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High Definition

The politics behind regulation of legal services have been very much to the fore of late – particularly evident in the debate over referral fees since Jack Straw rather belatedly suggested that they ought to be banned. Notwithstanding that the Legal Services Board’s review of the matter had found no regulatory case for banning them, the Ministry of Justice has announced that there will be a ban on referral fees in personal injury cases – possibly backed by criminal sanctions.

The LSB, as may be expected, moved swiftly to confirm that its review had expressly not considered public policy considerations – I’ll leave readers to translate the response…

The government’s announcement and, more interestingly, the LSB’s reaction to it are noteworthy, particularly when one considers that the LSB has made much of being an independent evidence-based regulator, and is currently consulting on the ambit of reserved activities – a consultation to which I urge all practitioners to respond.

It seems that the LSB is satisfied that there is a case for regulating will-writing activities and has already issued a call for evidence as the first step towards doing so. On the other hand, the LSB’s initial inclination appears to be toward de-regulation of commercial matters. In the context of the solicitors’ profession, quite how ‘de-regulation’ of types of legal work would be achieved is anyone’s guess. ABS by default perhaps?

Indications are that activities such as will writing may be regulated in a different way – i.e. there would be some form of regulation but it may not necessarily be as all encompassing as reserving the activity to one or more of the authorised professions. Assuming, of course, that the LSB can make the regulatory case for regulation at all. Further activities which may ultimately be caught within the regulatory net are likely to be given the same consideration.

It is interesting that, in nearly ten years of reviewing the provision of legal services, no one has come up with a comprehensive definition of what constitutes or should constitute ‘legal services’. The LSB’s consultation is, of course, a start down this road. The focus on regulation of the activity, however, leaves me wondering whether our ultimate destination is a generic profession of ‘lawyers’ each individually licensed to perform specified regulated activities – rather in the manner of a driving licence.

What’s in store?

So what does the review – and its potential consequences – mean in practice? In the world post 6 October 2011, firms will be obliged to inform clients – sorry, consumers – which of the services they provide are regulated and which are not. For ‘traditional’ firms, this is easy – all services are regulated (at least, for now); for multi-disciplinary practices, this may not be quite so clear-cut. It will be particularly awkward where mixed teams of professionals collaborate on a client’s matter. Such firms will also have to grapple with problems created by overlapping or inconsistent requirements for indemnity insurance among numerous other potential pitfalls.

Hopefully, the review will ultimately lead to greater clarity, for traditional firms and ABSs alike. While it is probably too much to hope that the end result will be a definite line between regulated and unregulated legal services, any increase in clarity must be a good thing, particularly given the requirements in the new code of conduct to ensure clients are properly informed.

I have no doubt that the Legal Ombudsman will also welcome increased clarity in this area. Since its launch in October 2010, the LeO has been consistently raising concerns about the limits of its jurisdiction. Case studies demonstrate that the LeO has had to turn away apparently meritorious complaints because of a lack of jurisdiction over unregulated entities. Naturally, in the eyes of the complainant, this is extremely frustrating and may erode their trust in all legal services providers. Of course, it is in the profession’s interest to ensure that the LeO is not wasting time on complaints it does not have jurisdiction to consider and also that our reputation is not damaged by unregulated providers.

The question of what services should be regulated should have been resolved long before the advent of ABS. I hope that the LSB conduct its review swiftly and reach a sensible and certain conclusion. Given that the last major review carried out by the LSB was effectively overruled by the Ministry of Justice just six months after it was complete, maybe this time it would be sensible to include public policy considerations!

Susanna Heley

This article was first published by Solicitors Journal and is reproduced by kind permission.


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