The Legal Services Board (LSB) yesterday approved the Council for Licensed Conveyancers’ (CLC) application to become the first licensing authority for alternative business structures (ABSs), despite the opposition of the Lord Chief Justice.
The approval is limited to the areas of reserved legal activity currently within the CLC’s competence – probate, reserved instrument activities and the administration of oaths – with the LSB set to make a decision in July on the CLC’s separate application to extend its reserved activities to include litigation and advocacy.
The LSB said: “The executive has concluded that the CLC has developed the required licensing rules to regulate ABS and has done so in accordance with both LSB guidance and the requirements of the [Legal Services] Act.
“Whilst we recognise that there is some development work to do in terms of how the proposed arrangements will operate in practice, we are satisfied that the CLC has the capacity and capability to be a competent licensing authority for its existing reserved activities.”
This includes the possibility that the CLC will allow licensed bodies to offer reserved and non-reserved work through separate bodies, which prompted concern from both the Lord Chief Justice, Lord Judge, and the Legal Services Consumer Panel, that this would lead to inconsistency and cause confusion for consumers. Along with the Office of Fair Trading, they are the LSB’s statutory consultees on applications of this nature.
The CLC’s expectation is that both types of work will be offered through the same entity, and it told the LSB that an applicant who does not want to do this will have to show why the proposed arrangements are appropriate and how they impact upon the regulatory objectives.
The CLC has committed to assess the consistency of all its licensing determinations after the first six months and then every year thereafter.
Lord Judge expressed concern at the limited nature of the CLC’s experience and said the number of ABS regulators should be restricted. “The more established regulators, having the widest knowledge and experience of the regulation of legal services, ought to regulate ABSs in the first instance,” he said.
He also saw the application as a “stepping stone” to the application for litigation and advocacy rights, a move Lord Judge said he strongly opposed.
The LSB said it had to determine the licensing application on its own merits as required by the Legal Services Act. “We do not consider this application is about regulatory competition,” it added.
The LSB will now formally recommend to the Lord Chancellor that he designated the CLC as a licensing authority. It is still consider the Solicitors Regulation Authority’s application.
The CLC regulates around 10-15% of the residential conveyancing market. Its regulated community is made up of 1,103 licensed conveyancers, 301 managers and 215 practices. The CLC already regulates non-lawyer managers of practices it regulates, and it estimates that over 30 of them will have to become ABSs. Between them, these practices account for 54% of the profession’s turnover.