A successor to the Legal Services Act 2007 is urgently required to build on the Act’s successes and to iron out the problems that have emerged since, according to a leading market commentator.
In a paper giving his personal views, The Legal Services Act: What might replace it and when?, Stephen Mayson, an honorary law professor at University College, London, and chairman of a regulators’ review of options for the future of legal services regulation organised by the Legal Services Board, argued that the Act was “a job half done”.
On the same day it was published, Prof Mayson introduced many of the paper’s themes at this week’s Legal Futures Regulation & Compliance Conference in London.
Although the 2004 Clementi report on which the Act was based was thought by some at the time to be too radical, it had in fact been “the considered articulation of the incrementally possible”, he said.
He continued: “Contrary to some predictions, English law firms have not been taken over en masse by crooks, sharks and charlatans; lawyers’ ethics have not been abandoned in the pursuit of profit; and the price and quality of legal services have not plummeted to the lowest common denominator.”
But the “flaws and fudges” underlying the Act now meant an update was necessary, he said. “It is, in short, time to move to stage two of the process initiated in 2007 and to finish the job.”
Eight consequences of the Act’s limitations were “inhibiting a more effective future”, Prof Mayson said. These are:
- the Act’s regulatory objectives are in conflict with each other, causing confusion;
- building a regulatory framework around an “historical, anachronistic, and limited list of reserved legal activities” is unsustainable;
- a “maze of regulation by activity, individual, entity, and professional title” leads to burdensome regulation;
- the fact that non-reserved activities can be carried out by non-qualified people “beyond the reach of [regulation]” is unjustifiable;
- the “independence of regulation from government and professional representation” is incomplete;
- the “multiplicity of regulators” risks “overlap, inconsistency, regulatory competition and arbitrage”;
- the “over-prescription of regulatory requirements in statute” needs examination; and
- the statutory basis of the regulatory framework needs simplifying.
Prof Mayson accepted there was “a short-term probability” that no parliamentary time would be devoted to a new Legal Services Act, but he argued that the work of planning the revision had to start now.
A key question that needed to be addressed was the role of before-the-event barriers, such as the need for qualification, reserved activities, or licensing entities, including alternative business structures.
Other questions included the role of during-the-event protections, such as professional indemnity insurance, or risk monitoring and supervision, and after-the-event redress, such as complaints handling, compensation, and disciplinary action.
There were a number of possible reasons as to why ministers might come to see the need for new legislation as pressing, he said.
Risks under the existing Act included to the “legitimate participation of citizens in society”, such as unmet legal need in a post-financial crisis economy, and “to the fabric of society and the rule of law”, such as the rise of self-represented litigants in court and resultant pressures on the justice system.
Risks to consumers from non-regulated legal activities, and the cost and burden of regulation leading to an absence of healthy competition in the marketplace, were further possible “sets of mischiefs and risks” that “provide cause and force to the case for improved coherence, balance and proportionality in our regulatory approach to legal services”.
Prof Mayson concluded: “A new regulatory settlement is… imminently required in order to continue to protect and promote the public interest in the rule of law, the effective administration of justice, the global position of English law and courts, and the public value of judicial determinations; to protect consumers of legal services appropriately; and to allow the market providers to grow, adapt and innovate further, given the realities of a different economic climate.”