The cost of the ’dysfunctional’ legal services regulation system is ’close to getting out of control’, City firms warn today.

In the latest response to the government’s call for evidence on legal regulation, the City of London Law Society, which represents some of the world’s largest firms, says that the changes introduced by the 2007 Legal Services Act have created ‘an unnecessarily complex and expensive regulatory framework’. 

It is particularly critical of ‘one-size-fits-all’ regulation of law firms. ‘The fact is that the profession comprises professional organisations which have very little in common, from sole practitioners, to small high street firms, to larger regional networks, to ABSs, to firms concentrating on the corporate sector, to large international firms. In addition, it also includes in-house lawyers and government and local authority lawyers. The regulatory needs of these different sectors and their corresponding clients are very different and the SRA’s attempts or ability to apply different approaches is too limited.’

However, the majority of the cost of regulation falls on the larger firms, the submission, signed by the society’s chief executive David Hobart, notes.

For the future, the society proposes creating a ‘high-level umbrella’ with four or five ‘semi-autonomous divisions focusing on and providing appropriate types of regulation tailored to each different sector’.

Similar arrangements could also cover the bar, legal executives and other professions with their own regulatory structures. 

The society says that the larger corporate and international firms have of their own volition, established risk management and quality assurance processes. ‘It is in the interests of them all that none of them does anything which damages the reputation of – in particular – the City as a leading centre for legal services globally.

The City of London Law Society’s submission is available here.

The Ministry of Justice last week extended its call for evidence and said it has no timetable for publishing a response.