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Law
Revolutionary changes coincide with caution over ‘disruptive’ technology
Gibraltar’s lawyers are witnessing the greatest professional changes in 50 years after a comprehensive overhaul of legal services regulation that will bring greater transparency and openness to their practices, reports Ray Spencer
understood could be £1,000 or more per head for lawyers and £1,500+ for Gibraltar’s 17 Silks and will be swollen by the addition of non-Crown counsel to support the new LSRA administration and premises.
Following UK experience, law changes in September permitted practices to incorpo- rate as Limited liability companies or Limited Liability Partnerships (LLPs), the latter route having been taken by ISOLAS to mark its 125th anniversary. It is the first large legal firm to do so.
Protected from errors
Senior partner Peter Isola, explained: “As the firm grows, having limited liability becomes important, because when it’s just family who are partners, you are probably quite happy to carry each other’s risks: when it’s more of a professional business relationship, you want to be sure you are protected from other people’s mistakes. Of course, an LLP doesn’t protect you against individual negligence, but it protects other partners from it”.
He added: “Limited companies have Articles and a Memorandum, but with an LLP being a partnership, within that document we had to set out the terms of membership in a way in which I don’t believe any other law firm in Gibraltar has.”
Two other large Gibraltar firms – Hassans with 75 lawyers and 260 staff, and Triay & Triay (T&T) with 22 lawyers and 66 staff – both plan to morph into limited companies this year.
Melo Triay, T&T senior partner, revealed: “We were going to pursue the LLP route, but we plan to incorporate as a Limited Company after the LSA commences, probably this summer; a limited company structure provides more protection and gives certain tax advantages which an LLP structure does not.”
A partnership’s profits are taxed as partners’ income at their personal rate regard- less of whether distributed or not. “The personal rate of tax is always higher than the corporate rate of 10%. The effect is that partnership profits are inevitably distributed and it is difficult to create reserves,” Triay declared.
Ramparts, an 11-strong specialist firm in financial services, payment, eGaming and
Fintech, was established in 2012 and founder, Peter Howitt, opened a Manchester office two years ago.
Recruiting issues
Most clients are international and he expects to add two more lawyers and extra support to bring the total to around 15. “All of our lawyers here were born in Gibraltar, but we struggle to find suitable candidates, given that we are small and younger than most other major firms, and we have a culture derived from having worked close to businesses rather than a traditional law practice,” he declared.
All major Gibraltar law firms report a surge in business interest in Distributed Ledger Technology (DLT) and Initial Coin Offerings (ICOs) following the government’s decision to regulate those sectors, (see Token Regulation, p10).
“a limited company structure provides more protection” melo triay
Howitt notes: “We have been involved with ICOs and have used an informal protocol that we established last summer with the GFSC to ensure they understood what we were doing and how we were working in the unregulated areas. So far we have completed six ICOs and there are more in the pipeline: we also have four DLT providers with GFSC applications pending.”
Triay maintained crypto and DLT work is of concern. “Gibraltar has been very brave being the first jurisdiction to regulate this type of activity and all within this industry must take great care and act with some trepidation. The technology is very new and very technical – I don’t think our local profession- als fully understand the technology – and as a result, we will need to ensure that our legislation is sufficiently flexible so that
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Peter montegriffo: competition driven by “in-the-know” clients
Described as being “no short of a revolution” the imminent implementation of the Legal Services
Act (LSA) will in a stroke for the first time see all of the jurisdiction’s advocates – Crown and in-house lawyers –regulated by a new body, the Legal Services Regulatory Authority (LSRA) to a uniform Code of Conduct.
The LSRA - described by some as the lawyers’ FSC (Financial Services Commission) - will be independent of the Bar Council that is to be replaced by the Law Council as soon as the LSA takes effect. The move underscores Gibraltar’s fused profession – unlike in England from where most laws have originated – to involve barristers, solicitors, in-house counsel, legal executives and law costs draughtsmen.
In January, Gibraltar’s Supreme Court listed 233 lawyers, associat- ed with 38 practice offices. Now the new LSRA will also embrace an estimated near-100 qualified lawyers working in government, its associated bodies and the private sector. Some 42 are
government lawyers. Keith Azopardi QC,
Bar Council chairman at the
opening in September of the 2017-18 Legal Year, said: “The Legal Services Act is more far-reaching than the system of regulation it replaced.... and a modernisation of the system of legal services
that is long overdue.” At the time of Gibraltar International
going to press no information could be obtained from the Justice Minister, Neil Costa, as to when the Act would be implemented, nor the constitution or operation of the LSRA, but it is expected to be by the summer. Annual fee income it is
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