LSB hits back strongly at critics

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4 April 2013

Edmonds: show us the evidence

The Legal Services Board (LSB) has hit back at its critics, accusing frontline legal regulators of being “uncomfortable” with the language of competition and failing to examine the impact of regulation on the market.

Meanwhile, the country’s three top judges have expressed their “regret and disappointment” that LSB business plans do not include consideration of the functioning of the courts.

Responding to waves of criticism of its draft business plan 2013/14 – over such things as the way it perceived its remit – from lawyers’ representatives and regulators, the LSB said it understood but rejected them. Most recently, last month the Solicitors Regulation Authority presented a raft of fundamental objections to the way the LSB operated.

In a summary of consultation responses, the board acknowledged that themes alleged by the 17 bodies that responded included a tendency by the LSB towards micro-management, excessive intervention in decision-making, and an over-emphasis on matters of competition. The LSB recognised “that respondents feel strongly about these points” and suggested its recent regulatory self-assessment exercise had strengthened feeling.

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In a concession to criticism of the scope of its research programme – such as its decision to spend over £21,000 on academic research into the cab-rank rule – the board agreed projects would be “re-scoped significantly in light of feedback”.

But it “rejected utterly” the “totally un-evidenced assertion” made by the SRA that the LSB is at risk of being influenced by the government. On micro-management, the board reiterated its position that it believed in active oversight and stressed it had not resorted to its statutory powers. “All of the outcomes we seek have been pursued primarily through robust challenge, agitation, influence and persuasion,” it argued.

It denied it had inappropriately created “a hierarchy where Parliament intended there to be none” in regulatory objectives that over-emphasised consumer interests and the potential benefits of competition at the expense of other objectives. Its “regulatory philosophy” was not that of an economic regulator or competition authority.

The LSB refuted the SRA’s suggestion that it lacked the capacity to make good judgements on frontline matters and highlighted that it had board members “with current professional disciplinary and regulatory experience within both legal and other professional sectors”.

Meanwhile, in a cutting observation on what it characterised as the frontline regulators’ preoccupation with professional conduct regulation, the LSB said that while “unfettered competition is not a panacea for all ills in the legal services sector” and “targeted regulation” was therefore necessary, regulators must nevertheless think about “the market impact of their regulatory interventions”.

It continued: “This appears to continue to be new territory – as both the lack of data and research to understand competition effects and the discomfort with the language of competition reveals.”

According to the summary, the Lord Chief Justice, with the support of the Master of the Rolls and the President of the Queen’s Bench Division, argued the absence of a proper reference in the LSB’s draft business plan to the “effective functioning of the courts” raised “concerns about the efficacy of the current regulatory structure”.

Ensuring lawyers “adhere to the highest standards” which then supported the work of the courts and the judiciary was “one of the primary reasons for legal professional regulation”, the judges reportedly said.

The LSB said it was “again disappointed” that consumer and citizen groups had not come forward but claimed “informal discussions” with consumer bodies had shown a reason for the silence was “broad contentment” with the board’s performance.

In his foreword to the board’s 2013/14 business plan, chairman David Edmonds further chided regulators: “The more our stakeholders bring data rather than anecdote, the more persuasive we will find their views – regulatory restrictions and detailed requirements put in place for a different era need to be justified with evidence just as much as liberalisation, “ he said.

He revealed that in the coming year, “we will interrogate the regulatory system as thoroughly as we can to understand where complexity and inefficiency are introducing unnecessary direct and indirect cost… and we will continue to provide commentary and challenge where we see actual and potential risks to the regulatory objectives emerging”.

He warned: “Where necessary, we will use our statutory information-gathering powers to ensure that we have the full picture to underpin our judgements on the way forward.”

Mr Edmonds described the LSB’s £4.45m budget – £50,000 less than last year – as “not a ‘target to hit’ but an envelope to stay within… There is no ‘gold-plating’ at the LSB”.

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