It is time for truly independent regulation of the solicitors’ profession to stop attempts by the Law Society to interfere, the Solicitors Regulation Authority (SRA) has told the government.
The SRA has also reiterated its call for all legal activities to be brought within the scope of regulation.
In its submission to the Ministry of Justice’s call for evidence on the state of legal services regulation, the SRA said that the current operational independence it has was not sufficient, and that structural independence was also required.
Under the Legal Services Act, the professional bodies – such as the Law Society – remain the approved regulators “and, from the SRA’s direct experience, are still capable, within the statutory framework, of exercising, or attempting to exercise, a degree of influence over ‘independent’ regulators”.
It said: “The SRA’s experience has been that the delegation of operational independence from the Law Society has been given grudgingly and constant vigilance is required, backed up by the prospect of intervention by the Legal Services Board, in order to ensure that the SRA is able to operate independently as required by the Legal Services Act 2007.
“In addition, the current structures for operational independence require complex and expensive governance arrangements that consume time and management attention and add delay into regulatory decisions.”
The SRA also attacked the element of compulsory practising fees that funds part of the Law Society’s representative work, the so-called ‘permitted purposes’. It questioned why alternative business structures involving commercial entities that would not consider themselves to be solicitors’ firms, and have little association with the Law Society, should have to pay for the activities the society undertakes on behalf of solicitors.
The regulator pointed out that in 2014 the SRA would require £53.7m in fees for regulation and charge an additional £31.8m for the permitted purposes levy, and all this on top of fees taken to fund the LSB, the Legal Ombudsman and the Solicitors Disciplinary Tribunal.
It argued for “a regulatory entity that was both independent of government and independent of the profession”, answerable to Parliament, possibly along the lines of a post-Leveson press regulator.
But in a sideswipe at the LSB, whose chairman and board are appointed by the Lord Chancellor, the SRA said that calling for a structurally independent legal services regulator – as opposed to just operationally independent – “should not be read as advocating that the LSB as currently constituted assume that role”.
The SRA argued for what it said were the deficiencies of the Legal Services Act 2007 to be addressed via primary legislation, and a reform of the “patchwork quilt” of legal services regulation that has evolved.
All legal activities should be brought within the scope of regulation “as part of range of reforms which reduced the overall complexity and costs of the system”, it said.
The SRA stopped short of joining the Legal Services Consumer Panel in calling for a single regulator for all legal services providers and a single code of conduct. But it acknowledged that a growing focus on entity regulation rather than on individuals and titles was making the problem of having multiple legal regulators “more acute”.
The regulator observed: “It does not appear to be in the public interest, or in the interests of consumers, that the same regulated legal service might be delivered under one of, say, five different regulatory standards.”
Concluding its submission, the SRA said: “There is scope for significant improvement in the current arrangements. At present we would consider these to be significantly desirable but, given the pace and degree of innovation and development within the sector they will very quickly become essential if the system of regulation is not, itself, to become detrimental to consumer interests and sector development.”