The frontline regulators need lay chairs at the helm so as to cut the “overly strong ties” that still exist with their branches of the profession and have held back change, the Legal Services Board (LSB) said yesterday.
The call was met by strong opposition from the Law Society and the solicitor chairman of the Solicitors Regulation Authority (SRA), Charles Plant.
It is unlikely to be a coincidence that the terms of both Mr Plant and Baroness Deech, the non-practising barrister chair of the Bar Standards Board (BSB), both finish at the end of 2014.
The LSB is also expected shortly to announce the outcome of its investigation into whether the Bar Council interfered with controversial changes made by the BSB to the cab-rank rule to facilitate the new contractual terms between barristers and solicitors.
While emphasising that this was an institutional issue, rather than a reflection of those are or have been chairs, the LSB argued that the regulators are still tied too closely to their branches of the profession and that the current requirement to have a lay majority on regulators’ boards does not go far enough.
“Our analysis is that overly strong ties to the history, culture and rules of professional self-regulation are having a negative impact on the better regulation principles and putting the regulatory objectives at risk.
“While many regulators have taken significant steps forward in terms of allowing alternative business structures, shifting their models towards outcomes and refocusing on risk-based supervision, we are in no doubt that reform would have come further under regulators who were not tied to the profession.”
The LSB said regulators still tend to view change from the standpoint of their part of the profession, meaning non-traditional business models and owners are “regarded with some caution”.
In what looks like a direct reference to the SRA, the consultation paper added: “In practice, there has been a danger of the approved regulators confusing breadth of background (having a lawyer from a large firm, small firm, in house, legal aid etc on a board in a quasi-representative manner) with breadth of skills and knowledge (eg in relation to leadership, regulatory expertise, governance and non-executive challenge).
“It seems probable that better balanced boards would emerge if more of the chairs had leadership experience in a risk-based regulatory context rather than professional experience of self regulation as a member of the profession.”
Mr Plant said his board will formally respond to the proposal once it has had a chance to consider it.
Speaking for himself, however, he told Legal Futures: “It must be remembered that the SRA is required to have a lay majority and that is a principle I have always supported. It works well. That of itself dispels any notion that the regulator’s mindset can be too closely tied to the profession.
“I do not accept that an additional requirement – that the chair should be a lay member – would produce a better balanced board and in some way enhance independence.
“We support greater structural independence for the SRA but that requires a major review by the Ministry of Justice rather than a window-dressing exercise which inevitably will limit the range of candidates for the position of chair. The latter is the real point – the pool of talent from which to recruit the chair should not be arbitrarily restricted in the manner the LSB proposes.”
Mr Plant added that the board had never split along solicitor and lay lines.
A Law Society spokesman said prescriptive rules on the professional background of the chair “seems unnecessary”.
He continued: “The outcomes are most important – a chair needs the skills and knowledge to oversee the running of a potentially large and complex organisation. Whether a person holds a professional title or qualification seems relatively unimportant. It is a requirement that the LSB has a lay chair but it does not follow that this requirement needs to be imposed on the front line regulators.”
A BSB spokesman said: “The BSB has had a lay majority since January 2012 and is committed to keeping this. It currently appoints its chair on merit, without reference to the need to hold or not to hold a legal qualification. We will, as usual, engage constructively with the LSB consultation.”
The consultation only affects those regulators which are attached to a representative body; the Chartered Institute of Legal Executives and Costs Lawyer Standards Board already have lay chairs, while the chair of the Intellectual Property Regulation Board is a non-practising barrister.