Sir Michael Pitt, chairman of the Legal Services Board (LSB), said yesterday that he wanted to present the new government after next year’s general election with an agreed “range of options” for the future of regulation.
Playing down previous calls by the LSB for a single legal regulator, Sir Michael said this could be one option on a list which he hoped would be agreed by all the legal regulators.
“You can frighten the horses if you just talk about a single legal regulator,” Sir Michael said.
He said there might be “some downsides” to a single regulator, and some alternatives which could be better.
“We’re not saying it’s the only answer,” Sir Michael said. “There are a variety of answers which we could put to ministers, who one day might get round to doing something about it.”
Launching the LSB’s draft business plan for 2015-16 and draft strategic plan for 2015-18, the chairman said the Legal Services Act was not “fit for purpose” any more and “felt like a job half done”.
Sir Michael said legal services had “done quite well” since the Act came into force, increasing turnover by 15% to £29.2bn in the period 2007-2013, despite a “pretty deep recession”.
He praised the over 350 alternative business structures for bringing “innovation and new forms of business” to legal services, citing BT Law, Aspire Law and Buckinghamshire Law Plus as particularly “interesting examples”.
However, he said “many people were not enjoying the benefits of legal services when perhaps they need to”, and services were too expensive for many consumers and SMEs to use.
Sir Michael added that the LSB was “paying more attention than ever before” to unregulated services, which were increasing in importance.
In its strategic plan, the LSB grouped its work into three strands: breaking down regulatory barriers to competition, growth and innovation; enabling the need for legal services to be met more effectively; and continuing with its performance, evaluation and oversight activities.
As part of breaking down barriers, the LSB proposed a “thematic review” of the barriers to firms wanting to swap legal regulators and the restrictions imposed by regulators on their choice of indemnity insurer.
Other options for reviews were how regulators identify firms in financial difficulty and how they deal with “underspend” of practising certificate fees.
To enable the need for legal services to be met more effectively, the LSB said it wanted to understand and define what “affordability” meant, before considering how to support innovation and help consumers choose firms more easily.
The super-regulator proposed research on unregulated providers of legal services and the availability of quality and price information for consumers.
In its draft business plan, the LSB promised to keep to a “stand still” budget of £4.3m for 2015-16, of which around £250,000 was earmarked for research, working out at around £26 a year for each regulated lawyer.
The LSB added that its costs were being scrutinised, as well as the other legal regulators, as part of its review into the cost of regulation.