Parliament clears way for legal executive law firms

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27 November 2014

Kershaw: great opportunity

Chartered legal executives will be able to set up their own law firms in the New Year – a move that ILEX Professional Standards (IPS) said would for the first time also give solicitors’ firms a choice of regulator, and that the government said would help consumers access legal services.

Earlier this week the final legislative hurdle for full practice rights for chartered legal executives was cleared after the House of Lords followed the House of Commons in approving an order that enable IPS to intervene in firms and to set up a compensation fund.

IPS said it expects to begin taking applications from legal businesses in the New Year, subject to final clearance by the Legal Services Board, with several professional indemnity insurers having already confirmed they will provide cover for IPS-approved firms.

It said the new regulatory model is risk-based and will be “attractive” to new and existing firms.

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IPS chair Alan Kershaw said: “For many new and existing firms, this presents a great opportunity. For the first time they have a real choice of regulator.

“We should be clear about what that choice means. It does not mean a decline in standards, or a chance to escape scrutiny – it means a regulatory model that is best for your business, giving consumers the protection they need when seeking legal services.

“It also means that, for the first time, students starting out on the CILEx route can know that their natural end point is, if they want it, to be authorised to provide reserved legal services in one or more branches of the law either as an employed lawyer, or in running their own practice.”

In a brief parliamentary debate, the former chair of the Legal Services Consumer Panel, Baroness Diane Hayter, said the move was “good for clients”.

She said: “As we know, many local firms, particularly small ones, will not go to a lawyer when they have a legal problem because of the expense. This much broader provision of legal services will therefore be very good.

“At the moment, only about 12% of small businesses turn to a lawyer even when in difficulties. With this gradual increase in what they can do, as well as a greater availability of CILEx businesses, these specialist firms will be able to offer a service.”

For Labour, Lord Kennedy of Southwark agreed “that this is good news for consumers in giving them a wider choice in the marketplace when looking for legal services and in providing the public with proper protection. It is a boost to legal executives seeking to widen the sphere of work that they undertake, particularly unsupervised work, as they can demonstrate that they have proper protections in place”.

Justice minister Lord Faulks suggested that “many people will go to legal executives” rather than spend more money on other lawyers.

“There is increasing confidence in the standard of advice that they are giving. I have been to a number of events of theirs, and it is a profession that is in good health,” he said.

The peers also praised the diversity that chartered legal executives bring to the profession: 74% of CILEx members are women, and 16% are from black and minority ethnic backgrounds.

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