An alternative regulatory regime that sees all legal services regulated – including costs work – but providers subject to different requirements depending on the work they do has been mooted by the Independent Review of Legal Services Regulation.
The interim report of the review, headed by Professor Stephen Mayson (pictured), suggested that such a system may be better run by a single regulator, or at least a smaller number of regulators than now, to improve the consistency of approach.
But there would be a continuing role for professional bodies, the academic stressed, saying that the role of regulation was to set and enforce the minimum or basic requirements for legal services, while the professional bodies “are the natural (and arguably better) custodians of the higher standards and aspirations associated with a professional calling and vocation”.
The IRLSR, which began in July 2018, is being run out of University College London and Professor Mayson is supported by an eminent advisory panel whose members include former Supreme Court president Lord Neuberger and former Attorney General Dominic Grieve QC MP.
Professor Mayson described the system created by the Legal Services Act 2007 as “insufficiently flexible to apply targeted, proportionate, risk-based and consistent regulation to reflect differences across legal services areas and across time”.
Problems included “competing and possibly inappropriate regulatory objectives”, a pivotal set of reserved legal activities that were “anachronistic and do not necessarily include all activities that ought to be regulated”, the “unsatisfactory nature” of the separation of regulation and representation, and the existence of unregulated providers that could not be brought within the current regulatory framework.
He highlighted the “discrepancy between consumer expectations of regulatory scope and protection, and the current (and imminent) reality of scope and protection”, which meant that unregulated persons and entities could conduct all but the reserved legal activities without consumers understanding they did not have the same protections as if they were using a regulated provider.
At the same time, while stressing that professional titles would continue to have a role, “the link between the reserved activities and authorisation through professional titles creates inflexibility and constraints in the current regulatory framework”.
Regulating all legal services, rather than just those who provide them, meant “regulation – and its costs and burdens – could be targeted and distributed more appropriately to the risks of the activities actually undertaken by providers.
“In other words, while scope could be broader (to protect consumers), the focus of regulation could be targeted (to place only proportionate regulatory burdens on providers).”
Under the model put out for comment, promoting and protecting the public interest would be the primary objective for the regulation of legal services.
All legal services would be considered low-risk and subject to certain after-the-event protections – such as access to the Legal Ombudsman – unless there were features that made them intermediate- or high-risk, in which case there would be additional layers of regulatory obligation.
These could be during-the-event protections like specialist accreditation and indemnity insurance, or before-the-event (BTE) protections such as a qualification for the highest-risk activities.
The possibility of bill drafting being a reserved activity has been mooted at times. Professor Mayson – who has spoken to the ACL as part of his work – wrote: “Avoiding the need for statutory determination through reservation or its equivalent might allow, for example, regulation of will-writing and estate administration, or the drafting of costs bills, to be subject to regulatory conditions without the need for practitioners to undertake costly or burdensome BTE qualification and prior authorisation.
“To be clear, it could still be open to the appropriate regulator to impose a [during-the-event] requirement that, for example, those who write wills or draft costs bills should hold some form of qualification or accreditation to demonstrate their competence for the activity or service in question. It is the requirement for prior authorisation that might not be imposed.”
Professor Mayson observed that his ideas may seem to go against the grain of liberalisation and policies of deregulation.
“However, for me, the goal should not necessarily be one of deregulation or liberalisation, or even of competition, innovation or consumerism. Instead… the goal should be ‘right’ regulation to achieve the appropriate public interest objectives.
“If this suggests that more legal services should fall within the scope of regulation, then so be it…
“I am acutely aware of the link between regulatory scope, activity and cost. I fully accept that even appropriate and proportionate regulation will have a cost, ultimately borne by consumers.
“Nevertheless, it might also be necessary to accept that ‘right’ regulation properly imposes that cost.”
Consultation on the interim report closes on 29 November and a final report will be published next year. A consultation event is being held on 9 October. See the review website for all the details and background reports.