Laying down the law

Posted by Dan Bindman, associate editor, Legal Futures

What kind of person should be able to sit at the head of the regulatory table?

The issue of insisting on lay chairs to head the frontline legal regulators, as was proposed by the Legal Services Board (LSB) in a consultation that ends next week, has sparked predictable opposition among the targeted regulators.

That the LSB should try to push through such a potentially explosive change to internal governance rules at a time when it has just been pummelled in a series of bruising responses submitted to the Ministry of Justice’s regulatory review, shows bullishness on the part of the oversight regulator.

On the substantive issue, the LSB’s proposal, which it admits arises only from a value judgement based on observations over the past few years rather than empirical evidence, has provoked sharp complaints from the two main regulators.

The stately progress those regulators made towards a previous LSB goal of achieving lay majorities was arguably evidence of their lack of enthusiasm for the notion that public perceptions of their independence should be dealt with in this way. Moving the goalposts to include lay chairs was bound to reawaken that feeling.

For the Solicitors Regulation Authority (SRA), which told the MoJ it wanted full structural independence from the Law Society, imposing a lay chair is a gesture that misses the point by a country mile. For the Bar Standards Board (BSB), whose frustration with LSB interference has been barely concealed for years, despite the occasional attempt at rapprochement, lay chairs is an intervention too far.

The idea that requiring a lay chair will reassure the public of the regulators’ independence from the professional bodies they regulate seems to have caused offence to lawyer board members and lay members alike. It is preposterous, they complain, for the LSB to require such evidence-based rigour of their own policy changes, yet be consulting on a policy apparently based on no more than a gut feeling.

A strong chair appointed from within the profession is just as able to demonstrate independence as a strong lay chair and might even be in a better position to bring lawyers into line behind tough regulatory policy, they say.

Individuals within both regulators are suspicious that the LSB’s suggestion that a move to lay chairs would represent a healthy loosening of ties with their individual branches of the profession, in fact embodies a spurious analysis of the various things the LSB has disliked about the regulators over the past four years.

Most compellingly, they argue, it defies common sense to disqualify a candidate for the post because they qualified as a lawyer a long time ago – and maybe then only to spend years in a different career.

At a recent BSB main board meeting, a sense of the perceived absurdity of this narrowing of the talent field seemed to build as each member voiced their opposition. That this discussion was taking place in the public part of the meeting – at which reporters can be present – was no accident, but the strength of feeling expressed was genuine.

Even the potentially controversial suggestion that the LSB’s plan was perhaps “all rather personal” in origin, from the chair, Baroness Deech – after recalling the LSB had previously insisted the BSB strike out a rule saying that if its vice-chair was lay, the chair had to be professional, and vice versa – passed by without comment.

Only one BSB board member tried to calm the outrage, but simply on the tactical ground that lay versus professional membership was an old battle, and by making the point that the last time the BSB had tried to fight it, it had lost. Even he held the view that the LSB’s position was “ridiculous”.

The SRA’s official position was similarly robust, and it ostentatiously declined to make a formal point-by-point response because “we do not think it would be profitable” – presumably a polite way of saying ‘it’s not worth our time’. Instead, it took the form of a letter to LSB chief executive Chris Kenny from his SRA counterpart, Antony Townsend.

Along with points mentioned above, and having admitted that its board was divided on the matter, the SRA squeezed in a familiar argument about possible damage to perceptions abroad of the profession’s independence. Having the super-regulator intervene on lay chairs might damage UK exports and help competing jurisdictions, by damaging the credibility of UK firms, the line went.

In different circumstances, a lay chairs policy is perhaps the sort of thing that might have passed into the LSB’s internal governance rules without too much fuss. True, nobody knows whether the public perception of regulation would be improved by it, but it seems to tick the same boxes as the requirement to have a lay majority – already a fact of life.

But in the febrile atmosphere created by the MoJ’s review of legal regulation, with the possible redrawing of regulatory boundaries that might follow – and the seemingly ever-more strained relations between certain frontline regulators and the LSB – this issue has perhaps become a proxy for pre-existing complaints and a sounding board for deeper frustrations.

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