The significance of 6th October for the English legal profession diminished somewhat with the SRA’s announcement that it would not be in a position to launch its regulation of alternative business structures (ABSs) as planned. But kudos to the Council of Licensed Conveyancers (CLC), who have launched their own ABS licensing scheme in time for ‘ABS Day’. Legal Futures steals a march by profiling Premier Property Lawyers (PPL), one of the largest players in the conveyancing market, who have crossed the line to become the first licensed ABS. Tucked away in the same feature is the interesting snippet that the CLC are dealing with about 20 other “active enquiries” including some from existing solicitors’ firms considering changing regulator. Whether this just reflects dissatisfaction at the likely delay to SRA licensing arrangements (the SRA scheme is now scheduled to start accepting applications in December, with the first licenses being issued in the spring), or something more isn’t being made public, but, so far as I’m aware, this could become the first example of firms using the competition between regulators provisions of the Legal Services Act 2007 to adopt a new regulator of choice.
Rather less has been made of the fact that 6th October is also the date on which the SRA launches ‘outcomes-focused regulation'(OFR), with the publication of a new Handbook and Code of Conduct. The SRA Chief Executive, Anthony Townsend announced the launch by saying that
OFR marks our move away from our traditional, prescriptive approach in favour of one that is suited to the fast paced, modern and liberalised legal services market which provides greater flexibility to achieve the right outcomes for consumers.
The move to OFR is potentially very significant. The Legal Services Board has made no secret of its wish to see all approved regulators move to OFR, even though the model is relatively untested in the legal services market, and the other two largest regulators – BSB and ILEX PS – have so far been rather more cautious in their response to OFR.
The anticipated benefits of OFR are that it offers a more flexible, proportionate, risk-based and principles-based regime that is better suited to the new mix of individual and entity-based regulation that ABSs, in particular, will require. On the other hand, there are concerns that OFR will not just make decision-making in practice more difficult and, perhaps, more uncertain, but that it actually dilutes the ethical basis of professionalism, and creates new regulatory risks. In the only substantial academic piece published so far on OFR, Andy Boon pulls no punches:
It is not clear why, contrary to the views of many academic advocates of entity regulation, and key respondents to its consultation, the SRA is determined to turn its code of conduct into a manual for quality accreditation. There may be confusion between institutional and professional ethics (Greenwood and Hinings, 1996), which Freidson argues must each pursue different goals. Institutional ethics ‘serve the transcendent values of the discipline’ while professional ethics must ‘claim an independence from patron, state and public that is analogous to what is claimed by a religious congregation’ (1998; 219 and 221). In practical terms professional ethics represent concrete standards across the whole role, whereas institutional ethics are geared towards institutionalising processes in everyday work (Oost 2007). It would have been entirely possible to have retained the Solicitors Code of Conduct 2007 and issued guidance for inspection visits.
Anecdotally, there are many in the profession that are uncomfortable with the change, and unclear on what it means. There may still be work for the regulator here in winning hearts and minds. Moreover, now the regime is in place, it is important that independent research and evaluation is encouraged, to assess objectively what the impacts of OFR actually are on the regulator, regulatees and consumers. So welcome to the (in)glorious 6th October 2011; for good or ill it promises the start of some interesting times for legal ethics and regulation!