The Legal Services Board (LSB) has fired a shot across the bows of the Costs Lawyer Standards Board (CLSB) by questioning its long-term future at the same time as approving next year’s practising fee of £275.
The ACL has come to the regulator’s defence, arguing that the CLSB is improving and able to meet the LSB’s requirements.
Issuing its decision notice on the application to approve the fee, the LSB praised the CLSB’s budget process, saying “considerable thought has been put into its construction”.
While recognising that there was “a measure of flexibility” in the budget, the oversight regulator said there was limited scope for further scaling back the CLSB’s expenditure and resources if the number of Costs Lawyers it expects to be practising next year – 665 – was significantly lower, for example as a result of the impact of Covid-19. “We will be monitoring this situation closely,” said chief executive Matthew Hill.
But he highlighted too that the LSB “continues to be concerned about whether the CLSB has sufficient resources and scale in the longer term to be able to demonstrate that it can meet the outcomes and standards that we expect of well-performing regulators”.
Mr Hill explained: “The CLSB is currently undergoing a programme of improvement to address previous performance issues identified by the LSB and we are concerned that the planned resourcing may prove to be insufficient for the CLSB to continue the progress the CLSB has made towards meeting our regulatory performance standards in a timely manner.
“The CLSB has made arguments to us to the effect that because Costs Lawyers may practise without being regulated, increasing fees may drive some practitioners to leave the regulated space altogether. While we recognise and understand this argument, it remains a source of concern to us that a regulator’s discretion may be fettered in this way. This is a matter we are likely to take forward into broader considerations of the regulatory framework.”
The notice was published shortly after the LSB made public its latest assessment of how the CLSB has done in relation to its performance framework, which measures each regulatory body against five standards and 26 underpinning outcomes.
The CLSB initially struggled to achieve the required outcomes, but was praised at the end of last year by the LSB for making “considerable progress”. The latest update recorded that the CLSB now meets five on the nine outcomes previously assessed as ‘Not met – action being taken’.
The outstanding outcomes deal with building the evidence base and “learnings” from its work to support CLSB decisions, as well as the concern around resources.
CLSB chief executive Kate Wellington (pictured) told Costs Lawyer: “We believe the practising fee must be set at a level that is proportionate for all Costs Lawyers, regardless of their practising arrangements. We don’t shy away from the need to make regulation accessible to all who meet the requirements of being a Costs Lawyer.
“The equation is simple: when more practitioners choose regulation, we can raise professional standards across the board, and improve outcomes for more clients and the public. That is our aim. Given the extraordinary events of this year, it is more important than ever before that regulation is proportionate and inclusive.
“When approving the practising fee, the LSB noted that the CLSB faces resourcing challenges because we are the smallest legal regulator. This is no surprise, and it forms part of the ongoing debate about the structure of legal regulation. The LSB’s stated ambition is for there to be a single regulator in the legal services market. Whether or not you agree with that ambition, it will not be realised any time soon.
“For now, we continue to work harder and smarter with the resources we do have, building on the transformational progress we have made in the last year.”
ACL vice-chairman Francis Kendall said that although the association understood “the obvious scepticism” from the LSB, they were “on the whole based on historic issues”.
He continued: “We remain confident that the CLSB is both improving and will continue to meet the requirements set by the LSB. Great strides have already been made and the continued work should see the regulated arm of the profession flourish.
“We strongly believe that, although regulation itself is subject to continued overhaul and change, the profession remains as strong as ever and we are hopeful that regulation could become an absolute necessity given the recommendations made in the Mayson report.”
Applications for 2021 practising certificates will be online this year, and forms will be sent to Costs Lawyers by email in early November.