The president of the Law Society and chief executive of the Solicitors Regulation Authority (SRA) have clashed over the latter’s controversial proposal to allow solicitors to practise from unauthorised businesses.
They also sniped at each other over the independence of the SRA.
Speaking at a debate last week on competition and the legal services market, organised by the London School of Economics, president Robert Bourns said he was concerned that “promoting competition and, in some instances, reducing protection, could and will expose vulnerable consumers to exploitation”.
He said having solicitors work in unregulated entities was “a clear opportunity for confusion and consumer detriment”.
He continued: “They would be receiving advice from a solicitor who would not be bound by client rules, would not be able to offer legal professional privilege in respect of clients’ confidential information, would not provide access to the Legal Ombudsman to raise complaints, would not be obliged to provide professional indemnity insurance, and would not provide access to the compensation fund – underwritten by the profession.”
For the SRA, Paul Philip countered that the move would be good for both consumers and solicitors.
“We think that if you went to a travel agent, bought a package holiday and that package holiday was cancelled at the last minute, you shouldn’t have to go on the internet and pay someone with a success fee to try and get your money back,” he said.
“You should have legal services rolled up in the contract with the travel agent and they can act for you.
“That’s the classic example of the type of thing that we think would be good for business and good for the solicitors’ profession. That solicitor would be properly regulated, held accountable to a code of conduct, in the same way that any other solicitor would…
“The Law Society says that makes a two-tier profession; our view is that it would make more access to properly trained, properly regulated solicitors for many, many more consumers in the market place.” There would also, he added, be more opportunities for solicitors too.
Mr Bourns said he was concerned about the pressure that could be placed on the solicitor in the travel agent in an entity driven by revenue and profit targets rather than issues such as avoiding conflicts of interest.
Mr Philip described the question of the SRA having full independence from the Law Society as “an ongoing festering sore”.
Responding to Mr Bourns’ description of the SRA as the “operationally independent arm of the Law Society”, Mr Philip noted that he was an employee of the society and in some ways accountable to the president. “That is wrong – it has to be wrong because the interests of the profession are fundamentally different from the interests of consumers.”
He said the society’s stated strategy of representing, promoting and supporting solicitors was “genuinely at odds with regulating in the public interest”, adding that operational independence “doesn’t cut it” with consumers with complaints about solicitors.
Mr Bourns said SRA independence was “relatively parochial” compared to ensuring the independence of the profession from government, “the independence of the practitioner in the client interest and the duty owed to the system”.
The pair also disagreed over potential changes to professional indemnity insurance to reduce its cost.
Mr Bourns said insurance costs reflected losses and claims history, and suggested that the only way to cut them was to deny some parts of the market access to recourse.
Mr Philip said the minimum terms and conditions of insurance were unnecessarily “gold-plated”, pointing as an example to the requirement that insurers have to cover their policyholders even if the solicitors have lied in their proposal form.
He also touched on a move to regulation by activity, rather than title, along with a possible rethink of the reserved legal activities. While Mr Philip acknowledged that the reserved activities do not “properly reflect the risk in the market”, he said that this may not be the time to address these issues.
“We are in an interesting political time when people are doing their best to attack the standing of English law… I would just pause on timing before I attacked regulation by title or indeed a move away from reserved activities.”