A single regulator for all legal services is “logical and plausible”, but not inevitable, a report for the Legal Services Board (LSB) has concluded.
Former Ministry of Justice official Nick Smedley argued that the existence of multiple regulators “focused on the differences of individual practitioners” is unlikely to be relevant in a post-alternative business structures (ABS) market.
Instead, “regulation will be focused on the business entity providing a multiplicity of legal services to one or more consumer sectors”.
The LSB tasked Mr Smedley – who has produced a series of reports on regulation for the Law Society – with investigating the so-called “smaller approved regulators” (SARs): the Institute of Legal Executives (ILEX), the Association of Costs Lawyers, the Chartered Institute of Patent Attorneys, the Council for Licensed Conveyancers (CLC), the Master of the Faculties and the Institute of Trade Mark Attorneys.
Only the Solicitors Regulation Authority (SRA) and Bar Standards Board (BSB) were excluded from the study, but Mr Smedley said some of his conclusions would apply equally to them.
He found gaps in some of the SARs’ capacity and capability to deliver what is required by the Legal Services Act. This “might causes the LSB some anxiety even in a stable environment – but the environment is turbulent”. Some of the SARs, such as ILEX Professional Standards and the CLC, are bidding to extend the ability to regulate more reserved activities, and become ABS licensing authorities.
Mr Smedley put forward two options for the LSB: to “manage the present” and help the SARs continue the journeys each of them is on, possibly sharing services and functions to some degree; or to “manage the future” of a world with ABSs, in which “a clutch of competing regulators is unlikely to have a place in the legal services market”.
The report is clear that the latter is Mr Smedley’s preference, as he describes the former as “very likely to be a temporary solution only”.
He said: “This is not to say that there will necessarily be one legal services regulator – although that is both logical and plausible. There could be a regulator, for example for areas of law where there is a high public interest – criminal, public family law, immigration – and another regulator for commercial and high street retail legal services, often on a commoditised basis – claims management, employment, housing and property, wills and trusts and so on. Alternatively, there could be a single regulator with different, specialised divisions.”
Speaking at the Legal Futures Conference in April, SRA chairman Charles Plant said in time it might be right for a single regulator to replace the existing eight.
LSB chief executive Chris Kenny said: “This research, alongside wider work, will be one useful input into our decision on the standards of regulation and regulatory performance against which all approved regulators should be assessed.”
ILEX chief executive Diane Burleigh said the report provided “an interesting contribution to the debate about the future shape of legal services regulation”, but found it supported “by only limited analysis” of the organisations affected and the implications of the Legal Services Act.
While welcoming the report’s recognition of ILEX’s strengths, she added that its value was limited by the exclusion of the SRA and BSB.
She continued: “We continue to plan to enable our members to own and manage businesses. ILEX and IPS have the financial resources to enable us to move forward, and we intend to use those to build on our current successes as an approved regulator.
“We accept that we will need to develop our regulatory arrangements and structures. The report’s findings do not offer any revelations in that regard. However, our track record means we are well positioned to adjust to the needs of the future regulatory landscape.”
Anna Bradley, chairman of the CLC, said: “The CLC, like all regulators in this sector, is fully aware of the challenges the new LSB requirements present for all of us (big and small) going forward. This is why we have a clear corporate strategy for strengthening our capability and capacity, building upon our good record on risk management in the conveyancing market.
“The report acknowledges that the CLC have been addressing the strategic challenges it faces. The council will be working with the LSB to move forward to the next stage.”
Keven Bader, chief executive of the Institute of Trade Mark Attorneys, told Legal Futures: “For the ‘smaller regulators’ there have been and will be numerous challenges to face and it is only right that we explore all the options open to us to enable the most efficient and proportionate delivery of the regulatory objectives set out in the Legal Services Act.”