Legal services regulation review: The battle lines are being drawn

The consultation period on the government’s review of legal services regulation in England and Wales, announced in June, closed on 2nd September. A small but important group of institutional respondents – the Law Society, the Solicitors Regulation Authority (SRA), the Council of Licensed Conveyancers (CLC), the Legal Services Consumer Panel and Legal Services Board (LSB) – have subsequently published their responses to the MoJ’s call for evidence. A brief survey of these responses provides an interesting insight into the range of positions being adopted and arguments being deployed by the institutional players in this particular game.

As might be expected given the ‘previous’ between these two institutions, the Law Society and the SRA are continuing their public sparring match. The Law Society’s proposals seek to wind back the clock, not entirely to a pre-Clementi position, but pretty close, arguing that :

  •  the Society should have direct responsibility for training, authorisation to practise and standard setting;
  • it is better placed to create regulatory arrangements that are flexible and take account of the realities of different types of practice, and
  • investigation and prosecution of offences should be “undertaken at arms’ length” by a body that is part of the Law Society with independent decision making powers, but reporting directly to the Society.

The Law Society also calls, unsurprisingly, for the Legal Services Board to be slimmed-down in both form and function, and seeks the complete abolition of the Legal Services Consumer Panel, arguing instead that the professions should be responsible for creating governance mechanisms that incorporate the need for the consumer voice.

The SRA takes a markedly different tack. Whilst acknowledging that the Clementi reforms are still a work in progress, the SRA asserts that the proposed review is “timely” in that it is already apparent that the complexity of the regulatory regime is hampering regulators’ ability to meet the Legal Services Act’s (LSA) regulatory objectives. The body of the SRA’s paper then focuses on five ways in which the function of the regulatory regime is said to be sub-optimal. These are summarised in para 3.2 as:

    • inflexibility and over-prescription – in a rapidly evolving legal services market, too many requirements are specified to a significant level of detail in primary legislation hampering regulators’ ability to meet the regulatory objectives and the principles of better regulation;
    • complexity of primary legislation – the SRA has to operate under three major pieces of primary legislation; the Solicitors Act 1974; the Administration of Justice Act 1985 and the LSA. The other approved regulators also work under a multiplicity of legislation.
    • inadequate and irrational foundations for regulation – the whole of legal services regulation is founded on the regulation of six “reserved” activities which have accumulated in a piecemeal fashion and have never been the subject of an objective, evidence based, review;
    • the multiplicity of regulators – largely based around the historic regulation of titles (albeit in some cases with titles relating to distinct functions – for example licensed conveyancers) – which creates fragmentation of regulation across the legal services market and the need for rules to manage the boundaries of the various regulators. Not only are there eight approved regulators, there is also a layering of regulation with the LSB sitting above all of them. These features add to both complexity and cost.
    • regulation is not fully independent – the LSA made regulation more independent from the representative functions of the professions. However, this does not amount to full independence and, for as long as regulatory bodies remain part of strong representative organisations, there will be additional cost and a lack of flexibility within the system. In terms of cost, for as long as the current arrangements remain, the presence of the LSB will be essential in order to ensure compliance with the internal governance arrangements which enable independent regulation, and to deliver some degree of co-ordination between the regulators whose fields of regulation increasingly overlap. In addition the cost burden on the market is also inflated by s.51 LSA, which enables defined but extensive representative activities of approved regulators to be funded through the compulsory levying of practice fees.

The SRA’s remedies are the creation of a single statutory framework for entity regulation across the legal services market, including the abolition of a separate statutory scheme for ABSs; the extension of regulation to all legal activities as currently defined in s.12 LSA (in other words bringing currently ‘unregulated’ services like employment advice and will-writing within the reach of regulation), and, doubtless with a particular nod to the Law Society, a call for frontline regulators to be given complete structural as well as operational independence from the representative bodies. It does stop short of calling for a single regulator for the sector, while acknowledging that the growing (LSB-supported) focus on entity regulation was making the problem of having multiple legal regulators “more acute”.

The Legal Services Consumer Panel, however, suffers from no such reticence in its preference for what Legal Futures (Sept 2) has called the “nuclear option” of a single regulator. As we have come to expect, the Panel’s evidence does not mince words when it concludes (para 9.1):

Four years of evidence of the consumer experience has demonstrated to the Panel that the existing regulatory framework does not provide a sustainable model in the long term to offer consumers the best system of consumer protection or support a competitive market place. Consumers have to find their way around a labyrinthine maze; the scope of regulation is not based on any consumer protection rationale; there are gaps and overlaps in redress; there is considerable duplication in regulatory structures that consumers ultimately pay for; regulation is not sufficiently independent of the profession; and there are serious doubts about the capacity and capability of the smaller regulators to do a good job

The Panel’s advice? In effect, it calls on the MoJ to do a proper job of gathering the evidence and exploring the costs and benefits of the options, but with a view to tearing up the LSA and starting again with a more consumer-focused approach. The Panel does not anticipate nor spell out in considerable detail what this might look like, but it does highlight a number of themes. Most of these chime, to a degree, with the issues raised by the SRA: the need to assure proper regulatory independence from the professions, to re-visit the range of legal activities subject to regulation, including mapping out and assessing risk across the unregulated sector,  and to achieve a better balance between entity and individual regulation.

In the only response to be published so far by one of the smaller regulators, the Council for Licensed Conveyancers has also picked up on a number of these themes calling, longer term, for a review of the scope of regulated legal activities, completion of the separation of representative and regulatory functions and (interestingly) reform of compensation arrangements to improve consumer protection. For the time being, however, the CLC does not want much change. It specifically rules out a single regulator model for now, arguing that there is a role for multiple regulators to continue developing a range of approaches to regulation that will support specialisation and innovation in the marketplace.

In its response, published today, the Legal Services Board has also offered its support for the longer term option of a single regulator, adding, crucially, that such should be “unrelated to any existing regulator, including the LSB.” In the short term it is also highly critical of the continuing preponderance of ‘one-size-fits-all’ regulation and calls for existing regulators to do more to develop risk-based models and otherwise re-regulate the market, removing rules which cannot be justified on a risk basis. Its response also calls for wider consumer access to the Legal Ombudsman and new powers for the Office for Legal Complaints to develop its services.

So what does this small cross-section of responses tell us? First off, there is a fair degree of unanimity about one thing: the compromises enacted in the LSA regime have left virtually no-one satisfied. The CLC’s is the only published response so far that wants to retain something close to the status quo. This is not entirely surprising. The smaller regulated occupations have arguably benefitted disproportionately from the changes, gaining a mandate for (quasi) self-regulation, and with it the opportunity to use regulation to achieve a degree of occupational closure that they would have struggled to achieve otherwise. This of course also highlights another issue: the extent to which self-interest drives these kinds of institutional responses: the SRA’s calls for structural independence and the extension of regulation to all legal activities are thus somewhat predictable for an ambitious regulatory body, though such an extension of legal activities seems to fly against the liberalising ethos of the LSA. I suspect it will not find favour with a Lord Chancellor whose instincts are fundamentally deregulatory. The LSB’s proposals may in this regard be closer to the mark. They propose making all legal activities subject to a baseline comprising access to an Ombudsman or other dispute resolution mechanism,  supported by some enhanced consumer protection laws. They would only deploy a risk based model of regulation over and above this in respect of activities for which there are substantive public /consumer interest grounds for doing so.

I actually suspect that Lord Chancellor Grayling’s instinctive preference would be for a greater return to self-regulation, contrary to the views of the CLC, SRA, LSB and the Consumer Panel. Although it was the Thatcher government that took the first swipe at professional self-regulation, Tory governments (which this one seems to be in almost everything but name) are ultimately not renowned for favouring consumer over business interests, but would Grayling go as far as the Law Society (and one suspects the Bar Council, though the latter is likely to be less critical of its regulatory arm) would like?

I hope not. It is difficult not to see a return to the old ways as a retrograde step. Will market innovation be enhanced with (for example) the Law Society and Bar Council in charge of licensing ABSs? I don’t know, but, as data from the LETR indicated, there appears to be a strong undercurrent of hostility to new business structures among the grassroots of the profession. How would the representative bodies deal with that to re-assure external investors? It also takes a very short memory and a generous pinch of salt to take seriously the Law Society’s claim that “there is no evidence to suggest professional bodies cannot take decisions in the public interest about standards and qualification.” That’s true so long as we overlook the whole sorry story of the OSS (which the Society seemingly wishes to re-introduce in another guise), the Training Framework Review, which took seven years to achieve very little, and the history of underfunding and neglect of effective CPD regulation. I am sure the Law Society has learned some lessons from the past, but more evidence and less hubris might have made its claims more credible.

Some might say that it also takes a particular kind of legal mind-set to argue that professional self-regulation equates to independent regulation, and to conflate independence with non-accountability, but that’s a story for another post.

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Hemmings, super injunctions and super lies?

Having resisted commenting on the whole super injunction ferrago so far, the latest twist is hard to ignore. It will be recalled that MP John Hemmings used his position in Parliament to publicise information about cases in which the media, the parties and anyone else had been gagged using so-called ‘super injunctons’ – that is, interim orders which. Not all of these cases were about the very rich seeking to keep their bedroom antics off of the front page. One involved serious claims of sexual abuse made by a 7 year old child and her mother against the child’s father. Moreover, if the mother’s claims were true the case involved not only sexual abuse but rank incompetence and mendacity by social services and the legal profession. No wonder Mr Hemmings considered it in the public interest to highlight the attempt by Doncaster social services to use injunctive relief to keep their own failings under wraps. Except that Vicky Haigh’s quite extraordinary claims about her daughter’s abuse have now been judged by the High Court, for the third time, to be a complete fabrication – Re X (A Child) (2011). The full judgment has yet to be released, but in a press release from the Judicial and Tribunals media office, the President of the Family Division has stated that:

“The first judge found that allegations of sexual abuse made against the father of a young child were not just untrue but manufactured by the child’s mother, who then caused her daughter to repeat them. Because the mother was wholly incapable of fostering a relationship between her daughter and the child’s father, refused to accept the judge’s findings and continued to assert that the father was a paedophile, a second judge found that her mother had caused the child significant harm. The child’s mother is wholly unable to accept the court’s verdict and, with the misguided assistance of Elizabeth Watson [a private investigator and campaigner working with Vicky Haigh, who was gaoled by the court for contempt] has unlawfully and in breach of court orders put into the public domain via e-mail and the internet a series of unwarranted and scandalous allegations about the father and others. She has repeated the untruth that the father is a paedophile and – without a scintilla of evidence – has attacked the good faith of all the professionals who had had any contact with the case”.

Exceptionally the President decided that it was also in the interests of justice to disclose the names of the parents, though the name of the child was not disclosed:

“I have come to the conclusion that … I should … give a public judgment in which I explain, having read all the papers in the case, that I have reached the same conclusion as the two previous judges. These proceedings have had a serious effect on the life of the father and have threatened the stability of the child. Her mother’s actions are wholly contrary to her interests. The father is entitled to tell the world, and the world is entitled to know, that he is not a paedophile, that he has not sexually abused his daughter and that the allegations made against him are false.”

The Haigh case was widely taken up across the print and online media. A large number of websites, including victims united supported the mother’s cause, with (with a few honourable exceptions) all the fervour of a Mississippi lynch mob. A number of those disclosed the name of the mother. Others deliberately disclosed the father’s name. The impact of this whole sorry episode on father and daughter is hard to imagine, and the whole process will have done little for Vicky Haigh’s credibility, let alone her long term relationship with her daughter.

It is important that injunctions are no wider than the merits of the case demand and widespread use of so-called super injunctions would be deplorable (though as a number of commentators have observed, their use has been both less extensive than often portrayed – as the Neuberger Committee noted in its May 2011 report, partly because of the media confusion between genuine super injunctions and more limited anonymised injunctions – and has declined as clearer guidelines have been developed as regards their use and duration. But it is important to remember that the whole point of an injunction may be, as in this case, to protect the interests of the vulnerable, and to ensure that no one is subjected to trial by media rather than by due process of law – values that one would hope our legislators might respect. (And indeed Parliament’s own sub judice rules exist to enable Parliament to limit the scope of debate to avoid the appearance of political interference with the administration of justice). The case is a sobering reminder of our capacity to lose objectivity in the face of highly emotive claims of child abuse, and, one hopes, an equally sobering reminder to Mr Hemmings that with power comes responsibility.

Legal Education & Training Review

Following the public announcement early last month, word is gradually getting around that the “UKCLE Research Consortium” will be undertaking the research for the regulator-funded review of legal education and training that is taking place in England and Wales. Needless to say I’m very excited to be involved in what is being billed as the largest review since the 1971 Ormrod Report – and also very aware of the challenges of such a complex project.

No doubt that it is going to be a big job. Our remit is to look at the changes that are shaping the legal services market in the wake of the Legal Services Act 2007, and assess their implications for future legal education and training needs. We are currently still involved in a lot of the planning and ‘backroom’ stuff that a project on this scale requires, but we are aiming to start research ‘proper’ in July. We are scheduled to complete the whole project in November 2012. A lot of the research will involve traditional empirical analysis of qualitative and quantitative data, but we are also planning to make extensive use of technology to support and open up the project. There will be a dedicated website, which, as a research team, we want to use as a tool to encourage participation and engagement with what we’re doing. I hope we can make it a different, more inclusive way of doing a review, which given both the consumer dimension, and the importance of the equality and diversity agenda, is important.

We have a top-flight team of researchers engaged in the project – Avrom Sherr (IALS, London), Paul Maharg (Northumbria), and Jane Ching (NTU – pictured here with me, Dame Janet Gaymer and Sir Mark Potter, the Co-Chairs of the Review Consultation Steering Panel), are the other institutional leads. We also have Chris Decker (Oxford Regulatory Policy Institute & CSLS), Rob Wilson (Warwick Institute for Employment Research) and the incomparable Richard Susskind as consultants. I’m sure there will be those who don’t think we are quite the right people for the job. I hear murmurs already from some in the profession that we are too academic, and from some academics that we are too close to the profession! Maybe that level of contradiction at least indicates that we are what we’re supposed to be: independent.

ILEC IV – final post

I delivered my own paper in the final set of parallel sessions last Saturday. Entitled ‘Lawyering in liquid times: Values and professionalism in an age of uncertainty’, it took Zygmunt Bauman’s concept of liquid modernity as a framework for reflecting on changing values of legal professionalism. The paper focused on three problem areas which I defined as: achieving trust in the profession; maintaining moral identity and a sense of lawyering as ‘meaningful work’ (adopting Simon’s term), and, lastly, limiting lawyers’ “distantiation” (Bauman’s word) from the consequences of their acts. I looked at each of these in the context of potential changes in professional values and ethics being heralded-in by the new regulatory objectives of the (English) Legal Services Act 2007 and the proposed move to outcomes-based regulation by the Solicitors Regulation Authority. I argued that these changes were indicative of a move to a more market-based trust model, and offered some potential to reinvigorate both collective (at the level of the firm) and individual moral responsibility. I remained fairly skeptical whether the changes, by themselves would make a significant contribution to (re)building moral identity, and argued that they offered little solution in particular to the problem of distantiation. The paper generated some interest, though I’m not sure at this stage that there is enough in the idea to merit development into a full article. Thanks though to Kim Economides, Limor Zer-Gutman, and Russ Pearce for their observations and enthusiasm!

The final session of the conference involved a tough choice between a panel on ethics and neuroscience, and one on legal ethics and jurisprudence. I wish I could have attended both. (The ability to clone oneself would have been useful throughout the conference – I do think we could have had fewer parallels and gone into a third day.) In the end I attended the session entitled ‘Philosophical legal ethics: Ethics, morals and jurisprudence. It involved a roundtable discussion, consummately facilitated by David Luban, between a panel of ethics luminaries: Tim Dare, Daniel Markovits, Katherine Kruse, Stephen Pepper, Bill Simon, Brad Wendel and Alice Woolley. I’m not going to try and capture the session here, but the papers will be worked up for publication in Legal Ethics, and are available in their original form on SSRN. However, I was particularly struck by the suggestion, near the end, that most philosophical issues around legal ethics are actually matters of political rather than moral philosophy. Some food for thought here.

Work is now beginning on ILEC V, which will take place in in Banff, Alberta, on July 12-14, 2012. A steering committee has also been set up to look at creating a new international association of legal ethicists. It’s really great to see what is now coming out of the process that Kim Economides and I started on a wing and a prayer in Exeter back in 2004.

First sitting of the UK Supreme Court

Two posts in one day, must be a record! But appropriate to mark the first day that the new Supreme Court has actually sat as the final court of appeal in the UK. I recently came across the following YouTube video, with Lord Mance, one of the ten former Law Lords now sitting as a Justice of the Supreme Court. Its not a bad discussion of some of the issues, and it also captures nicely, I thought, some the obviously quite mixed emotions for those involved in the change. Could be a neat resource for GCSE/A level or even first year LLB?