The Law Society’s governance troubles – with the resignation of chief executive Catherine Dixon earlier this month  – are proof that it is “unsuitable” for any role in the regulation of the profession, the Solicitors Regulation Authority (SRA) has told the Legal Services Board (LSB).
It also said the oversight regulator’s plans to review its guidance on education and training were premature and potentially “a costly distraction” given that the SRA and others are currently reforming their training requirements.
In its response to the LSB’s draft 2017/18 business plan, the SRA again banged the drum for complete independence from the Law Society, which is named in the Legal Services Act 2007 as the approved regulator of solicitors – a task it technically delegates to the operationally but not structurally independent SRA.
The business plan talks about independence as a priority, but the SRA urged the LSB “to give this even more emphasis” in the wake of the Competition and Markets Authority coming out in favour of it late last year.
The SRA response said: “Until we have full regulatory independence, assuring the independence of the regulators from their representative bodies must be the central and dominant activity of the LSB…
“For example, rather than relying on self-certification by the regulators, we suggest that the LSB takes more proactive steps to satisfy itself whether the current internal governance rules are being breached and to take action where there is any evidence that they are.”
The SRA said the LSB should “fully use” the powers it has under the 2007 Act to deliver independence.
“This might include, for example, proposals for regulation to be delivered through separate legal entities to the trade association functions of approved regulators. The current governance problems of the Law Society reveal its unsuitability to have any statutory function regarding regulation.”
Responding to this in an interview with Legal Futures yesterday – which will be reported in full later in the week – Law Society president Robert Bourns said he was “not in the least surprised to hear” that the SRA was using the governance issues in this way.
“Frankly, I don’t think they have any other evidence to wave around. The fact is that there is a governance review under way…
“The SRA suggested last year that they’d just spent two and a half years reviewing their own governance structure in a much simpler business model and environment.
“Of course, because they’re operationally independent, they carried on that governance review quite discreetly, without much transparency as far as I know and just working on it through a board. That’s absolutely fine by me.”
The SRA also sought to hit the Law Society where it hurt by calling for greater scrutiny of the £35m Chancery Lane receives from practising fees for its non-regulatory activities.
Stressing its own commitment to reducing the costs of practising, the SRA said: “We would like the LSB to support us in our efforts to drive down these costs by ensuring that all elements of the fee, including the representative element, are scrutinised on a consistent basis in the context of the regulatory objectives and the principles of better regulation.”
The SRA said it was concerned about the LSB’s plan to review its guidance on education and training, “given that we, and other regulators, are already part way through long-term programmes to deliver reform in line with the current guidance”.
It continued: “Making any fundamental changes to the guidance at this stage would cause unnecessary disruption to our programme of work. Any such disruption could be costly and delay important reforms which, if implemented post consultation, will bring important market and consumer benefits.
“If the LSB does not intend to make significant changes to the guidance, then we would question the need for a review at this stage. If the intention of the review is to assess regulators’ progress with their reforms, then we suggest that this could be achieved through dialogue with the regulators or through some form of self-assessment by the regulators against the current guidance.
“We urge the LSB to reconsider this aspect of its business plan and avoid work that is both premature and potentially a costly distraction from more fundamental issues such as independence.”
On disciplinary issues, the SRA said it was “sure” that the LSB would want to continue to collaborate “on pushing reform of the disciplinary process”, including increasing the SRA’s fining powers and lowering the burden of proof used at the Solicitors Disciplinary Tribunal from the criminal to civil standard.