Shah: Leaving diversity for others to lead
The Legal Services Board (LSB) has unexpectedly ditched plans that would have increased pressure on regulators to improve diversity in the profession.
Last year it said the profession had failed to make “significant progress in tackling the structural and cultural barriers to encouraging equality and diversity” and stronger action was required.
This came in the form of a draft statutory statement of policy, a consultation on which was launched in November.
However, the oversight regulator announced yesterday that it has decided “not to proceed with the statutory statement at this time”, leaving statutory guidance from 2017 in place.
Statutory statements, issued under section 49(2) of the Legal Services Act 2007, set the direction for how the frontline regulators should approach a particular issue.
Statements published in recent years have covered upholding professional ethical duties, first-tier complaints, ongoing competence and empowering consumers. The regulators have to produce a plan of action and are tested against it.
Last year’s consultation consisted of four outcomes with core expectations that all regulators would be expected to meet, and ‘enhanced’ expectations that they should consider meeting.
The first outcome was ‘strategic, evidence-based and collaborative action’, the second was ‘fair regulatory approaches and decision-making’, the third was to be ‘accessible, flexible and inclusive’, and the fourth was ‘professional conduct and competence’.
Under the latter, regulators would have been expected to “embed duties in codes of conduct to prevent discrimination and promote respect, supported by guidance and competence frameworks requiring ongoing development in equality and inclusion”.
The LSB said the consultation responses demonstrated “different views about the extent to which regulation can best support” the ambition of encouraging a diverse legal profession.
“Some respondents identified practical challenges about how a single policy statement would work across regulators with different statutory frameworks, operating models and existing programmes.
“Many respondents suggested that the resource impact of the proposals could be significant, with small firms and those with limited HR infrastructure likely to be particularly affected.
“Respondents also described work taking place within their professions and the progress being made. There is experience and meaningful progress to build on, while significant barriers remain.”
In its response, the Solicitors Regulation Authority said a proposed rule requiring law firms to take “remedial action” to address disparities in equality, diversity and inclusion went too far.
The LSB said that, to achieve meaningful change, “we need to enable regulators to develop a range of approaches which are better suited to different parts of the profession”.
The 2017 guidance, which has less weight than a policy statement, is also notably less forceful that what was proposed last year, as it focuses more on intelligence gathering and sharing good practice than taking action.
In 2020, concerned that progress was too slow, the LSB introduced three specific expectations to clarify what “good regulatory performance” looked like in terms of diversity.
In the consultation last year, the LSB said compliance with the guidance was “inconsistent and requires improvement”.
Replacing it with a strengthened regulatory approach would “better enable the sector to dismantle barriers, harness the benefits of diversity, and ensure a sustainable, effective profession aligned with societal needs”.
Yesterday, however, the LSB highlighted how the guidance required regulators to ensure their work on diversity was evidence-based and effective. “We expect them to identify barriers and work with employers, professional bodies and others to address them.”
It will assess progress against the guidance through its regulatory performance assessments.
LSB chair Monisha Shah said: “Encouraging an independent, strong, diverse and effective legal profession remains a statutory regulatory objective that we share with regulators.
“We are concentrating our resources on fewer priorities, focusing on the most pressing risks to consumers and how regulation can protect them, enable technology and innovation, and support growth. This means making choices about where we lead, and where we enable others to do so.
“We have carefully considered the consultation feedback and made the decision not to pursue a statutory statement of policy at this time.
“However the regulatory objectives in the Legal Services Act continue to inform and shape our work, and we will keep our priorities under review as the landscape, the evidence and our assessment of the risk to the public and consumers continues to change and evolve.”
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