Legal Services Board delays decision on approving new CLSB code of conduct

CLSB says revised rules will have “a positive impact on regulated persons, consumers and the public interest”

A decision on whether to approve changes to the Costs Lawyer Standards Board’s (CLSB) code of conduct will be made by 21 March, after the Legal Services Board (LSB) exercised the option to extend the time for considering them.

The CLSB consulted last May on the first wholesale rewrite of the code since it was first published in 2011 and submitted the new version for approval by the oversight regulator just before Christmas.

The LSB had an initial 28 days to make a decision, which it can extend to 90 – a choice it has now made.

In a letter to the CLSB, LSB chief executive Matthew Hill wrote: “The CLSB submitted its application on Saturday 23 December 2023, by which time the LSB was closed until 2 January 2024. The LSB has also raised some enquiries relating to the proposed new regulatory arrangements within the CLSB’s application.

“Further time will be required to consider and discuss the CLSB’s responses to those enquiries, so that the LSB may then conclude its assessment of the application.”

The end of the decision period will now be 21 March, “although the LSB will endeavour to make a decision in advance of that date”, Mr Hill said.

The consultation attracted responses from the ACL, Legal Services Consumer Panel and five individual Costs Lawyers. All were broadly supportive of the proposed changes but the CLSB did make some changes as a result of the comments received.

These included adding a new paragraph to make it clear that, in the event of a conflict of interest between the professional and ultimate client, the interests of the latter should take precedence.

The proposed code now has a requirement that information be provided to clients and prospective clients in a form that they are able to understand, based on the nature of the individual or business.

Further, the words ‘and equitably’ have been added to principle 6 – ‘Treat everyone fairly and equitably, and with dignity and respect’ – in line with feedback from the consumer panel, the CLSB said, “and to reflect the fact that some clients (for example, vulnerable clients) may need different types of service to enable them to receive the same level of service and satisfaction as others”.

In its application, the CLSB told the LSB that the new code would have “a positive impact on regulated persons, consumers and the public interest”.

It explained: “The changes will strengthen the obligation on Costs Lawyers to maintain their skills and knowledge, in line with expectations set by the LSB in its policy statement on ongoing competence.

“The changes will also means that the code better reflects the CLSB’s consumer outcomes framework by strengthening expectations of the role that Costs Lawyers can play in serving consumer clients (including small business clients).

“The proposed amendments will also strengthen conflict protections for consumers, reinforce the CLSB’s diversity commitment and encourage innovation, in pursuit of the regulatory objectives in the Legal Services Act 2007.”

The revised code “highlights the range of roles that Costs Lawyers can play in the legal services sector, over and above providing services directly to clients”, it continued, introducing the principle of independence for the first time.

This laid the foundation “for Costs Lawyers to grow their role as independent actors in the justice system in pursuit of the wider public interest, as distinct from the interests of individual consumers or clients”.

The code “underlines the importance of Costs Lawyers’ role in the efficient resourcing of legal matters and the role they might play in other areas, such as pricing” as well.

Finally, the changes to the code clarified that a Costs Lawyer’s remit was not limited to the reserved legal activities, a factor which the 2022 Hook Tangaza review suggested was acting as an actual or perceived constraint on innovation.

“Updating the code to remove such perceived constraints on innovation will help to promote competition in the provision of legal services, further benefitting the public interest,” the CLSB said.

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31 Jan 2024

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