The Legal Services Board must resist the urge to ‘micro-manage’ aspects of legal regulation, and should reduce its budget rather than extending its role to become an ‘economic regulator’, the Law Society has warned.

Responding to the LSB’s draft business plan, Chancery Lane also cautioned that the overarching regulator’s £900,000 budget (over three years) for externally funded research risked ‘duplicating’ work already being done by frontline regulators such as the Solicitors Regulation Authority.

The Society said: ‘The LSB’s interpretation of the regulatory context seems to be shifting towards placing increasing emphasis on considering the skills, distribution and makeup of the legal sector. It is doubtful whether this is the proper business of the LSB.

‘The LSB was not designed to be an economic regulator, like those governing the utilities; it has a more limited role.

'It is important that the LSB does not divert resources into research relating to economic regulation, rather than reducing its budget.’

Chancery Lane noted that the LSB planned to maintain its 2011/12 budget at £4.9m. It suggested that the regulator should instead be looking to reduce its budget, around 80% of which is likely to be paid by solicitors.

Chancery Lane also voiced concern over the LSB’s plans in relation to education and training in the profession.

It said: ‘The LSB says that it will assess how education and training requirements can be used as a regulatory tool to ensure proper standards of professional and ethical competence across the legal workforce.

‘We understand that the LSB, as an oversight regulator, would want to know how frontline regulators are achieving this aim… [but it] must resist the urge to micro-manage the process.’

The Society did, however, acknowledge that the LSB had ‘quickly grasped the legal landscape’ and operated in a ‘professional and consultative manner’.

An LSB spokesman said it would discuss responses to its draft business plan at its board meeting next week.