LSB to impose controversial lay chair requirement on regulators

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20 February 2014


Edmonds: significant and sensible step

The frontline regulators will be required to have lay chairs in future after the Legal Services Board (LSB) pressed ahead with its controversial change to the internal governance rules.

Despite strong opposition from regulators and representative bodies alike during the consultation process, the LSB said the move provides “a workable and proportionate route to increased independence in legal services”.

Further, the oversight regulator has decided to launch a further consultation – particularly in response to lobbying by the Solicitors Regulation Authority – that would make regulators, rather than professional bodies, responsible for certain aspects of the appointments and reappointments process for board members and their chairs.

The LSB said lay chairs will “contribute to better regulatory outcomes. It will enable faster progress towards the development of modern, risk and outcomes-based regulation that is likely to deliver the regulatory objectives and principles of better regulation.

“Our assessment is that at present strong ties to the history, culture and rules of the profession in general and professional self-regulation in particular can act as a significant drag on the better regulation principles and therefore put the regulatory objectives at risk.”

Those without lay chairs – such as the Solicitors Regulation Authority (SRA) and Bar Standards Board (BSB) – will not have to make an immediate change, but the new requirement will apply to the next appointment once their current chairs’ terms come to an end.

The LSB dismissed the three main objections to the change: that it was inconsistent with the principle of appointment on merit, that the LSB did not have the statutory power to introduce it, and that there was a lack of evidence.

It argued that qualifying criteria are imposed in many cases where selectors are obliged to select candidates on merit – such as judicial appointment – while external legal advice confirmed that the Legal Services Act 2007 provides a “valid legal basis” for the change.

On the evidence argument, the LSB said: “It is unclear what more evidence respondents feel the LSB should have. Direct evidence of a causal link between professional chairs and the independence of regulators‘ decisions would be very unlikely to exist.

“It would be difficult to identify a ‘control’ situation in which the LSB could observe the outcome of a decision a regulator may have made if a lay person had held the chair. Equally, it is possible to envisage a situation in which a lay chair was subject to professional capture to a greater or lesser degree.

“In spite of this, we consider it logical that if (for example) a professional body denounced a policy as being contrary to the interests of its branch of the profession, a chair who is also a member of that profession is more likely to be influenced by professional considerations, either consciously or unconsciously, than a lay person would be.”

The LSB, somewhat tortuously, added that opponents had not produced evidence that this would not occur.

Given that “the influence of the chair may be disproportionately important in making regulatory decisions”, the LSB argued that, by contrast, a lay chair would demonstrate to the external world that professional interests would not have undue influence on a decision: “Perception is important to the maintenance of public confidence in regulators.”

LSB chairman David Edmonds said: “Independent regulation is central to the aims of the 2007 Legal Services Act. This decision to require lay chairs for regulatory bodies represents a significant and sensible step towards embedding and strengthening independence in legal services regulation.

“It brings the regulatory bodies into line with the LSB’s own lay-chair requirements set out in the 2007 Act. I also believe that restructuring the appointments and reappointments process would be a proportionate further step to safeguard the independence of regulatory boards.

“As I have said before, these changes, and the new proposals, are not a criticism of any current or past chair.”

BSB director Dr Vanessa Davies said appointment on merit was its key consideration. “The LSB’s decision is based on an assumption that lay chairs will behave independently in circumstances where legally qualified chairs would not, and we believe there is little evidence to support this conclusion. The chairs of many comparable regulatory bodies are not lay persons.”

An SRA spokesman said: “We understand the LSB decision on lay chairs. The SRA thought it was a finely balanced issue and we respect that, in exercising its statutory role, the LSB has reached this conclusion. The board will be discussing the implications in due course.”

In its response to the consultation, the SRA accepted that there were arguments in favour of a requirement that a chair should be lay, but concluded that this cut across the principle of securing the best person for the job.

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One Response to “LSB to impose controversial lay chair requirement on regulators”

  1. All of the responses that I saw were opposed to the idea – on the fairly obvious basis that the chair should be the best person for the job.

    No one should be excluded just because of their professional background.

  2. Steve Cornforth on February 21st, 2014 at 2:00 pm

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