Mixed response to LSB’s plan for regulatory overhaul, with Falconer calling for focus on unmet legal need instead

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14 September 2016

Lord Falconer: unmet need trumps regulatory reform

Lord Falconer (centre): no evidence of huge regulatory failure

Reactions from key legal services industry bodies to the Legal Services Board’s (LSB) blueprint for radical form of legal regulation have ranged from enthusiastic welcome to anger at its timing, while the politician who introduced the Legal Services Act 2007 said tackling unmet legal need was more of a priority.

Having heard the LSB’s plans while chairing Monday’s Westminster Legal Policy Forum in London, former Lord Chancellor Lord Falconer – who until June was shadow justice secretary – told delegates that he wondered “if this was the moment to focus on unmet need rather than changes to the regulatory system”.

There was not, he suggested, evidence of “huge regulatory failure”. It may need to be revisited when the Competition and Markets Authority (CMA) published its final report, “but not at the moment”.

The LSB blueprint for reform, published on Monday, included regulation by activity and a single regulator for the entire profession. It would also replace the eight regulatory objectives of the Legal Services Act with an overarching public interest objective.

The statutory consumer voice, the Legal Services Consumer Panel, was keenest on the LSB’s report, which it said “demonstrates a comprehensive understanding of the difficulties and challenges of the current regulatory framework and, importantly, how these conspire against the interests of consumers”.

Elisabeth Davies, the panel’s chair, added: “The current regulatory system is confusing and complicated; now is the time to simplify it. Effective regulation must focus on consumers and providers alike. There needs to be more than just a consumer voice.”

Perhaps the loudest objections came from the Law Society, which said the proposals were “mistimed” at a time of Brexit-related upheaval. It also highlighted the CMA’s misgivings about “the risks of wholesale change to a regulatory framework” expressed in the interim report on its legal services market study in July – although the CMA also saw merit in a “systematic review” of regulation.

Robert Bourns, the society’s president, said: “Although the LSB’s proposals are an interesting contribution to a future vision for legal services regulation, we simply don’t think that it is in the public interest to embark on such changes at this time…

“We don’t believe there is any demand from clients or the legal professions for the LSB’s proposals, and therefore now is not the time to embark on disruptive and costly change.”

Also strong in its condemnation, the Bar Council said the LSB had raised strategic issues for the regulation of the Bar and the rest of the sector, and particularly objected to removing the regulatory objective that encourages an independent, strong and diverse and effective legal profession, and any references to the interests of justice.

Chairman of the Bar, Chantal-Aimee Doerries QC, said: “We do not believe that this is in the public interest any more than the restructuring of the regulatory architecture in the ways proposed would be.”

Echoing Lord Falconer’s concerns, she continued: “Right now, there is a need to address the unmet legal needs of the public rather than change a regulatory framework which isn’t broken.”

Agreeing with the Law Society on timing, she said: “We believe that now more than ever policy makers’ attention should be on focused on meeting the strategic challenges posed by Brexit and on properly funding the justice system.”

A milder call for restraint came from the Solicitors Regulation Authority, which, while welcoming the LSB’s making the case for regulation independent of the government and professions, said: “We should pause for thought when considering fundamental constitutional changes, such as regulating by activity or moving to one single regulator.

“Some consolidation across the regulators seems to be inevitable in the longer term, but we must avoid being distracted by rewriting the regulatory landscape to the extent that we blight much needed market reforms.”

The Bar Standard Board’s director-general, Dr Vanessa Davies, said only that the board was studying the LSB’s report with interest, continuing: “We believe that the public are best served by a specialist regulator which is fully independent of both the profession and the government, given that the Bar is a specialist profession which requires particular training and skills.”

Chartered legal executives and licensed conveyancers were on the whole positive about the LSB’s proposals. The chair of the Council for Licensed Conveyancers, Dame Janet Paraskeva, backed a move to activity-based regulation, adding: “A risk-based approach in place of the current, haphazard system of ‘reservation’ of certain legal services also has our support as we believe it will deliver benefits to consumers and legal service providers alike.

“Likewise, a sharper focus on regulation in the regulatory objectives will provide clearer goals and so reduce the overall regulatory burden.”

She also called for speeding up the process of making legal regulation independent of representation. “‘It is our view that the [LSB] already has powers to deliver independence of regulation from representation and I urge the board to use those powers now in line with its views as set out in its paper.”

On a single regulator, Dame Janet said: “We agree with the [LSB] that whether there should only be one regulator can only flow from answers to the prior questions about how we ensure independence and move to a risk-based approach and regulation by activity.’

A spokesman for the Chartered Institute of Legal Executives (CILEx) said the body welcomed the LSB report, in particular on regulation by activity. But he called for clarity on the issues of risk assessing which activities should be subject to regulation, the use of professional titles, and a regulator’s duties towards access to justice and the rule of law.

Sam Younger, chairman of the profession’s regulator, CILEx Regulation, said: “We are pleased to read that the LSB’s vision reinforces many best practice approaches to risk-based regulation that are either emerging or already in operation in our sector…

“The LSB’s proposal for an overarching regulatory objective is an essential ingredient to deliver a vision of true regulatory independence and we are pleased to see secondary objectives of consumer choice and competition remain.”

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