Orpin: LSB has a greater role than just overseeing the frontline regulators
The plans to transform the Solicitors Regulation Authority (SRA) are promising but need to be seen through “at pace”, the new chief executive of the Legal Services Board (LSB) has told Legal Futures.
In his first interview since being confirmed in the role earlier this year, Richard Orpin argued that the LSB was more needed now than ever.
A former civil servant and Ofcom official, he joined the oversight regulator in 2023 as director of regulation and policy, and took over as chief executive on an interim basis last summer, before being given the job full-time in January.
Top of the to-do list has to be the SRA.
Earlier this month, the LSB issued a statement saying it would be scrutinising the SRA amid concern that more collapses could follow the likes of Axiom Ince and PM Law.
In a blog, we suggested this looked somewhat performative, given that the SRA is already under an unprecedented three statutory enforcement measures imposed by the LSB – statutory directions to address the failures over Axiom Ince, and both a public censure and performance targets given the failures over SSB Law.
Mr Orpin pushed back on this characterisation. Rather, it was “an escalation” driven by the collapse in February of PM Law and potential loss of £40m of client money, he said.
“That does make it more serious and hence the statement of intent and action to move to a more intensified period of monitoring.” The LSB is worried that more may be to come.
The end of June will be “a really important milestone” for the SRA, as it has to deliver an independent audit of its progress against the statutory directions, as well as the full ‘serious event’ review into what happened with PM Law.
“At that point we’ll be able to make a really thorough assessment of how they’ve performed over the last year,” said Mr Orpin. “I can see lots of activity in the SRA to put them in a better, more effective position in future – you’ll have heard [chief executive Sarah Rapson’s] plans and she set them out in her business plan.
“The idea of adopting a more supervisory approach, where they are getting out and being much more proactive, and less investigation and enforcement led, has to be the right thing. So I’m confident that the executive team at the SRA understand what’s needed.”
The question was whether this could be delivered “at pace” because “there is risk in the market right now”.
Hence that statement earlier this month: “This is why we’re intensifying how we scrutinise [the SRA] by using our formal information-gathering powers, so we can see almost in real time what they know and what they are doing about it.”
The failures at the SRA have raised questions about the oversight regulator itself – it was only two years ago that the LSB judged that the SRA had passed its annual performance assessment, with the Costs Lawyer Standards Board the only other to provide ‘sufficient assurance’ that it was both well led and had an effective approach to regulation.
Then came Axiom Ince, SSB Group and PM Law.
Mr Orpin noted that, on that occasion, the assessment did not look at operational delivery, “which is where most of the failings that we’ve seen reside”.
He added: “We didn’t give them a clean bill of health either. That report says actually they need to be more effective in their enforcement activity, they need to learn from their mistakes, they need to deal with complaints better and they need to assess risk more effectively.”
But the LSB has “absolutely gone through a period of reflection and review”, he acknowledged, and is rethinking its approach to overseeing the regulators.
Rather than the same annual assessment of all, based mainly on to-and-fros between the LSB and each one, the plan is to gather intelligence from a range of sources to identify where risks might be.
Mr Orpin is creating a dedicated directorate to oversee the regulators and react appropriately. High-performing regulators can expect a light touch, while Mr Orpin wants to be able to look horizontally across them all regulators and not just vertically at each one.
This would help avoid what the LSB now realises happened with litigation rights, leading up to the Mazur case, namely different regulators issuing inconsistent guidance. The final report on this should be published soon.
“What I want our regulatory oversight function to be able to do in the future is a thematic review of an area that cuts across different regulators, look at what’s in place and, if we find discrepancies or inconsistencies, go and proactively tell the regulators.”
The aim is to try and head off issues before they become problems.
Ms Rapson’s business plan is seeking a 29%, or £25m, increase in the SRA’s budget and, assuming the proposal survives consultation, it will be for the LSB to approve this.
It is not a tick-box exercise, as the Legal Ombudsman (LeO) can attest, after in March the LSB rejected its bid for an 11% budget increase this year in favour of a 6% rise, plus additional funding to invest in developing radical reform of the scheme as it faces more complaints and, as a result, a growing backlog.
The backlog was already stubbornly high before this surge and LeO warned that 11% was needed just to keep the situation stable; 6% will make it worse. The sums at stake were much less than with the SRA’s budget.
Essentially, the LSB did not want to throw good money after bad, Mr Orpin explained. “Once you’ve recognised that an operating model isn’t working as well as it should be, then it doesn’t make sense to continue to fund anything beyond the minimum operating level to keep it running.”
But surely, while LeO is formulating a new scheme, the backlog will just keep growing, to the detriment of consumers, and also make its recovery even harder.
Mr Orpin contended that it was not just about funding. “There are levers that they can pull before transformation occurs and we’ve told them that we’d expect them to do that. They’ve got the ability to make scheme rule changes and changes to their case fee. All of those things have a potential impact on volumes.”
LeO would argue that it has already pulled the levers, and hard, with various scheme rule changes in recent years. “They can be pulled again,” Mr Orpin insisted.
It was also for the frontline regulators “to be far more effective” in ensuring that lawyers deal with complaints better in the first instance. Nearly half of complaints escalated to LeO are found to have been dealt with inadequately by the lawyer. “That in itself tells you a lot about what needs to be done to get into a better place.”
The LSB is responsible for LeO and so is its state a failure of the oversight regulator?
No, Mr Orpin replied. The work the LSB did five years ago “to hold it to account” led to improvements at the complaints body, which have only gone backwards because of the “turbo-charging” of complaints volumes – probably contributed to by AI – that has been seen across a wide range of consumer-facing services, not just law.
When it comes to other regulators, Mr Orpin praised the improvements at the Bar Standards Board, which has long been on the LSB’s naughty step, although there was still progress to be made.
The decision of the SRA and CILEX not to press ahead with the latter’s application to transfer regulation of CILEX members from CILEx Regulation to the SRA will undoubtedly have been a relief to the LSB, which would have had to make the difficult decision of whether to allow it and may well have ended up in court over it (CILEx Regulation was threatening to challenge whether the power existed).
Mr Orpin would not comment on that but he credited CILEx Regulation – helped by a quick decision by the LSB to approve the necessary rule changes – for putting in place a new route to obtain standalone litigation rights after the original Mazur ruling last September.
More than 1,000 now have their rights, “which puts them in a better place for their careers regardless of the Court of Appeal outcome, and CILEx Regulation has done that under quite significant pressure. That’s an indication that you’ve got an organisation that is not failing.”
Mr Orpin was given a hard time by the justice select committee recently, with members questioning the point of the LSB.
But he believes its job is more important than ever at a time when the market is changing so much and some regulators are not performing as well as they need to.
“We’re the body required to hold them to account to drive up standards. And there are these questions that I think Parliament always anticipated the LSB would be best placed to ask when the market shifts, when there’s disruption through technological developments, when consumers’ behaviour changes, [such as] the growth in the unregulated sector.
“It’s for the LSB to think about those things and then make recommendations to ministers if we think a change is needed.”
In any event, it is unlikely that committee members’ suggestion that the Ministry of Justice could do the LSB’s job would prove popular even with the LSB’s detractors.
“[Sir David] Clementi always very clear and the government at the time very clear that regulators need to be independent,” Mr Orpin said. “Not just of the profession, but of government too.”
The second part of this interview will be published tomorrow
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