CILEx Regulation urges reform, not replacement by SRA

Rees: We must recognises distinctive contribution of CILEX professionals

CILEx Regulation (CRL) has set out its case to remain the regulator for chartered legal executives, warning that it is prepared to go to court to clarify “where responsibility for changing regulatory boundaries lies”.

The consultation on changes to its regulatory regime is one of the outcomes of last month’s Legal Services Board (LSB) investigation into the dispute that broke out when the Chartered Institute of Legal Executives (CILEX) announced it was considering whether to switch regulator to the Solicitors Regulation Authority (SRA).

Undertakings given by CRL and CILEX in response to the LSB included CILEX pausing consideration of alternative proposals for eight weeks to enable CRL “to consult on and develop options for changes to CRL’s regulatory arrangements”.

CRL said yesterday: “Following this consultation, we will work with CILEX to bring forward firm proposals for change. We will also, if necessary, clarify before the courts where responsibility for changing regulatory boundaries lies.”

This indicates that CRL has not accepted the LSB’s conclusion that, in principle, CILEX has the power to change regulator.

The consultation asked CILEX professionals whether they viewed changing the current regulatory system as “a priority” and whether the profession was “enhanced by having its own regulator focused on the profession’s unique place in the delivery of legal services”.

Only the 7,700 chartered legal executives are ‘authorised persons’ for the purposes of the Legal Services Act 2007 and thus pay for regulation through practising certificate fees.

But CRL also regulates CILEX’s 9,300 paralegal members and the consultation asked whether it should stop this work or require paralegals to contribute to the costs.

It was particularly important to create “a fairer balance between the cost of regulation and those who pay for it” following CILEX’s acquisition of the Institute of Paralegals.

CRL floated changing its name to tackle the “lack of recognition and understanding within the legal community and the wider public” of its identity as an independent regulator.

On the issue of independence, CRL said greater operational independence from CILEX could reduce overall costs. This could involve moving away from shared back-office functions and taking over from CILEX the task of collecting practicing certificate fees.

CRL said CILEX had “previously supported complete structural separation for CRL as the independent regulator” and Chris Kenny, former chief executive of the LSB and adviser to CILEX, said last year that its “current degree of financial and service dependency on CILEX is not desirable”.

CRL also said it wanted to make setting up regulated law firms easier. It said research this time last year found that more than half (56%) of 86 chartered legal executives who owned their own firms thought the ‘CRL Law Firm in A Box’ idea would be useful.

The proposals aim to make it easier for new law firms and sole practitioners with limited resources and budgets to satisfy regulatory requirements.

CRL also sought support for education requirements that “reflect the specialist needs of CILEX practitioners”.

“A recent example would be CRL’s work to address the limitations of regulation by reserved activity for specialist lawyers and the proposal through our 2023 business plan to begin to address this through the development of regulation by role rather than activity.”

CRL said once it had received the results of the consultation, it would “seek to work with CILEX to agree what is the solution most likely to meet the interests of consumers, improve the tailored and independent approach to regulation of CRL’s regulated community, and provide true value added for all”.

Jonathan Rees, chair of CILEx Regulation, commented: “Much has changed in the 15 years since we were established. Consumers are more cost conscious, more diverse, and they rightly have increased expectations of legal professionals.”

Mr Rees said there was an equal need to “preserve what has worked well: independent regulation informed by the contribution of CILEX professionals as one of CRL’s stakeholders” and a regulatory system “that recognises the distinctive and specialist contribution CILEX professionals make”.

He added: “We believe the only sensible way forward is through open engagement with all interested parties.”

The consultation closes on 26 June.

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