We submit part 1 of our report. Our Law Reform views are not random and are also based on research made by the Law Reform itself.
PART 1 The Legal Services Bill 2020 (the “2020 Bill”).
From the outset we would like to underscore that we are in complete agreement with all concerned that there is an urgent need to implement a modernized, fair and balanced legislation to regulate the legal profession. It is long overdue. Our concerns regarding the limitations of the 2020 Bill and which have been aired ad nauseum, with the leadership in this country and by the community (lawyers and layman alike) for almost 20 years now remains the same:
• The absence of any substantial nexus between the non-resident attorney and the jurisdiction; the only nexus being employment by a ‘recognised law firm’;
• The lack of relevant and appropriate supervisory/regulatory oversight of persons practicing Cayman Islands law in other jurisdictions;
• The proposal that non-residents who work for ‘recognised firms’ in other jurisdictions should be able to obtain practicing certificates with no detailed reasons as to why;
• The implications for future employment of graduates of the CILS (Caymanian and non-Caymanians alike);
• The concern that the overseas firms with non-Cayman Islands attorneys will divert work that otherwise would be done by persons that hold practicing certificates on island;
• The jurisdictional risks to these islands.
We checked the Roll and there are about 900 lawyers with Practicing Certificates resident on Island. They deserve protection during these difficult times impacting our economy and the financial sector in particular caused by the pandemic and the anti-avoidance legislation adopted by OECD countries that are trying to increase their tax revenue. The residents, be they expatriates or Caymanians, contribute to the economy of the Islands by making Cayman their home. This is where they spend their money. Whether they are Caymanians or expatriates we need to protect their livelihoods because if they are made redundant it will have negative effect on the local economy. For every lawyer made redundant, especially senior lawyers 2 or more support staff will likely lose their job and think of the impact during these pandemic times.
With "remote" working being the "new normal" and meetings with overseas lawyers and clients taking place online for the foreseeable future (certainly 2021 and 2022) there is no reason why law firms in Cayman could not structure their affairs to be able to work in shifts from Cayman to meet the demands of clients and their professional advisors in all time zones instead of having to employ lawyers in offices in jurisdictions outside the Cayman Islands.
2.1. On 11th October 2010 (October 2010 Meeting) the Hon. Attorney General, Mr. Samuel Bulgin (the “Attorney General”) organized a meeting with members of the Cayman Islands Law Society (CILS or Law Society), the Caymanian Bar Association (CBA or Bar Association) and legislative members of the assembly to discuss the Legal Practitioner’s Bill. As with previous meetings of its kind it did not succeed in moving the discussion forward.
At the root of the debate at the time and today, were the complaints by Caymanian lawyers over the years to members of what was then the Legislative Assembly that they have not participated equally in the success of the industry, largely some argue because of discrimination.
The other issue related to the practice of Cayman Islands law by foreign lawyers in overseas jurisdiction without having a local practicing certificate in contravention of the Legal Practitioners Law 2010 Revision and in total disregard to the requirements under the immigration law,
Section 10 of the Legal Practitioners Law 2010 Revision then and under the current Legal Practitioners Law makes it an offense to engage in the practice of Cayman Islands law without a practicing certificate and only Caymanians are eligible to have a practicing certificate.
2.2. Caymanian lawyers felt then and as they do now that if practicing certificates are issued to non-residents, young professionals would have to compete with an unlimited number of foreign attorneys, worsening the existing system skewed by design against Caymanian success in the industry. Caymanians by and large felt then and now that allowing attorneys overseas to hold Cayman based certificates is simply a method of keeping a Cayman workforce outside of the Cayman Islands and without the necessary immigration controls.
The Caymanian lawyers we spoke to remain aggrieved in that the 2020 Bill continues to mandate where they should work and with whom, given that the bill states that they can only work in another jurisdiction with an ‘affiliate’ (of a recognised firm).
2.3. This they add is compounded by alleged misconduct by certain partners and non-lawyers in the profession and the fear of reporting that this elicits (being managed out of the firm, blacklisted, no employment, the inability to succeed in one’s profession in one’s country and being unable to take care of one’s family).
There now appears to be a more prevailing view that leaders have taken corporate bribery to new heights and given the nature of local politics and elections due in a few months it would be career suicide to submit any written comments or complaints that they may have regarding the 2020 Bill (notwithstanding whistle blower legislation).
ALPA can attest to the legitimacy of certain of these concerns given conversations members have had with current leadership regarding potential conflicts of interest and the concerns they raised in their letter dated 22 October 2019 to all members of Parliament.
2.4. It was no coincidence that the Hon. Leader of the Opposition, Mr. Arden McLean said on the government’s radio talk show, For the Record hosted by Mr. Orrett Connor this past Friday morning that professionals in the industry continue to tell him, rightly or wrongly, that our leaders simply cannot be trusted to adopt fair and measured legislation. And that the fear that professionals have in the industry is real.
2.5. But more recently the advent of the Covid 19 pandemic and its likely effect. You will note from the articles attached that major UK and USA law firms have been steadily laying off their lawyers and partners. We believe that it may only be a matter of time before this downsizing and cost cutting becomes our reality and that it will be the Caymanian lawyer, student, corporate assistance that will be adversely affected. We are aware of local firms already downsizing and Caymanian staff being retired or furloughed.
2.6. Cabinet agreed to pay the Cayman Islands legal Practitioners Association (CILPA) over CI$2,000,000 for the years 2020 and 2021 for the CILPA to monitor and supervise its members with practicing certificates. There was no requirement on the other hand for CILPA to monitor or supervise its members employed overseas without practicing certificates. It would appear that the reputational risk posed to these islands having unsupervised and unregulated professionals in foreign jurisdictions that claim to be Cayman lawyers was not a priority.
2.8 Our view given the unresolved challenges and tensions evoked by certain provisions of the 2020 Bill is that it would be prudent and pragmatic to steer a safer course (as has been firmly suggested in the past) to adopt the non-contentious provisions of the 2020 Bill, retain the provisions that the court may only grant practicing certificates to Caymanians and persons who intend to reside in the Islands during the term of their work permit as soon as possible.
2.9 Further, given the pandemic times in which we live, let us also conduct a Covid socio-economic impact assessment to evaluate whether the proposed model of overseas legal practice is beneficial to the welfare of the people of these Islands, and only in the event that such evaluation confirm this to be the case that the government contemplate moving forward with the 2020 Bill in its essential format.
2.10 Finally given that these islands are always under international scrutiny it would not bode well that our Parliament is seen to be knowingly, aiding abetting persons committing criminal offences arising under the Legal Practitioners Law and the Penal Code. See the summary relating to Mr. Paul Garlick QC’s opinion below.
3. Chronological Summary
Whilst this issue had its genesis in early 2000, on the 2nd June 2003 Law Society provided the Attorney General (who is still the Attorney General for these islands), with a draft copy of the Legal Practitioners Bill, (the “CILS 2003 Bill”) which included what continues to be the contentious provisions under what is now branded the Legal Services Bill 2020.
The CILS 2003 Bill sought to authorize non-resident persons to be admitted as Cayman Islands attorneys at law provided that they were employed by a (1) “recognised firm” namely a firm with at least 50% ‘partners or persons holding equity interests’ are Caymanians or resident in the Cayman Islands’ or (2) an “affiliate” namely any person with at least 50% of which is owned and controlled by ‘recognised firm’ or under ‘common ownership with it’.
Thus the CILS 2003 Bill sought to regularize persons that were not Caymanians, ie persons that were not living in the Cayman Islands and not having a local practicing certificate, to practice Cayman Islands law overseas.
In August 2003 the Attorney-General instructed the Legislative Drafting Department to prepare a draft Legal Practitioners Bill (the “AG’s Bill 2003”) which was reviewed in 2004 by both the Attorney General and the Hon. Chief Justice, Mr. Anthony Smellie (the “Chief Justice”).
4. The Legal Practitioners Bill 2003 and the Law Reform Commission
4.1. The Attorney-General subsequently transferred the CILS 2003 Bill to the Law Reform Commission (the “Commission”) in September 2005 for a more in-depth review.
4.2. At this point some of the unresolved and central concerns held by the Commission were thus:
• the eligibility of persons to practice the laws of the Cayman Islands-should attorneys-at-law who practice Cayman Islands in other jurisdictions be able to obtain practicing certificates;
• whether all attorneys, including government attorneys, should be subject to the same forms of discipline;
• whether all attorneys should be called to the Bar and have practicing certificates;
• the composition of the Complaints Committee;
• whether the Attorney-General should have a veto over the dismissal of a complaint against an attorney by the Complaints Committee; and
• the composition of the Disciplinary Tribunal.
4.3. The Law Society’s response to the AG’s 2003 Bill was: “The Bill is slanted in favour of Governmental and Judicial control of the legal profession, which is unwarranted and undesirable and constitutionally unacceptable.” James Bergstrom for CILS in letter to the Commission dated November 11, 2005.
The Commission’s view on the other hand was that the right of individuals to represent themselves is an inalienable right common to all natural persons. But no one has the right to represent another; it is a privilege to be granted and regulated by law for the protection of the public.
4.4. It should be noted that the Commission’s role from inception was to promote law reform with a responsibility to study and to keep under constant review the statutes and other laws comprising the law of the Cayman Islands with a view to systematic development and reform.
4.5. After several iterations of the AG’s 2003 Bill, taking into account comments from the Judiciary, CILS and the CBA, the bill was revised and circulated on January 29, 2007 for public consultation. Presidents of the CILS and CBA made oral representations to the Commission on February 28, 2007. In May 2007 the Commission submitted its Final Report No 2 (see attached) to the Attorney General after which time the President of CILS wrote to the Attorney General in August 2007 suggesting further amendments. This resulted in a Cabinet meeting in March 2008 with members of the Commission, CILS and CBA in attendance to consider what was ultimately in the best interest of all stakeholders.
4.6. By 2008 the central articulated concerns regarding the AG’s 2003 Bill were:
• The regulation of the practice of the law of the Cayman Islands by those persons resident in the Islands and those resident in foreign jurisdictions;
• The establishment of a complaints Committee to whom members of the public and others may make complaints about alleged misconduct of attorneys-at-law in the private sector;
• The establishment of a disciplinary tribunal to determine complaints about private sector attorneys;
• The continued discipline of government attorneys by the Grand court;
• The provision of a Code of Conduct.
The Commission and the Law Society, CBA agreed to points 2, 3 and 4, but not those expressed in points 1 and 5, above.
4.7. On the question of non-resident lawyers, the Commission did not agree with the CILS and CBA’s position as suggested in their letter in August 2007 that the class of persons entitled to be admitted to the Cayman Bar be expanded should include persons who are not resident in the Islands who are either a partner or employee of a firm trading under the same name as a recognized firm “where a majority of the Cayman resident equity partners have an equity interest (directly or indirectly) in such affiliate.”
Further The Commission did not agree with the Law Society that the Law be enacted without the Code of Conduct (which at the time was set out in Schedule 5 of the Bill) and that their draft code be used as a “starting point” to be issued by the Legal Advisory Council after the law is enacted.
4.8. The Law Society’s response was “We remain strongly of the view that the current draft Code be substituted as suggested” and did not provided comments to Schedule 5 of the draft Bill”.
5. The Law Reform Commission and Professional Concerns which remain unchanged by the Legal Services Bill 2020
5.1. By 2008 the Commission’s concerns with the proposal as presented by the Law Society and the Bar Association can be summarised as follows:
• The absence of any substantial nexus between the non-resident attorney and the jurisdiction. The only nexus advanced by the Law Society and the Bar Association was the non-resident attorney’s employment with a recognised law firm. This position has not changed.
• Under the proposals by the Law Society and the Bar Association the recognised law firm itself didn’t have to be substantially established in the Cayman Islands. As mentioned above this would have implications for future employment of graduates of the Cayman Islands Law School whether Caymanian or non-Caymanians or the potential for the development of “brass plate” law firms based in the Cayman Islands. This position has not changed.
• The lack of supervisory/regulatory oversight. Under the proposals at the time the professional misconduct by non-resident attorneys could go undetected by the local authorities as there were no provisions for cross border reporting by and to the regulatory oversight bodies in the various jurisdictions in which the non-resident attorney may be practicing. This position has not changed.
• While the Law Society and the Bar Association suggested that the partners of the recognised law firm could be subject to discipline under the code of conduct of the associations for allowing the non-resident attorney who is suspended or struck off to continue in the firms’ employment, there was no real/express obligation on the partners to report any misconduct or sanctions abroad. Even in circumstances where a potential act of misconduct came to the attention of the Complaints and Disciplinary Committees there would have been significant challenges encountered in gathering and evaluating evidence from abroad. This position has not changed.
• Lack of knowledge of Cayman Islands law. This is an essential tool for protecting the public (clients) as well as the local and international reputation and standing of persons admitted to practice in the Cayman Islands. While there may be some informal training by some of the law firms, there is no indication that this was either mandatory or done across the board for all law firms.
• The Law Society proposed that non-residents who work for recognized firms should be able to obtain practicing certificates but provided no detailed reasons other than if not allowed they would have to close down their overseas practices. This position has not changed.
• The view was that the Bill only benefited major law firms and in August 2007 the associations sought to broaden their proposal to include any affiliate of a recognized firm the members of which did not even have to practice law.
• In addition there remains the concern that the overseas firms with non-Cayman Islands attorneys divert that otherwise would be done by persons that hold practicing certificates.
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