuse (the proof of which shall be upon him) alters, causes or allows to be altered any certificate, licence, permit or other document issued under this Law or any entry in any document lawfully made under this Law: or

(c) without lawful excuse (the proof of which shall be upon him) uses or possesses, or causes or allows to be used or possessed, any forged, altered or irregular passport, visa, certificate or other connected document or any endorsement on any of such documents which has been altered or forged,

commits an offence."

(b)          The Bill provided that any person who commits an offence under the law is liable to be proceeded against and punished accordingly.

(c)           In the case of R v. McCafferty (Grand Ct.: Schofield, J.) February 25th 1994, 1994-95 CILR) it was held that the Caymanian Protection Board is a judicial authority.  Accordingly, it can be argued that the Business Staffing Plan Board is also a "Judicial Authority".   The Bill provides that an attorney-at-law is an officer of the Court.

(d)          The Bill provides that an attorney shall comply with the obligations imposed under the Law and failure to do so may be subject to disciplinary proceedings.

19.8       Under the Bill, Cabinet can also make further regulations relating to the BSP.

19.9       If the event of any inconsistency between the LPBPG and the Code, the Code shall prevail.

 

20           Does the Local Companies (Control) Law ("LCCL") apply to a law company?

20.1       The LCCL regime does not apply to law partnerships and only applies to law companies.  The Bill provides that LCCL does not apply to a law company thereby placing law companies on the same footing as a partnership.  A majority of the law firms operate as partnerships.

20.2       The Bill however ensures that the economic control of law firms remains in the Cayman Islands by ensuring that that no non-Caymanian will practice law in a foreign jurisdiction IF A > B+C+D, where:

(a)           A = # of Non-Caymanian attorneys in another jurisdiction with the Qualified law firm and any Affiliates

(b)          B = # of Caymanian attorneys worldwide with the Qualified law firm and any Affiliates

(c)           C = # of Non-Caymanian attorneys in Cayman with the Qualified law firm and any Affiliates in the Islands.

(d)          D = # of trainee attorneys with the Qualified law firm and any Affiliates.

20.3       All law firms that hold work permits must file a Business Staffing Plan detailing how they intend to comply with the Law Firm Best Practice Guidelines.

 

21           Does the Bill incorporate recommendations of the Report of the Law Reform Commission dated May 2007 – Review of the Law Regulating Legal Practitioners in the Cayman Islands?

The Bill incorporates most of the recommendations of The Law Reform Commission (see http://www.gov.ky/portal/pls/portal/docs/1/2385276.PDF) – in particular those relating to the regulation of practitioners outside the Islands, the requirement for a recognised law firm to have a substantial nexus with the Islands, disciplinary proceedings, the code of conduct, an examination for foreign attorneys, four months of mini articles.



[1] Under the Bill,

 

“affiliate”, in respect of a qualified law firm, means-

 

(a)         an office engaged in the practice of Cayman Islands law in another jurisdiction where it is trading under a name that is the same as, similar to, or a derivative of the name of the qualified law firm; or

(b)         an office engaged in the practice of Cayman Islands law in another jurisdiction that is held out as being associated with the qualified law firm,

and-

 

(c)          in which the voting control of the office is held –

 

(i)             by one or more attorneys who are Caymanian; or

 

(ii)            by -

(A)   one or more attorneys who are legally and ordinarily resident in the Islands and who practice Cayman Islands law from within the Islands; and

(B)   one or more attorneys who are Caymanian.

 

(d)         in which those attorneys listed in (c) above may veto the appointment or promotion of an attorney at the office.

 

[2] Under the Bill

“qualified law firm” means a law firm that undertakes the practice of Cayman Islands law in the Islands and that includes at least one attorney-at-law who is Caymanian and in which voting control is held –

a)     by one or more attorneys who are Caymanian; or

b)     by-

(i)             one or more attorneys who are legally and ordinarily resident in the Islands and who practice Cayman Islands law from within the Islands; and

(ii)            one or more attorneys who are Caymanian.

[3] Until 1 January 2019

[4] After 1 January 2019

[5] Council may in exception cases waive this…however Council must in that case within 2 week publish details of such approval.

[6] If the Complaint was made by Council, the Chief Justice will instead nominate the 2 attorneys (one of whom must be Caymanian).