The DWF-listed practice has bought a law firm in Vancouver, Canada, for £28million, a deal cleared only by its local bar association with terms ensuring local lawyers retain control.
The Law Society of British Columbia (LSBC) has issued a letter pledging not to take any regulatory action regarding the arrangement with Whitelaw Twining, which currently violates its rules, subject to the companies complying with a series of conditions .
Dealing with foreign law firms owned by non-lawyers is a new challenge for people like the LSBC, despite it being one of the most progressive local bars in North America.
It already enables a limited form of multidisciplinary practice and runs an innovation sandbox to help those looking to deliver legal services in new ways.
Whitelaw Twining is a £20m firm specializing in insurance, commercial litigation, personal injury and dispute resolution. It has 16 partners and more than 200 employees, with offices in Vancouver and Calgary, Alberta.
DWF told investors that its acquisition “brings a strong strategic fit, greater scale and an enhanced platform to North America.” The result would be “an integrated legal and business services offering in Canada that would also align with 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 also assumes an estimated net external debt of £4m and will pay off shareholders’ debt of £7m, or £28m in total.
He would also create an employee share plan worth £500,000 “with the aim of compensating and incentivizing Whitelaw Twining employees by December 31, 2022”.
The acquisition is subject to the satisfaction of certain conditions precedent, which are expected to be met by the end of 2022.
The LSBC letter, posted via the sandbox, explained that the partners of Whitelaw Twining were forming a new limited liability partnership with DWF Adjusting (Canada) Ltd, an Ontario-based loss adjustment firm part of the group DWF.
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 to take no action to prevent DWF from joining the partnership or the new firm from providing legal services, although this is against the rules, provided 14 conditions are met.
These include that the named associate attorneys “have effective control over the provision of legal services” and can “exercise independent professional judgment and take all necessary steps” to comply with their professional obligations.
Associate lawyers must also take “all reasonable steps” to ensure that non-lawyers provide claims management and administration, expert services and other related professional services “with the skill , judgment and skill”.
Non-lawyers may only provide services to the public that “support or supplement the practice of the law exercised by the partnership and that such services are under the supervision of an associate lawyer”.
Associate attorneys must also take reasonable steps to ensure that no inappropriate disclosure of privileged or confidential information is made to anyone, “including a person designated by the regulatory body of another profession in connection with the practice of another partner or employee”.
In a statement, the LSBC said: “In 2020, the Task Force on the Future of the Law Society recommended enabling innovation in legal service delivery and alternative business structures while protecting the public, including examining current regulations and restrictions on law firm ownership and investment, as well as multidisciplinary practice and partnership structures and establishing a regulatory sandbox to enable innovations, which can 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 alternative business structures, has been adopted by a number of other jurisdictions, including Arizona and Utah.
“The ‘no action’ letter sent to WT BCA LLP provides for a number of conditions consistent with current Law Society rules permitting multi-disciplinary practices…
“If the associate attorneys breach any of the terms of the letter or if the company engages or proposes to engage in conduct that poses a risk of harm to the public or undermines the integrity of the administration of justice, the Law Society may take action under Part 3 (protection of the public) and Part 4 (discipline) [of its rules].”
During this time, DWF and the Alberta firm of Whitelaw Twining will enter into a “relationship agreement”.
Elizabeth J Osler KC, Chief Executive Officer and Managing Director of the Law Society of Alberta, said: “The Law Society of Alberta is aware of the agreement. Since each law society has different regulations regarding law firm ownership, we cannot speak to this issue generally.
“We will work with affected parties to ensure that their organization in Alberta complies 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 that DWF is in a strong position so that we can confidently make these key international acquisitions, enabling us to progress further against our strategy to be the preeminent global provider of integrated legal and business services.
Daniel Shugarman, Managing Partner of Whitelaw Twining, said, “In 40 years, Whitelaw Twining has grown from a three-person firm in Vancouver to a full-service litigation law firm serving clients in 17 languages.
“This is the next step for our business, further strengthening our position in Canada and creating opportunities for our colleagues to support our customers globally.
He added that he was “delighted” that Whitelaw Twining staff could become shareholders in DWF, “with an opportunity to benefit from our future success”.