A study of rules and rulemaking in the UK legal sector has revealed copious clutter. Matt Packer explains why the Legal Services Board wants your thoughts on how to clear it up
A new climate for UK legal services requires new rules – and there are signs that a sea change on regulation is underway. As NewLegal Review reported in the summer, the regulatory framework for legal services has already faced criticism from UK legal ombudsman Adam Sampson, who said that the burgeoning choice in the market had led to ‘difficulties in understanding the regulatory status’ of each service provider.
However, it turns out that the Legal Services Board (LSB) – the body with overall responsibility for UK legal reforms – has been listening. And best of all, it wants to listen even closer. In its recent discussion document, Enhancing Consumer Protection, Reducing Regulatory Restrictions, the LSB has set out in detail its ideas of what is not working – with the aim of hearing from legal professionals about what will work.
A crowded room
In a nutshell, the LSB’s 80-page document paints a picture of a system that started from a set of core principles, but in expanding to cover developments in the sector has become an unwieldy sprawl. Areas of the system that it cites as collectively problematic are:
• Laws on reserved legal activities, or areas of legal work that can only be carried out by solicitors or barristers. These include i) appearing as an advocate in court; ii) dealing with the transfer of land or property; iii) probate; and iv) administration of oaths.
• Multiple approved regulators overseeing the legal services market, as spawned by the 2007 Legal Services Act. There are currently 10 such bodies in existence – including the Bar Council, the Institute of Legal Executives and the Law Society of England and Wales, to name but three – with a complex web of overlapping remits. Some of them oversee parts of the reserved activities; some don’t.
• Additional approved regulators from the financial world, in the shape of the Association of Chartered Certified Accountants (ACCA) and the Institute of Chartered Accountants in Scotland (ICAS). Those bodies have been enabled under the Act to license any of their member organisations who want to provide support functions to solicitors or barristers working in probate.
• One-off rulemaking schemes introduced by government to address developments in specific areas of the market – eg, claims-management firms working in fields such as employment or personal injury.
• Regulators from other sectors, such as the Financial Services Authority (FSA), which will now be required to monitor legal services activities offered by financial firms. This duty is likely to pass on to the Bank of England when the FSA is phased out next year and its responsibilities are transferred there.
• Trade groups with their own voluntary licensing schemes, such as the Association of Personal Injury Lawyers (APIL).
It is difficult to avoid the impression that this amounts to overkill.
Living up to principles
That point was acknowledged by LSB chairman David Edmonds, who stressed in the discussion document that regulation as an on/off switch designed to keep certain practices to certain practitioners was becoming untenable in the reformed era. ‘Arguably,’ he wrote, ‘the debate has now shifted to the negative impacts on innovation and competition that come from a restrictive approach. With the Legal Services Act in force and embedded, it is possible to move beyond this patchwork quilt to develop a more rational, strategic approach.’
In the LSB’s proposed vision, that approach would be built around the following tenets:
i) Minimal obligations for achieving maximum objectives: Reliance upon general consumer or competition law is favoured wherever possible, to mitigate the impact of multiple bodies and rulemaking systems.
ii) Consumer-protection schemes must fit their markets: Before-the-event regulation and after-the-event redress should be clarified in each legal discipline to provide more effective support for clients’ concerns, and reduce overlaps.
iii) Practice must live up to principles: A revision of regulatory scope should be linked to a development of its standards and performance, ensuring that it functions in accordance with underlying ethics.
‘Liberalisation is already happening with regard to ownership of law firms, external investment and control,’ Edmonds said. ‘That liberalisation will accelerate as these proposals take effect. But it needs to be underpinned by the right consumer protections and oversight – in particular, proper redress from firms and the Legal Ombudsman.
‘Whichever direction we take,’ he added, ‘the objective is simple: the legal services market must work for the consumer and the public, for it is they to whom we all – regulators and professionals alike – are accountable.’
The LSB’s consultation, based upon the discussion paper, is open until Friday 4 November
To download the discussion paper, click here
To take part in the consultation, email a Word or PDF response to this address