… as Law Society calls on government to slash the LSB’s budget to stop it overstepping the mark

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By Legal Futures

10 April 2012

Budget squeeze: the LSB’s budget should be a third of what it is, says Law Society

The Legal Services Board (LSB) should have its budget slashed so as to rein in its ambitions to move beyond a supervisory role, the Law Society has claimed.

In its response to the Ministry of Justice’s triennial review of the LSB, Chancery Lane said that while the LSB should continue for the time being, “the need for its continued existence should be reviewed critically in the next triennial review”.

The society said there are “disturbing indications” of the LSB seeking to move beyond its role as a supervisory regulator, intervening only when frontline regulators were acting unreasonably. A more proactive role for the LSB is “unnecessary and undesirable”.

It echoed the heavy criticism of the LSB expressed last week by the Bar Council and Bar Standards Board, but other bodies – the Solicitors Regulation Authority, the Chartered Institute of Legal Executives (CILEx) and the Council for Licensed Conveyancers – have been more measured in their responses.

The Law Society said that with its main priorities already delivered, many of the LSB’s functions are either not needed or could be dealt with as they were before the Legal Services Act. However, there are some tasks – such as resolving disputes between approved regulators and their regulatory arms – for which the LSB remains the most appropriate decision-maker.

But it said the LSB should “operate on a scale more appropriate to the remaining tasks”, saying that without this “the board will simply expand its activities to consume all, or almost all, of the available budget”. The society called for the LSB’s budget – £5m in 2011/12 and £4.5m in 2012/13 – to be cut to £2.5m in 2013/14 and £1.5m the year after. “The remaining work of the LSB cannot possibly justify a staff or anywhere near the current size nor expenditure of £4m a year.”

In its response, the SRA said the LSB has “largely struck the correct balance in terms of the way in which it assists in the maintenance and development of standards of regulation”, but that it is now time for the LSB “to re-evaluate its regulatory focus” and what its role shoudl be.

At the same time, the SRA said the LSB was “sometimes guilty of a micro-management approach to monitoring and compliance… The LSB can display a tendency to step into management of the approved regulators and their regulatory arms, rather than overseeing [their] work”.

A joint response from CILEx and its regulatory arm, ILEX Professional Standards applauded the achievements of the LSB to date and said it was too early in the development of the legal market to consider significant changes.

It too said the LSB should strive for greater budget restraint, in line with the 20% savings required of government departments and cautioned against an “unduly detailed approach to oversight regulation, which risks undermining professional independence”.

In its response, the Council for Licensed Conveyancers said the LSB has important statutory functions to perform, but highlighted “a perception that, as an oversight regulator, the LSB is not itself taking a risk-based and outcomes-focused approach”.

It explained: “For example, the LSB has set a demanding timetable for the regulators to obtain diversity data from the profession apparently before it has itself fully understood and satisfactorily resolved all the legal issues surrounding the collection of personal data. We believe that the LSB is making too many demands on approved regulators, without discriminating sufficiently between them, leading to a ‘one size fits all’ approach which in turn makes unnecessary claims on their resources.

“Further, we do not believe that the LSB is responding by appropriate prioritisation of the concerns identified by Approved Regulators and other stakeholders in its own work plan. The risk in the approach taken by the LSB is more, not less, regulation, without commensurate benefit for the interests of consumers (or for the other regulatory objectives).”


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