Pitt cools talk of single regulator as he bids to build reform consensus

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15 September 2014


Pitt: ABSs off to a good start

In his first interview since taking over as chairman of the Legal Services Board (LSB), Sir Michael Pitt has cooled talk of a single regulator for all legal services.

Sir Michael also praised the Solicitors Regulation Authority (SRA) for its current programme of reform.

Presenting its blueprint for deregulation a year ago, the LSB – under the chairmanship of David Edmonds – said a single regulator should be the “core model” to be tested for a new regulatory framework.

However, speaking to Legal Futures, Sir Michael said that while a single regulator was a “powerful option”, it was unlikely to be the only one.

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He said: “Conceptually it looks like it might be an answer, but I suspect that when you do the detailed working around it, there will be other options that will spin off that might be just as good and effective, [and] maybe more palatable to a wider range of organisations as well. So if we are trying to work jointly and build consensus, we shouldn’t close down to just one possibility.”

The comment is in line with Sir Michael’s bid to build as strong a consensus as he can among the frontline regulators about the future of regulation before the issue again catches the interest of politicians – which an increasing number of people think will happen in the second or third year of the next Parliament.

He is convinced it will happen, but “you never quite know when these things are going to take off”.

The former head of the Planning Inspectorate acknowledged that he will not get the whole sector rowing in the same direction, but wants to identify both short-term changes and a longer-term vision.

“If we wait for a unanimous conclusion, then we’ll wait a very long time,” he said. “There is quite a lot of evidence around that one or two of the frontline regulators are very nervous about what might come in a future Legal Services Act, but I think we have to build up a body of opinion and need to get some of the major stakeholders onside looking at new possibilities.”

Sir Michael has, of course, been given the task of working towards the LSB’s own abolition, but ultimately it will be a matter of a future government finding the time to legislate for such a move.

He said: “I think the existing Act has another three to five years to run, and that would then provide time for a new government to think through and get in place the legislation it would need, bearing in mind that these things take a long time to get through Parliament. So somewhere between three and five years would probably be optimum for the future of the LSB.”

But it is only a decade since we were having the same debates during the Clementi review. Doesn’t that speak to the deficiencies of the Legal Services Act that followed? Sir Michael is not so sure. He suggests that there is “some advantage” in having paced change rather than a legal big bang.

Research is now showing a measurable improvement in the consumer experience of legal services over the last six years, the one-time engineer observed, “and nobody can turn round and say something big has gone wrong”.

At the same time, he is concerned about LSB research showing many individuals and SMEs unable to access legal services – “primarily because of cost” – and that shows why further reform is needed.

Alternative business structures (ABSs) are helping, Sir Michael said. “We’re off to a good start. I think they’re having a positive impact and also having a stimulating impact on other organisations that are not ABSs… They’re helping to create a dynamic market place with more competition; it’s a good thing and I’d be very happy if the numbers increased very dramatically.”

It is also with the need for further change in mind that he welcomes the SRA’s work on reforming the way it operates. “I want to pay tribute to the way the SRA is going about this. I think they are doing a thorough root and branch review of regulation from their point of view. It’s long overdue.”

But didn’t we have that only three years ago with the introduction of outcomes-focused regulation? Maybe, says Sir Michael, but solicitors still face a rule book running into hundreds of pages, while “there are aspects of regulation we think could be better targeted” – particularly with the aim of reducing the burden on high street solicitors.

This does not mean that the LSB will not pick holes in the detail of SRA proposals, as shown recently with its move to extend the decision time on reducing the minimum level of indemnity insurance to £500,000, which scuppered SRA hopes of introducing it this year.

But those who have praised the LSB for this should not think that the idea is dead. While the SRA submitted insufficient evidence to make the case, the evidence provided by Law Society and insurers against the move was “not compelling either”, the chairman said.

Sir Michael will bring a smoother and more conciliatory tone to the LSB than his predecessor, who by the end of this second term of office had clearly lost patience with what he saw as the Law Society and Bar Council’s intransigence. He is helped by the general changing of the guard at the head of most of the key regulatory and representative bodies that the LSB deals with, which will allow for a fresh start all around.

But that does not mean he is any less determined than David Edmonds to bring about further reform. As is often the case for such roles, he was initially approached to see if he was interested in it. “I built up to this quite slowly but every time I started looking into things, I became more and more intrigued by the nature of the job and the scale of the challenge,” he recalled.

It would seem that the idea of ‘business as usual’ will continue to have little meaning in the world of legal regulation for some time to come.

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