CLC warned over allowing ABSs to dodge regulation of unreserved legal work

Print This Post

By Legal Futures

11 March 2011

Will-writing: "closely related" unreserved services will have to be regulated

The Council for Licensed Conveyancers’ (CLC) bid to license alternative business structures (ABS) could allow firms to dodge regulation of their unreserved legal work, the Legal Services Consumer Panel has warned.

Although supportive of the application and complimentary about the CLC’s attention to consumer needs in several respects, the panel said it is vague on a number of regulatory issues important to consumers.

In its advice on the application – which is required by the Legal Services Act – the panel called for greater clarity over rules under which licensed bodies undertake non-reserved legal activities related to reserved legal work, such as will-writing alongside probate.

The CLC says in its application that it expects ABSs to provide “closely related” non-reserved activities through the regulated entity, citing the panel’s own research, Quality in legal services, which shows that consumers assume that “someone is making sure standards are being maintained”.

However, the CLC goes on to say: “Otherwise, we will expect [them] to explain why they consider such an approach to be in the best interests of consumers and how they plan to address any risks identified.”

The LSCP agreed that non-reserved work should be carried out by the regulated entity because the policy “aims to prevent entities from dodging regulation by establishing a separate business”. But it was concerned that the CLC’s willingness to entertain “alternative approaches could lead to inconsistency and cause confusion for consumers”.

Enlarging on its concerns, the panel said the CLC’s approach raises questions as to exactly when one legal activity is ‘closely related’ to another, how it will monitor compliance and what criteria it will apply in considering alternative approaches. It concluded: “The panel hopes the CLC will develop further its policy approach on these questions and ensure the regulatory framework is transparent and easy to understand for consumers.”

The Solicitors Regulation Authority is seeking to address the issue by applying the existing separate business rule to ABSs.

The panel welcomed a stipulation that bodies seeking an ABS licence from the CLC must provide, among other things, a statement “explaining how the entity will respond to the needs of consumers and improve the public’s access to justice opportunities”.

But it also wanted the CLC to look at the overall impact of its ABS regime on access to justice. “Over the next period, we would like to see the CLC give more thought to how it will analyse this overall impact and communicate its findings externally.”

The panel also took exception to the CLC’s intention, stated in the application, to apply the criminal standard of proof to its enforcement decisions, where an allegation, if proved, is serious. The panel wanted to see the civil standard of proof applied in all disciplinary hearings.

Tags: , , ,

Leave a comment

* Denotes required field

All comments will be moderated before posting. Please see our Terms and Conditions

Legal Futures Blog

Lawyers must now draw on the data and drive change

Chris Marston 2014

The results from this year’s legal services consumer tracker survey make for interesting reading. In its sixth year, the research finds that a firm’s reputation continues to grow in importance, holding its top slot as the number one factor influencing choice of lawyer, with price remaining a strong second, reflected in a shift towards higher numbers of fixed-fee transactions. Alongside, it reports that trust in lawyers has declined to 42%, from 47% in 2012. It’s useful information as far as it goes, but what is the sector going to do with it?

September 26th, 2016