Uber-regulator’s blurred vision

If you could decide how lawyers should be regulated, what sort of system would you go for? Would you allow the solicitors’ representative body to double-up as their statutory regulator, while requiring the Law Society to devolve its powers to an arm’s-length subsidiary that it must fund but cannot control? And would you do the same for barristers and chartered legal executives?

And what functions would you regulate? Would you say that taking out a grant of probate should be reserved for regulated lawyers, while anybody was allowed to do work that has a much greater potential for fraud, such as will-writing and estates administration?

No? Then what changes would you introduce? What about proposals from the Solicitors Regulation Authority that are meant to make it easier for solicitors to work in unregulated law firms? Would they provide additional consumer protection, as the SRA says? Or would they ‘create consumer confusion and harm’, as the Law Society believes?

Of course, you may hanker after the days when self-regulation was the mark of an independent profession. But solicitors lost that particular argument in 2003 when Sir David Clementi was invited by the government to cut through the regulatory maze. His recommendations, given effect in the Legal Services Act 2007, were seen as a way of modernising and simplifying the delivery of legal services. But the Legal Services Board, which sits at the apex of Clementi’s regulatory system, now regards the reform as a temporary compromise that satisfies nobody.

For some years, now, the government’s view has been that two regulators for each branch of the profession is too many. Solicitors wondered whether the LSB would swallow up the SRA or the SRA would depose the LSB. Last week, though, the LSB put its cards on the table. In its view, both should go. The LSB – and the approved regulators that it currently supervises – would all be replaced by a new regulator, as yet unnamed, covering the whole legal services sector.

This legal regulation authority, as I shall call it, would start from first principles. What activities need to be regulated in order to protect the public? In what areas is the public at greatest risk? How can we ensure that legal regulation is independent of the lawyers and of the government?

These questions would be easier to answer if we were starting with a clean sheet of paper. The problem that defeated Clementi was fitting his reforms into long-established legal structures.

To take the obvious example, it is perfectly legitimate to require solicitors to pay the Law Society for a practising certificate if the representative body keeps its statutory responsibility for regulating the profession. But if those powers were handed to the new legal regulation authority, the Law Society would be left with only its representative and membership functions. There would be every reason for solicitors to remain members, just as doctors benefit from membership of the British Medical Association. But it would be difficult to justify a compulsory membership fee.

The bigger question is whether there would still be any solicitors left for the Law Society to represent and support. This is where the LSB plan runs into difficulties. Anxious to stamp out what it sees as anti-competitive practices, it believes that regulation should be focused on activities rather than on the providers who carry them out. Regulation would not be based on a professional title. Anyone who met the regulatory requirements could do the work.

On the other hand, the LSB recognises that titles such as solicitor and barrister have ‘extremely strong brand power for consumers in a market where there are few other signals to help consumers choose between providers’.

So should the title of solicitor be awarded by the Law Society? No, says the LSB, which fears that representative bodies would raise entry standards and reduce competition. But the LSB does not seem to understand that it is only because bodies such as the Law Society maintain such high standards that professional titles like ‘solicitor’ command such public confidence.

The Law Society and the SRA have both damned the LSB proposals with faint praise. They were ‘an interesting contribution to a future vision for legal services regulation’, said Law Society president Robert Bourns. The report contains ‘some useful thinking’, added Paul Philip of the SRA. But we should ‘pause for thought when considering fundamental constitutional changes’, Philip continued. It was ‘not in the public interest to embark on such changes at this time’, agreed Bourns.

As for the justice secretary, whose predecessor seemed so keen on regulatory reform, the best that Liz Truss could come up with was: ‘It is something we will be looking at.’

So don’t hold your breath. Normal hostilities may continue for some time yet.