The Law Society has said it is “deeply concerned” that new rules proposed by the Legal Services Board (LSB) could largely prevent it from either lobbying or criticising the Solicitors Regulation Authority (SRA).
The society said the internal governance rules (IGR), which aim to ensure that the SRA and other regulators are independent, could also create a situation where “disagreements are more likely to arise”.
The draft rules were strongly criticised last month by Richard Atkins QC, new chair of the Bar Council, who warned that the Bar could be “sleep walking into a nightmare scenario” where it had no involvement with its regulator, the Bar Standards Board.
Under section 30 of the Legal Services Act 2007, the LSB is obliged to make rules for approved regulators, like the Law Society and Bar Council, to ensure separation of representative and regulatory functions.
Responding to an LSB consultation on the rules, the society said the new draft IGR went “far beyond” the requirements of section 30, and “inadvertently interfere with legitimate public interest and representative activities” in a way that put some of the regulatory objectives of the Act at risk.
The society said its “legitimate influencing activities” were a healthy part of the regulatory system and a “core part” of its representative role.
“However, the proposed rules would appear to put the Law Society in a worse position than any other stakeholder in carrying out legitimate influencing activities.”
One example, the society said, was a rule which would prevent approved regulators from influencing regulatory decisions, except in the context of a consultation.
Another would restrict its role in the same way for budget and resource decisions.
“Wide-ranging restrictions on legitimate influencing activities are inappropriate given the fact that it is representative bodies like the Law Society who are in many instances best placed to articulate the potential impact on the regulated community of a proposed regulatory decision.”
The society said it could be banned from writing letters to the SRA highlighting concerns over new rules, publishing articles or press releases on regulatory issues outside a consultation, meeting informally with SRA staff to put forward views, writing to its members to raise concerns and “speaking out publicly” on behalf of the profession.
The society argued that, rather than relying on “assurances made by the LSB”, the draft rules should be changed so ‘undue influence’ was prohibited rather than simply ‘influence’.
“The Act gives ultimate responsibility for complying with the Act to the approved regulator, not the regulatory body. It is therefore implicit in the Act that approved regulators, like the Law Society, must be able to hold regulatory bodies, like the SRA, to account.
“The proposed IGR suggest that the role and responsibility of the society would be reduced to a residual role by providing that the approved regulator is entitled to be assured that the regulatory body is discharging regulatory functions correctly.
“This would mean that the society continues to carry organisational and financial risks whilst accountability for the regulatory activities would lie elsewhere.”
The society said the draft IGR ran “counter to parliamentary intentions and the design of the Act” and it did not consider that the LSB was “entitled to reduce the authority of the approved regulators in the way it suggests”.
The society said it also believed the draft rules would “prohibit the sharing of services” with the SRA, in the way that was “onerous” and “disproportionate”, forcing some services to be shared unnecessarily and others to be duplicated.
In view of the “potentially serious cost implications”, the society called for an impact assessment to be carried out by the LSB before any decisions were made.
Last May, the LSB publicly censured the Law Society for having governance arrangements in place that could have interfered with the SRA, in a “serious breach” of the IGR.