The Legal Services Board (LSB) has launched a formal investigation into whether the Bar Council interfered with the independent regulation of barristers over controversial changes made to the cab-rank rule.
The Bar Standards Board (BSB) changes – which were themselves subject to a lengthy LSB investigation before being approved  in July 2012 – were made to facilitate the new contractual terms between barristers and solicitors, and the LSB is concerned that the Bar Council exerted undue influence in the process.
The extent to which the standard terms were a matter for the regulator or the representative body had been an issue during the approval process, and the LSB was concerned by press reports  and announcements in March that the terms were a matter for negotiation between the Law Society and Bar Council.
There was a particular focus on a joint statement issued on 7 March by Bar Council chairman Maura McGowan and Law Society president Lucy Scott-Moncrieff, which said that the new contractual terms “have been designed by the Bar Council”.
In his report to the April meeting of the LSB, chief executive Chris Kenny said this “could have been read as implying that [the Bar Council] had exerted undue influence in the drafting of the standard contractual terms for the operation of the cab rank rule”.
The LSB issued two demands for documents from the Bar Council under section 55 of the Legal Services Act 2007, and as a result of the information received, it decided this week to commence a formal investigation into whether the independent regulation of the Bar had been undermined, and with it protection of the public interest and the rule of law.
It will also consider whether the Bar Council failed to comply with the requirements imposed on it by the LSB’s internal governance rules, which detail the split between representation and regulation within approved regulators.
Under the LSB’s enforcement policy, it will first consider whether an informal resolution is appropriate. Formal remedies range from issuing a direction or censure to a financial penalty and even intervening in the regulator. The maximum level of fine is 5% of all income which the regulator has derived from the exercise of its regulatory functions.
In its recent assessment  of the BSB’s performance, the LSB questioned whether the regulator was – or was perceived to be – sufficiently independent from the profession and the Bar Council.
A Bar Council spokeswoman said: “The Bar Council strongly supports the principle of regulatory independence and the other regulatory objectives which underpin the Legal Services Act 2007. It will co-operate fully with the LSB’s investigation.
“The Bar Council denies that it has undermined, or at any time has sought to undermine, the regulatory independence of the BSB in relation to the BSB’s application to the Legal Services Board for approval of changes to the Code of Conduct.
“The changes… arose out of the Bar Council’s long-standing wish to introduce standard terms of business to enable barristers to recover fees for work they have done but for which they have not been paid. The rule change was the result of protracted negotiations and a regulatory approval process covering more than 10 years.”
A BSB spokeswoman said: “We intend to fully cooperate with the investigation and it would not be appropriate to comment further while this process is ongoing.”