Lord Chancellor calls for greater innovation in legal market and hints at regulatory reform

Lidington: There is still much to be done

There needs to be a “more diverse and innovative legal services market” in England and Wales that attracts new providers and offers new opportunities “for the current and future legal profession”, the Lord Chancellor has said.

Almost exactly a decade on from the Legal Services Act becoming law, David Lidington also hinted that further regulatory reform was still on the agenda.

In his first words on legal regulation issues since being appointed in June, Mr Lidington was writing a message for potential applicants for the post of chairman of the Legal Services Board (LSB), which has been filled on an interim basis since 1 May, after the term of Sir Michael Pitt ended.

He said: “In its most recent evaluation of the changes in the legal services market since 2007, the LSB demonstrated that this is a sector that is exhibiting positive change: a market that has grown; where there is evidence of the greater availability of fixed fees for consumers; and where most measures are showing improvements in quality.

“However, as the recent Competition and Markets Authority market study has shown, there is still much to be done.

“We have a legal services sector which has an excellent reputation both at home and abroad but it cannot afford to stand still. We need a more diverse and innovative legal services market that attracts new providers and offers new opportunities for the current and future legal profession.

“Underpinning that we need a modern regulatory framework which is effective, proportionate and flexible and in which the consumer and profession have confidence.”

Legal Futures understands that last year, before the EU referendum, the then Lord Chancellor, Michael Gove, had agreed to a wholescale review of legal regulation, but this was derailed first by the referendum result and then by Mr Gove losing the job when Theresa May became prime minister.

There are hints in Mr Lidington’s welcome that this may remain on the table, however.

He praised the way that the LSB continued to drive the change that is needed to break down regulatory barriers to competition, innovation and growth in this important market sector, under Sir Michael’s chairmanship. 

“Its approach, exemplified by the publication of LSB’s vision for a new regulatory framework, has also relentlessly focused on putting consumer and public interests at the heart of regulation and redress, as expected by Parliament… You will play an important role in delivering a regulatory framework that is fit for the 21st century.”

The LSB’s vision was for a radical reshaping of legal regulation, including regulation by activity rather than professional title, and a single regulator for the entire profession.

Mr Lidington also stressed the importance of the new chair considering “how best the LSB can pursue greater diversity in the legal profession and makes sure that regulation underpins the undoubted reputation of England and Wales’ legal sector at home and aboard”.

The role will pay £63,000 for a commitment of 70 days a year. Until now the chair has served for three years, but this appointment is for four, with the possibility of another terms at the discretion of ministers, up to a maximum of 10 years in post.

The appointment panel is currently made up of Ministry of Justice official Benjamin Smith, Lady Justice Rafferty as the Lord Chief Justice’s representative and independent member Peter Spencer, a former public appointment assessor for the Commissioner for Public Appointments. One more member will be added.

Though the post is only open to non-lawyers, the job description said the “essential criteria” for appointment included understanding the regulatory framework governing legal services, as well as how the sector works and the challenges it faces.

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