The Solicitors Regulation Authority (SRA) could offer “activity-based licences”, allowing lawyers to provide individual reserved legal activities instead of its current ‘all or nothing’ approach to regulation.
It has also raised the prospect of legal regulators offering voluntary regulation for those providing unreserved services, such as will writing.
Another plan mooted in the SRA’s submission to the Competition and Markets Authority’s review of progress since its 2016 report on the legal market is piloting how a digital comparison tool (DCT) for consumers works in a particular area of practice, such as conveyancing.
The SRA said there “may be merit” in the recommendation of Professor Mayson, in his independent review of legal services regulation published in June, for activity-based regulation – this would mean regulators apply only the minimum necessary requirements to target an identified risk in order to keep the costs and burdens of regulation as low as possible.
“We have found through implementation of our reforms that there can be institutional resistance when trying to ease longstanding restrictions and requirements to be more flexible and proportionate. Such a change could therefore assist regulators with creating a more flexible and proportionate regulatory framework.”
But it continued that more could be done under the existing regulatory framework. “For example, the development of activity-based licences (allowing individuals to provide individual reserved legal activities) has the potential to help address the issue of ‘all or nothing’ regulation raised in Professor Mayson’s report.
“This is something that we may explore in the future. We would explore benefits and disbenefits, with any proposals being subject to consultation.”
The submission said some limited legislative changes may be needed to enable such licences.
Another option open to regulators was a voluntary scheme for providers wishing to deliver only unreserved legal activities. “Regulators could set requirements for providers wishing to be ‘accredited’ by them.”
The SRA acknowledged that the shorter-term idea of extending access to the Legal Ombudsman to the clients of unregulated legal services providers – as recommended by Professor Mayson and supported by the ombudsman – would provide a minimum safety net.
But this would “not be without its challenges”, the regulator said, such as in defining what was meant by legal services, agreeing a funding model and in bringing all providers within the scheme.
“There are also risks in terms of the additional costs of regulation being passed on to consumers and the potential impact of additional regulation on the pace of innovation.
“Even a low level of regulation has the potential to dampen innovation. Further, there is no guarantee that additional regulation will improve consumer confidence in the wider unregulated legal services market.”
The SRA cautioned against a starting assumption that all unregulated providers were ‘bad’.
The submission revealed the progress made since last year’s change that allowed solicitors to practise in unauthorised firms.
“We do not expect the removal of restrictions to result in an immediate market shift, however we are seeing solicitors taking advantage of the new rules,” it said.
“Ten months after the rules were introduced, we currently have 229 solicitors that have registered with us as freelance solicitors, 59 of whom are providing reserved legal activities.”
The CMA was keen on the development of DCTs, such as review and comparison websites, but progress has been slow.
The SRA said it would work with DCT providers on whether it was providing them with the right data – 11 providers currently take an information feed from the regulator.
It is going further too, “looking at the scope for a DCT in a specific area, such as conveyancing, in discussion with other regulators”; a pilot would help them understand better the impact of regulatory intervention on the DCT market “and how firms already using established products respond”.
An SRA spokesman explained: “We want to help the comparison market develop so that people who find reviews and similar services useful can readily access that information. We have already published guidance for law firms on using digital comparison tools and recently convened a roundtable with a range of providers.
“They are keen to work with us and that could include some pilots in some common areas of legal services – we are exploring the options but no decisions have been made.”
Separately, the cross-regulator Legal Choices website is developing a ‘help me to trust my lawyer’ product, which will search publicly available information from across the regulators’ registers and provide disciplinary and Legal Ombudsman data.