All providers of legal services, whether legally qualified or not, should be registered and regulated by a single regulator, a major review has concluded.
Stephen Mayson, honorary professor of law at University College, London, said it was time to move from regulating lawyers to regulating legal services, but to differing degrees depending on the risk to the public interest of the work.
This meant a qualification should no longer be the sole route into becoming a regulated provider.
His 340-page report, Reforming legal services: Regulation beyond the echo chambers, follows a two-year review and has been submitted to the Lord Chancellor, although it was not commissioned by the government.
The Ministry of Justice recently indicated it has no plans for a review of the Legal Services Act 2007, and Prof Mayson has also recommended a series of shorter-term measures because, during the review, he became “increasingly convinced that some change is needed sooner rather than later”.
This was especially as the public does not generally understand the difference between regulated and unregulated providers, while the Covid-19 crisis had led to “increasing and changing demand for legal services”, particularly the move online.
He praised the 2007 Act for heralding “a more modern and liberal approach to the regulation of legal services”, but added: “We now need to go further.”
Prof Mayson pointed out that lawyers have “consistently estimated” that, on average, only about 20% of their work covered the current reserved legal activities (although it will be higher for most barristers) – but the way the regulatory regime worked meant the full panoply of requirements applied to all their work.
Further, a YouGov survey of almost 30,000 adults published by the Legal Services Board earlier this year recorded that about one-third of the 60% of them who had faced a legal issue in the past four years did not receive any help. Of the two-thirds who did receive help, just under half used a regulated lawyer.
“The conclusion of this review is that the regulatory framework should better reflect the legitimate needs and expectations of the more than 90% of the population for whom it is not currently designed,” he wrote.
He added: “We have more lawyers than ever before, but more (and rising) instances of legal problems not being addressed.
“The regulation of legal services is not the cause of these concerns. But this report shows that sometimes it reinforces them, and sometimes it stands in the way of alternatives that could make a difference. It is time to reconsider.”
It was, the academic continued, unacceptable that those unable to afford a regulated lawyer were left to their own devices in an unregulated market. But reform must happen “without sacrificing the best of what we already have”.
Nonetheless, challenging the proposition that legal services were best provided by lawyers, Prof Mayson said this would be correct if two further propositions were borne out: “First, that lawyers were universally the best providers; and second, that lawyers were universally accessible by all those in need. Unfortunately, neither is the case.”
He described the current arrangement of 10 front-line regulators plus an oversight regulator as “cumbersome”, and recommended replacing it with a single, independent regulator – the Legal Services Regulation Authority (LSRA).
“The requirement for flexibility, consistency, coherence and coordination across regulation within the legal services sector necessarily leads to a single regulator,” the report said.
The authority should be established as an arm’s length agency that reported to Parliament rather than government; there should be no general power for the Lord Chancellor to give it directions.
Regulatory scope should apply to “advice, assistance, representation and document preparation in pursuance of or in connection with legal rights and duties arising under the law of England & Wales”.
Lawtech would fall within this and an appropriate person should be registered as a ‘provider’.
The LSRA would replace the reserved legal activities by categorising all legal services according to risk and apply differing levels of protections as required.
All providers would be subject to minimum requirements, such as giving clients access to a beefed-up legal ombudsman; compliance with a code of conduct applicable to all regulated legal services, against which they could be disciplined; a minimum level of professional indemnity insurance; and disclosure and transparency in relation to regulatory status, terms of engagement, pricing (in some areas) and complaints.
For practice areas that are at an ‘intermediate’ level of risk, there would be additional obligations, such as for handling client money, higher levels of insurance and CPD, while those providing services that are of high public importance or high risk to consumers would require prior authorisation, such as through a qualification.
In both higher risk areas, providers should benefit from legal professional privilege, the report said.
Prof Mayson recommended exempting both immigration and notarial services from the definition of ‘legal services’, saying practitioners should be regulated by the Office of the Immigration Services Commissioner and Master of the Faculties respectively.
In-house lawyers and departments would be covered though: “An in-house legal department should be capable, for regulatory purposes, of being registered as a distinct business unit, so that the department’s delivery of legal services would be subject to the same regulatory obligations as any other registered provider.”
There would be a single public register. The LSRA would have the power to approve the requirements for registration, regulation and the award and removal of professional titles, but the ‘ownership’ and award of titles would remain with the established professions.
“This would not prevent professions from maintaining and promoting higher professional standards than those required by the regulatory minimum where they believe that it is in their best interests to do so.”
All legal professional titles would have the benefit of statutory protection, rather than only solicitors, barristers and chartered legal executives as now.
A revised and more extensive ombudsman scheme would act as a single point of entry for complainants who are individual consumers or micro-organisations, including ‘own-initiative’ powers to investigate providers.
In the short term, especially given the impact of the Covid-19 crisis, the report proposed creating a ‘parallel’ new structure, fast-tracking a public register for currently unregulated providers of legal services, including those who provide online services and paid McKenzie Friends, which would bring them within the ambit of the Legal Ombudsman.
This goes beyond the scope of the Legal Services Act, meaning primary legislation would be required; we reported earlier this week that the Legal Services Board has begun looking at what reform it could introduce using existing powers in the Act.
Other recommended short-term measures would not need legislation reform, however: encouraging specialist accreditation of all those involved in wills, probate and estate administration, and separately those providing criminal and youth court representation and advocacy.
Prof Mayson said: “The current regulatory structure provides an incomplete and limited framework for legal services that is not able in the near-term and beyond to meet the demands and expectations placed on it, particularly with the emergence and rapid development of alternative providers and lawtech.
“The recommendations in this report seek to create a level playing field for legal services and enhance consumer protection, through targeted and proportionate regulation.”