MPs’ support for Legal Services Act review divides opinion

Mayson: Time is now right to start working on reform

MPs’ backing for a review of legal regulation has split opinion in the market, pitching the Legal Services Consumer Panel and Professor Stephen Mayson against the Law Society.

Other recommendations from the justice select committee’s letter last Friday to Lord Chancellor Alex Chalk, including a review of the Legal Services Board (LSB), won support.

Committee chair Sir Bob Neill said it would be “wrong” for the government to ignore the conclusion of Professor Stephen Mayson’s independent review of regulation that many of the recent issues relating to regulation were evidence of the fundamental flaws of the 2007 Legal Services Act.

He said: “We recognise that there is relatively little appetite in the sector for far-reaching regulatory change, however, it is undeniable that the case for re-examination of the legislative framework underpinning regulation is growing stronger and stronger.”

Professor Mayson told Legal Futures that he was “naturally delighted that the justice select committee, after careful consideration and taking evidence, has taken the view that it would be wrong to ignore the conclusions of the independent review”.

He continued: “The final report of the review was written in 2020 in the expectation that it would inevitably be some time before substantial change would take place.

“However, the committee’s response shows that developments in the sector could well overtake the pace of regulatory change, leading to harm to consumers, and that the time is now right for government to start working on reform of at least some aspects of the legislation.”

Sarah Chambers, chair of the Legal Service Consumer Panel, added: “We agree with the select committee that a review of legal services regulation is urgently needed.

“In the context of rapid technological change, the emergence of a range of disturbing ethical issues, and declining funds to enable those on low incomes to access justice, the panel suggests that it is the underlying framework of regulation, rather than the LSB in particular, that needs updating in order to protect the needs of consumers and the general public.”

Though we contacted the professional bodies and regulators of solicitors, barristers and chartered legal executives, only the Law Society commented on this issue, with chief executive Ian Jeffery saying it believed “the regulatory framework overall is stable and functions effectively”.

“The focus of regulators and professional bodies alike should be on ensuring the framework created by the Legal Services Act works effectively, rather than pursuing regulatory tinkering,” he said.

An LSB spokesman said: “The justice committee acknowledges that it is our independent board’s responsibility to decide how to interpret our statutory remit and that we are operating within it.

“The committee also acknowledges that the nine challenges for the legal services sector we identified in our strategy are real and pressing, and it agrees with us that we alone cannot tackle them.

“While effective regulation is vital – and we will ensure it plays its part to the fullest – others have a role, too. We continue to support efforts to ensure legal services work better for people and small businesses who need them.”

Mr Jeffery said the Law Society also supported “the committee’s view that CILEX’s proposal to change the titles of CILEX lawyers is unnecessary”.

The committee expressed scepticism about CILEX’s switching regulator to the Solicitors Regulation Authority (SRA), which its current regulator, CILEx Regulation, was quick to highlight.

Chief executive John Barwick said it agreed with the committee that CILEX’s proposals “raise fundamental issues with the structure of the 2007 Act, and share their scepticism on any benefits to consumers”.

He went on: “This suggests the case for change has not been made adequately and we call again on the CILEX board to drop their potentially unlawful proposals.”

The committee called on the LSB to review its internal governance rules (IGR), which aim to ensure the independence of regulatory arms of the approved regulators, such as CILEX and CILEx Regulation.

Mr Barwick said: “On the issue of the internal governance rules, our lived experience of the operation of the IGRs over the past couple of years is that a fundamental review of the operation and effectiveness of the IGRs is needed.

“We have set out our ideas for change to the LSB and urge the LSB to be bold in its approach.”

A spokeswoman for CILEX said: “We are moving ahead with our proposals and remain in contact with the committee.”

Bar Council chair Sam Townend KC supported the IGR review and backed a performance review of the LSB – something his predecessor explicitly called for in his evidence to the committee.

A Bar Standards Board spokesman said: “We strongly support the committee’s view that the Post Office Horizon scandal has damaged public trust in the legal professions and that it is vital that regulators identify and discipline those who may have breached regulatory standards. We have explained the approach we are taking in past statements.

“We also welcome the committee’s support for both the BSB’s focus on improving our operational performance and the emphasis the committee places on greater institutional independence as a contribution to our effectiveness.”

An SRA spokesperson said: “We welcomed the opportunity to engage with the committee and will consider their findings.”

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