BVI Legal Profession Act 2015: Clampdown on Non-BVI Firms Practising BVI Law
The New Act
Proposals to introduce legislation in the British Virgin Islands (the "BVI") to reform the regulation of the legal profession have been around for a number of years. But recent concerns about non-BVI law firms practising BVI law, its likely negative impact on the local profession and on the financial services industry in the Islands generally, not to mention the obvious risks inherent in individuals who are lacking the necessary expertise giving legal advice, put it to the top of the BVI government's agenda. The result is the Legal Profession Act 2015 (the "LPA"), which was enacted on 11 May 2015, but is not yet in force. The main areas the LPA covers are:
(a) The fusion of the profession – all former BVI barristers, solicitors and attorneys-at-law will now be known as 'legal practitioners';
(b) The establishment of a General Legal Council (the "Council"), whose responsibilities include setting standards for legal qualifications as well as applications for the admission of legal practitioners;
(c) The admission, enrolment and status of legal practitioners (with criminal offences for those who practise BVI law without practising certificates, details of which are noted later in this article);
(d) Disciplinary matters (including the establishment of a Disciplinary Tribunal);
(e) Legal education and training;
(f) Remuneration (which allows the Council to make rules regulating the remuneration of legal practitioners in respect of non-contentious business);
(g) A legal aid fund;
(h) The temporary admission of foreign counsel;
(i) Pupillage; and
(j) A Code of Ethics.
New Offences for Unqualified Persons Practising BVI Law
Of most interest to our readers, no doubt, are the new requirements for someone to be able to practise BVI law. The headline point is that it is now a criminal offence for any person to practise BVI law unless: (i) their name is entered on the Roll in accordance with the LPA; and (ii) they are the holder of a valid practising certificate. There are two main offences.
The first is that anyone who practises law without a practising certificate (even if their name is on the Roll) commits an offence and is liable on summary conviction to a fine of US$10,000 and a further fine of US$1,000 for every day on which the offence continues after conviction.
The second is that any person who is not a BVI legal practitioner (i.e. whose name is not on the Roll) and who either: (i) practises law; (ii) wilfully pretends to be a legal practitioner; or (iii) makes use of any name, title or description implying that he or she is entitled to be recognised or to act as a legal practitioner, commits an offence and is liable on summary conviction to a fine of not less than US$15,000 or to imprisonment of a term of not less than three years or both.
There are also criminal penalties - a minimum fine of US$10,000 and a minimum term of imprisonment of two years or both - which apply to anyone who is not a BVI legal practitioner and who practises BVI law in the name of or through the agency of a BVI legal practitioner who is entitled to act.
Meaning of 'Practise Law'
The definition of 'practise law' in the LPA is slightly circular in that it refers to practising as 'a legal practitioner' or undertaking or performing "the functions of a legal practitioner as recognised by any law whether before or after the commencement of [the LPA]". It is certainly no accident, though, that such a general term has been used. It is thought that it must cover any of the following, at least where it is being done for reward (although it is not expressly limited in that way):
(a) Giving legal advice and opinions;
(b) Drafting documents intended to have legal effect; and
(c) Representing clients in legal negotiations and court proceedings.
There are limited transitional provisions: everyone who was entitled to practise as a BVI lawyer immediately before the LPA comes into force is deemed to hold a valid practising certificate until 31 January 2016 (assuming it comes into force during 2015). After that date, however, they will need a practising certificate and will only be able to obtain one if they are either:
(a) a belonger or resident in the BVI; or
(b) practising law in an overseas branch or affiliate of a law firm operating in the BVI and have obtained the prior written permission of the Council to practise law in that overseas branch or affiliate.
Other Consequences of Breaching the LPA
The criminal sanctions are not the only consequences of a breach of the LPA.
The LPA also provides that anyone who practises BVI law and is not a BVI legal practitioner or does not hold a practising certificate cannot recover their fees for conducting any legal business. Whether that person could sue for their fees in their own jurisdiction depends on the view that jurisdiction's courts would take of that person's breach of the BVI criminal law. Indeed, the contract for the provision of those legal services may not be enforceable on public policy grounds. Certainly, if a similar question came before the BVI courts, while the position is not certain, our view is that it is likely to be held unenforceable, so the adviser would not be able to sue to recover their fees.
Conversely, suppose that person negligently drafted a document; if the contract is unenforceable, the client would not be able to sue them for negligence. Even assuming it is enforceable, would they be covered by their professional indemnity insurance? That would depend on the terms of the insurance cover, but there must be a serious question as to whether insurers would typically cover someone for doing something which is a criminal offence in another jurisdiction. At the very least, any doubt on the point gives the insurer a reason to try not to pay out on the policy if they are so inclined.
If the person in question were a lawyer admitted and practising in another jurisdiction, what would be the attitude of the relevant regulatory body?
It also raises additional interesting questions for fiduciaries. Given the difficulties, is it appropriate for someone in a fiduciary position, such as a trustee or a director, to instruct someone who is not qualified as a matter of BVI law to give BVI legal advice or draft BVI legal documents? There has no doubt always been a question as to whether that might be a breach of their fiduciary duties; certainly, it makes it more difficult for them to demonstrate that they reasonably considered the non-BVI lawyer to be the best person to advise them on BVI law. At the very least, that has now become more difficult, but if the contract for those services may be unenforceable, it is difficult to see how it isn't a breach of their duty.
For further information, please speak to your usual Maples and Calder contact or one of the above individuals.