The Legal Services Board’s (LSB) offices near Holborn in central London offer a neat metaphor for what is happening in the legal world right now. From the outside, the LSB appears to be housed in a rather old-fashioned building; but inside, Victoria House is almost space-age, and the LSB’s offices very modern, with everyone – even the chairman – working open plan.
The parallel is easy to draw – from behind the still traditional facade of the legal profession a more modern aspect is about to emerge, at least if the LSB has its way.
LSB chairman David Edmonds began his term on 1 May 2008 – in January 2010, the board finally took on its full powers under the Legal Services Act. So how has the intervening period been?
“I think it’s gone as well as I could reasonably have expected it to,” says Mr Edmonds. “The board is functioning as a united, articulate, challenging board. We’ve now got the full complement of staff in the organisation, nearly 30 people.” He takes a project-based approach, ‘so you’ve not got board members simply turning up every month and agreeing’; instead they work in small groups with the staff, “and I think that’s really heightening the quality of the stuff we are producing”.
There were 12 consultation or discussion papers issued in the past year, the most recent on the LSB’s proposed approach to licensing alternative business structures (ABSs), while great progress has been made on setting up the Office for Legal Complaints. “So I think we have either achieved or are well on the way to achieving all of the targets that I set myself and that we set for the board, and [in] the first business plan,” Mr Edmonds says.
He feels the LSB has build “strong and effective relationships” with the approved regulators . “They know who to talk to and I think we have built a reputation for listening, responding and being pretty clear in where we want to go to next.”
The LSB is ploughing ahead with its mid-2011 target date for ABSs despite criticism from many that there is no need for hurry. Mr Edmonds bridles at the suggestion that the board is in an unseemly rush.
“How can it be an unseemly rush?” he demands. “The Legal Services Act was passed in 2007, Sir David Clementi’s report was [three] years before that… There’s been a huge debate around it ever since.” From his appointment, he has made it clear that ABSs are “at the heart of the reform of the market that we would be looking to introduce”. So they were in the LSB’s first business plan and this is the second consultation on them.
“And we’re talking about introducing them in the middle of 2011. Where’s the rush and where’s the unseemliness? I think we’re proceeding at an absolutely measured pace to produce an important change with massive consumer protection built in. This is all about providing for the consumer, for the citizen, the possibility of a wider range of legal services, hopefully at more affordable prices, enhancing access to justice. Now if I’m going to be accused of unseemly haste in terms of broadening the ability of my fellow citizen to get access to justice, so be it, but I think it’s an unfounded charge. And actually if I am being charged with that, I’d probably plead guilty.”
He also refutes “categorically and unequivocally” the suggestion that the timetable is governed either by government diktat or his own desire to see ABSs in place by the time his contract ends in May 2011 (although there is nothing to stop him being reappointed). No minister has set him such a deadline, he emphasises, while pointing out that “the timetable we are working to is exactly the timetable in the business plan” which the full board set.
Mr Edmonds is equally bullish over the way the levy to pay for the LSB’s set-up and initial running costs has been calculated. Each regulator has to pay a sum for every authorised person it oversees and some have not been happy. The Institute of Legal Executives (ILEX), for example, complained that this method fails to take account of the ‘very low risk’ that its Fellows represent when compared to solicitors.
He rejects the notion that it is an unsophisticated approach, adding: “I think it’s a fairly sensible way, certainly to get the thing off the ground.”’ He suggests that once the more painful start-up costs are out of the way, both the levy and complaints over it will be reduced, but: “I know where ILEX is coming from. I appreciate the argument they’ve developed and clearly we will look at it again [this] year.”
One potential frustration of having a fresh regulator in place – especially one that is relatively small, like the LSB – is that its focus on getting the key planks of a new regime in place mean there is little time for other issues. Take protecting the legal executive title. Mr Edmonds says he can “see the argument” but admits frankly that “we’ve not really done any work around that”.
However, the growing clamour around certain unregulated providers of legal services, such as will writers and employment advisers, looks like it has had an effect. “It’s a priority area for us to do some thinking in the early part of [the] year,” he says. “It’s not been a priority area till now. Issues to do with unregulated advice have clearly been put to us during the first year of our life. We will look at it. We’ll do some research. We’ll get the consumer panel going at it, but I don’t think you can expect anything significant till at least the middle part of [this] year.”
Referral fees are also set to come under the microscope. Mr Edmonds admits that “it’s a much bigger issue than I had perceived it to be when I took on this job”. He continues: “Each day that passes I get another bit of evidence about referral fees. Some of which is positive, in the sense of them leading to consumer good, quite a lot of which is negative, in that they do seem to distort relationships and bring bias into proceedings, which we might be better off without.”
However, he has not yet formed a definitive view that he will publicly express, but has asked the new consumer panel to address referral fees as a matter of priority.
The profession is going to have to get used to a regulator that does not necessarily subscribe to the traditional way of looking at the big issues. For example, the recent consultation paper makes it clear that when an ABS licensing authority is looking at the impact an application could have on access to justice within an area, there needs to be a much more sophisticated metric used than just the number of law firms that have offices there.
What this boils down to is that an application would not be turned down just because small high street practices might be driven out of business by a supermarket or bank setting up a law firm in their vicinity.
“The world that I see emerging is going to be a very variegated world. Has the growth of the big conveyancing firms limited access to conveyancing services? No. As far as I’m aware it’s made conveyancing services available a lot more cheaply to people who want to use them… If you’ve got one firm offering you a wraparound service, it’s more likely to enhance access to justice.” Such a business is likely to advertise and innovate in trying to attract clients, he says.
He also points to the many other forces bearing down on high street firms at the moment. “There’s a much wider economic set of pressures that should be really the major concern rather than ABSs.”
Just because something has been done in a certain way for a long time does not necessarily make it a good thing, Mr Edmonds continues, and he urges high street solicitors to take up the opportunity that ABSs offer.
“Don’t just sit there and wait, because things are going to happen. There are lot of people out there with capital. There are a lot of medium-sized, smallish law firms who want to capitalise on this, who want to be on the high street. Work out for yourself what you think the route through is. Just saying, ‘I’ve done it like this for 30, 40, 50 years’ may actually not be the right solution.”
This different approach also means he is not so bothered by the distinctions between the eight different legal professions that the LSB oversees. “I find it sometimes quite difficult to break down, in the way that the members of this legal profession do, the various categories of profession. I see people who are providing services. [For example] I see advocates, high court advocates from the solicitors’ profession as well as from the bar… So, to be honest, I don’t differentiate very much.
“It seems to me that what you’ve got to do and what you’ll certainly have to do in the world of ABS is find out what the service is that the consumer wants and then structure your firm behind that to provide it economically and efficiently.”
Mr Edmonds predicts that ‘the role of the legal executive in that will be key’ because of the skills they have. But ultimately, ‘it’s what the firm offers rather than what the title is [that] matters’.
This article first appeared in the January issue of the Legal Executive Journal