The government should return regulation to the legal profession’s representative bodies, rather than introduce full separation, the Law Society has said in response to yesterday’s surprise announcement from the Treasury that separation is now on the cards.
The move – supported by the Legal Services Board – is set to open up the fault lines in the current regulatory set-up created by the 2007 Legal Services Act.
Law Society chief executive Catherine Dixon said: “The legal profession must be free to set the standards and rules under which it operates, and also own legal education and training so that standards are led by the people who practice law.
“Enforcement of the rules and standards set by the legal profession, by an independent regulator would also be a further protection of the public and consumer interest.”
The response continues Chancery Lane’s bid to roll back the Legal Services Act reforms that led it to delegate regulatory matters to the Solicitors Regulation Authority.
Back in 2013, in their submissions to the Ministry of Justice’s legal regulation review, the Law Society and Bar Council both called for the return of responsibility for areas such as standard setting and training to the professional bodies, with their regulatory arms retained for discipline and enforcement.
Equally both the SRA and the Bar Standards Board have operational independence, but have been pushing for structural independence too.
With the exception of the Council for Licensed Conveyancers (CLC) and the Faculty Office (which regulates notaries), all of the regulators are offshoots of professional bodies, which are named in the Act as the approved regulator of their branch of the profession.
Among other things, complete separation has the potential to capsize the financial model that allows the Law Society, Bar Council and Chartered Institute of Legal Executives (CILEx) to claim substantial portions of practising fees for so-called ‘permitted purposes’ – certain activities that are not directly regulatory but which the Act allows the representative body to fund from practising fees.
This would mean lawyers instead being asked to contribute voluntarily to their professional bodies. The Bar Council currently seeks a voluntary fee from barristers for activities not funded via permitted purposes, while the Law Society and CILEx generally rely on commercial and other income.
There has been no move by CILEx Regulation to seek structural separation.
Ms Dixon also suggested that the proposals put the independence of the profession at risk: “Public protection demands that setting of rules and standards for legal services must be independent of government and ensure that there is no perception, or otherwise, that government is interfering with the independence of the legal profession. Freedom from government intervention is an essential cornerstone of our justice system and of the rule of law.”
SRA chief executive Paul Philip described the announcement on ABS licensing as “positive progress”, and on independent regulation added: “It is in the public interest that regulation is independent of the profession.”
Dr Vanessa Davies, director-general of the Bar Standards Board, said: “For some time, the Bar Standards Board has supported, in principle, the complete separation of the regulatory and representative functions. This is because we believe it would be in the public interest and would allow regulatory and representative bodies to be stronger in their respective roles.”
CILEx chief executive Mandie Lavin said: “Enabling an innovative and competitive legal services market is in the best interests of consumers. We are pleased that the government will be considering how to make it easier for new market entrants, such as businesses run by specialist CILEx members, and we look forward to supporting the government as these plans take shape.
“A high-quality, independent legal profession is at the heart of a democratic society. Approved regulators, like CILEx, uphold the highest standards in the profession, and our frontline regulators enforce those standards independently.”
Sam Younger, chair of CILEx Regulation, added: “Our focus first and foremost is on what is best for the public. In all important aspects we operate independently of CILEx, although we are open to further thinking about development of the regulatory model and will consider the detail of the consultation and how a revised model could impact positively on the consumer.”
Sheila Kumar, chief executive of the CLC, backed a simplified regime for alternative business structures, saying that fears they would erode ethical standards have proven “wholly unfounded”.
“We are also pleased that there is to be consultation on making regulators independent of representative bodies. We have pressed for this to be an area of focus for some time because it will speed realisation of the benefits promised by the Act and bring improvements for consumers and those running legal services businesses.”