Frontline regulators are to collaborate on identifying business models that will avoid lawyers holding client money, it has emerged.
The regulators will also meet at executive level to come up with joint proposals to amend the Legal Services Act, for top level discussion early next year.
In a letter, published today , from the chairman of the Legal Services Board (LSB), Sir Michael Pitt, to the chairs of the regulators, reporting on a meeting between them a week earlier, one of the outcomes was that the regulators would meet to discuss alternatives to client accounts.
Sir Michael said that one of the “key actions” arising from the meeting was: “LSB to convene a meeting of the regulators with a view to collaboration on identifying effective business models to avoid the holding of client money.”
The regulators’ chairs meeting, which took place on 2 October, followed up the ministerial summit of regulators on 21 July, at which regulators were urged by the Ministry of Justice to take deregulatory steps to “encourage innovation in the legal services market”, Sir Michael said.
He described the meeting as having “made encouraging first steps towards more proactive collaboration”.
Other outcomes from the meeting were that the LSB would:
- lead on production of a briefing document to “map existing work by the regulators” to reduce unnecessary regulatory burdens;
- review its statutory decision-making processes; and
- convene a group of “executive representatives” from among the regulators to prioritise between five and 10 “clausal changes” to the Legal Services Act for discussion at the next meeting of regulatory chairs towards the end of January 2015.
Also, the Solicitors Regulation Authority would “consider how best to share amongst the regulators collective knowledge and learning from work on reviewing restrictions on in-house practice, facilitating entry of MDPs, reforming ABS ownership tests and reviewing business ownership restrictions”.
The regulators would look at “developing legislative options beyond [the 2007 Act]. Sir Michael added: “The LSB has offered to take the initiative on proposing the process for this work, which may include further facilitation by Professor Stephen Mayson”.
In a statement, he said: “I am pleased with the progress that was made with our regulatory colleagues last week. We have identified a list of key actions on which immediate steps can be taken including:
- steps to communicate more clearly how the work of the legal services regulators already contributes to deregulation
- increased collaboration and knowledge sharing on specific initiatives such as financial protection arrangements, and
- working together to explore legislative changes to lighten the regulatory load both within the framework of the current Legal Services Act and beyond”