Explainer: Cabinet bringing into force parts of Legal Services Act Loop Cayman Islands

Black Immigrant Daily News

On October 13, the Cayman Islands Government issued a press release stating that “Cabinet approved the commencement of Parts 1 and 2, as well as sections 99 and 101, of the Legal Services Act (LSA) effective Friday, 14 October 2022.”

For people who are interested in learning more about Parts 1 and 2 and 99 and 101, it is useful to provide a brief explainer.

Members of the public are reminded, however, that nothing mentioned in this explainer is deemed legal advice and it is just the sharing of information to help members of the public to understand why the Legal Services Act has been so controversial for decades.

Part 1

To start, Part 1 contains helpful definitions, including what activities are covered by the term “legal services” and an explanation of what it means to practice Cayman Islands law.

Part 2

Part 2 then deals with the establishment of the Cayman Islands Legal Services Council to regulate the practice of law in the Cayman Islands.

Now, the purpose of Council is, generally speaking, not controversial because everyone agrees that the practice of law should be regulated.

What is controversial, however, is the composition of the Council.

According to the Legal Services Act, the council will consist of seven members, including

(a) the Chief Justice

(b) the Attorney General

(c) a non-practising attorney-at-law who is a Caymanian appointed by the Premier

(d) a non-practising attorney-at-law who is a Caymanian appointed by the Leader of the Opposition

(e) two practising attorneys-at-law who are Caymanians appointed by the Premier after consultation with the bodies representing the legal profession

(f) a practising attorney-at-law who is a Caymanian appointed by the Leader of the Opposition after consultation with the bodies representing the legal profession.

Some professional say that the challenge with the proposed membership of the Council is that the powers of so many powerful people are concentrated in one place. This is problematic for many reasons, especially the possibility of breaching the doctrine of separation of powers.

Now, if you are asking what is the doctrine of separation of powers, it is an important concept that suggests that the powers of the judiciary (i.e., the court), the Executive (i.e., Cabinet, which the Attorney General is a part of) and the Legislature (which the Attorney General is also a part of) should not be mixed together in one place and should remain separate.

If separation is not practiced, then too much power from different arms of government might become heavily concentrated in one place. This is not good from the perspective of good governance, especially independence.

The mixture of persons from the Legislature, the Judiciary and the Executive on the Council may also pose issues for someone who wishes to challenge a decision of the Council.

For example, if a sitting judge or the Attorney General is the chairperson of the Council responsible for disciplining an attorney, then when the attorney challenges the decision of the Council, the attorney may have questions about whether he or she will have a chance at a fair trial when he or she goes to court.

This concern arises because it would have been an active, sitting judge on the Council that was part of the decision-making to discipline the attorney in the first place.

Some serious thought therefore needs to be given to the possibility of conflicts of interest like this between the courts and the Council.

This is important because such conflicts could threaten the right to a fair trial.

The other issue is that there are several political appointments to the Council. These include persons appointed by the Premier and the Leader of the Opposition.

The fear in this case is that political appointees may carry out the wishes of politicians rather than follow a strict code of conduct.

While one could expand on the concerns here, it is more useful point to provide some solutions that have been proposed over the years. These are set out below.

The Council should not include the Attorney General or any active, sitting judgeThe Council should not include any political appointeesInstead, a variety of people should make up the Council, including retired law firm partners, retired audit firm partners and other governance professionalsAll of these positions should also be advertised in a transparent way and selections should be based on competencies and not hand-picked in secret

The other controversial issue is that, even if the Council is set up properly, the intention under the Legal Services Act is for the Council to carry out the functions imposed on the Council under the Proceeds of Crime Act (2020 Revision) ins questionable regarding the expectation that the Council will act as a Supervisory Authority or a regulator to ensure that lawyers stay in line with anti-money laundering and anti-terrorist financing requirements.

The reason that some professionals have pushed back on this is because they say that the Cayman Islands Monetary Authority (“CIMA”) is already in place as a regulator for anti-money laundering and anti-terrorist financing purposes.

In fact, CIMA inspects very complex structures and assists international regulators including the Securities and Exchange Commission to solve important crimes.

Once CIMA is provided with more funding and more staff to regulate lawyers for anti-money laundering and anti-terrorist financing, CIMA will competently to do the job, in the same way that CIMA has done so for big banks, investment management companies and other complex structures.

With CIMA being such an obvious solution as a regulator, it is challenging to understand why there may be resistance to CIMA as a regulator for lawyers for anti-money laundering and anti-terrorist financing purposes.

Section 99 and 101 of the Legal Services Act

Tomorrow, the explainer will continue, covering the regulations that can be made by Cabinet under section 99 of the Legal Services Act and the types of transitional provisions that can be made under section 101 of the Legal Services Act, including what Cabinet might suggest as transitional provisions to penalize or forgive persons who have been practising Cayman Islands law for years overseas without any Cayman legal practice certificates.

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