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Prepare for impact

The Consumer Impact Report provides practitioners with a valuable indication of what may be to come as regards regulatory change, says Susanna Heley

There has been quite a flurry of activity in legal services regulation of late. Alongside the BSB finally putting into place its plans to regulate entities is ILEX Professional Standards (IPS), the regulatory arm of CILEx), which is opening its process for regulating firms, the ongoing issue of regulating paralegals raising its head once again, and the SRA consulting on the separate business rule and the services which solicitors should provide through regulated entities.

One might conclude that the race is on to become the regulator of choice. IPS has already indicated that it has received enquiries from a number of existing firms, as well as new market entrants.

Shopping around

It has always been the case that solicitors’ regulation goes far beyond what would be strictly necessary to deal with the regulation of reserved activities. With the expansion of the remit of existing regulators and the authorisation of new regulators, such as the Institute of Chartered Accountants in England and Wales (ICAEW), for probate activities last year, the prospect of regulator shopping is clearly a possibility for the profession.

The SRA has been working on its own activities and continues with its reform programme, in particular, by looking at ways to reform the accounts rules. In the background, of course, the long-running review of education and training rumbles on.

In the midst of all of this activity, in December the Legal Services Consumer Panel published its third annual Consumer Impact Report, which seeks to measure the progress made by the industry and its regulators in fulfilling the aims of the Legal Services Act 2007.

The report is generally pleased with increased competition and consumer choice in the sector, and comments favourably on the increasing incidence of fixed fees, particularly in family cases. The overall summary of the report is, in essence, some progress: some improvement needed.

One of the main concerns identified by the report is the difficulty in obtaining information on the technical quality of legal advice. While acknowledging that it is extremely light on reliable data, the report suggests that the profession’s response to the Quality Assurance Scheme for Advocates (QASA) reflects poorly on our ‘avowed commitment to scrutiny and quality’ and refers to concerns expressed by multiple sources about the poor quality of advocacy.

The report notes that, while there has been a decline of professional negligence claims in the High Court, complaints to the Legal Ombudsman of failure to advise and failure to follow instructions have increased. If one were extremely cynical, one might conclude that consumers have worked out that a complaint of professional negligence to the ombudsman is, in effect, a free dry run at a professional negligence claim for those who are eligible to complain.

Levelling off

The issue of client money also features in the report, and it would appear to be the opinion of the panel that the ultimate goal is to create a system whereby solicitors do not hold client money at all.

The report also blithely suggests that lawyers have questions to answer in respect of ‘many of the major recent scandals in British public life’, citing as examples phone hacking, in-house lawyers writing letters as if from external firms, the Nightjack case, criticism from the Public Accounts Committee about the use of QC opinions, and the Hillsborough cover up.

This does seem to be rather overstating the case, not least because the Nightjack case, in particular, barely caused a ripple in mainstream news. This point also seems contradicted by earlier commentary in the report, which indicates that the general decline in trust in the profession seems to be levelling off.

The SRA’s approach in respect of the Risk Outlook is mentioned with approval, and it is clear that the panel endorses the LSB’s insistence on lay chairs and lay majorities for the approved regulators. The report suggests that improvements have been made in the separation of the regulator from representative bodies, but there is still a lack ‘of cultural independence from the workforce’ which apparently means that the process of regulation is still too influenced by those who have knowledge and experience of the old system.

All things considered, the report is an interesting read, if occasionally heavy on rhetoric designed to drive a particular agenda. Given the central role played by the panel in setting policy, the profession would do well to take note.

Susanna Heley

This article was first published by Solicitors Journal and is reproduced by kind permission. You can read the original article by clicking here.


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