Vancouver: Letter of no action
Listed practice DWF has bought a law firm in Vancouver, Canada for £28m, a deal only allowed by its local law society with conditions that ensure local lawyers retain control.
The Law Society of British Columbia (LSBC) has issued a letter pledging to take no regulatory action over the arrangement with Whitelaw Twining, which is currently against its rules, subject to the firms complying with a series of conditions.
Dealing with foreign law firms owned by non-lawyers is a new challenge for the likes of the LSBC, although it is one of the more progressive local law societies in North America.
It already allows a limited form of multi-disciplinary practice and runs an innovation sandbox to help those looking to deliver legal services in new ways.
Whitelaw Twining is a £20m-turnover firm specialising in insurance, commercial litigation, personal injury and dispute resolution. It has 16 partners and more than 200 staff, with offices in Vancouver and Calgary, Alberta.
DWF told investors its acquisition “brings a strong strategic fit, greater scale and an enhanced platform in North America”. It would result in “an integrated legal and business services offering in Canada which will also align to the group’s existing Mindcrest and claims operations in Chicago”.
DWF is paying an initial £12m in shares plus £3m in cash, with a further £2m in shares payable provided certain 2022 financial targets and criteria are met. It is also assuming estimated external net debt of £4m and will repay shareholder debt of £7m, making £28m in total.
It would also create an employee share scheme worth £500,000 “for the purpose of remunerating and incentivising employees of Whitelaw Twining by 31 December 2022”.
The acquisition is subject to the satisfaction of certain pre-conditions, which are expected to be met by the end of 2022.
The LSBC letter, issued through the sandbox, explained that the Whitelaw Twining partners were forming a new limited liability partnership with DWF Adjusting (Canada) Ltd, a loss-adjusting business based in Ontario and part of the DWF Group.
The LLP, called WT BCA, will provide legal services in British Columbia and will be registered with the LSBC. Whitelaw Twining will be dissolved.
The LSBC agreed not to take any action to prevent DWF from joining the partnership or the new firm from providing legal services, despite it being against the rules, provided 14 conditions were met.
These include that the named lawyer partners “have actual control over the delivery of legal services” and can “exercise independent professional judgment and take any action necessary” to comply with their professional obligations.
The lawyer partners must also take “all steps reasonable” to ensure that non-lawyers deliver claims management and administration services, adjusting services and other related professional services “with appropriate skill, judgement and competence”.
Non-lawyers can only provide services to the public that “support or supplement the practice of law as carried on by the partnership and that such services are under the supervision of a lawyer partner”.
The lawyer partners have also to take reasonable steps to ensure that no improper disclosure of privileged or confidential information is made to any person, “including a person appointed by the regulatory body of another profession in relation to the practice of another partner or employee”.
In a statement, the LSBC said: “In 2020, the Law Society’s Futures Task Force recommended allowing for innovation in legal service delivery and alternative business structures while protecting the public, including looking at the current regulations and restrictions on law firm ownership and investment, as well as multi-disciplinary practice and partnership structures and establishing a regulatory sandbox to allow innovations, which may be illegal or unethical under current regulations, to be piloted and evaluated in a controlled environment.
“The use of regulatory sandboxes to foster innovation in the delivery of legal services, such as alternate business structures, has been taken up by a number of other jurisdictions, including Arizona and Utah.
“The “no-action” letter issued to WT BCA LLP provides for a number of conditions consistent with the Law Society’s current rules permitting multi-disciplinary practices…
“If the lawyer partners fail to meet any of the conditions in the letter or the partnership engages in, or proposes to engage in, conduct that presents a risk of harm to the public or undermines the integrity of the administration of justice, the Law Society may take action under parts 3 (protection of the public) and part 4 (discipline) [of its rules].”
Meanwhile, DWF and Whitelaw Twining’s Alberta practice will enter a “relationship agreement”.
Elizabeth J Osler KC, chief executive officer and executive director of the Law Society of Alberta, said: “The Law Society of Alberta is aware of the agreement. As each law society has different regulations regarding law firm ownership, we cannot speak to this issue broadly.
“We will work with the parties involved to ensure that the way they are set up in Alberta is in accordance with the Legal Profession Act and the rules of the Law Society of Alberta.”
DWF group chief executive Sir Nigel Knowles said: “We have worked hard to ensure DWF is in a strong position so we can confidently make these key international acquisitions, enabling us to make further progress against our strategy to be the pre-eminent global provider of integrated legal and business services.”
Daniel Shugarman, managing partner of Whitelaw Twining, said: “Over 40 years, Whitelaw Twining has gone from a three-person practice in Vancouver to a diverse, full-service litigation law firm serving clients in 17 languages.
“This is the next step forward for our business, further strengthening our position in Canada and creating opportunities for our colleagues to support clients globally.”
He added that he was “delighted” that Whitelaw Twining staff could become shareholders of DWF, “with an opportunity to benefit from our future success”.
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