Walking Forward Briskly

october2012-manwalkingThe Legal Services Board will not baulk as it strives to drive the legal services market forward and reinforce the regulatory objectives, says LSB chairman, David Edmonds

Counsel has invited me to reflect on the Legal Services Board’s (LSB’s) first three years, in the context of the Ministry of Justice’s recent triennial review of the LSB and Office for Legal Complaints.  In doing so, I was provoked to think about how the Bar, represented by the Bar Council, has dealt with the post-Legal Services Act 2007 (LSA 2007) landscape.


Vested interest

I recently characterised the Bar’s approach to the reforms as “walking backwards slowly”. I did so with reluctance – but felt it was right because I can recall few examples where the positive changes we have sought to make have been picked up, welcomed and developed by those mandated to represent the Bar. More often, it has seemed that we have faced the classic response of those defending a vested interest – a desire to argue over every detail, to define very detailed rules, and to assault the legitimacy of the regulator.

Most surprising to me has been seeing the Bar, which is – quite rightly – absolutely determined to safeguard its own independence from the state, so often turning to government to seek to persuade it to constrain the independence of the statutory regulator. “Be careful of what you wish for” may be a cliché, but it is particularly apposite in this context.

I can perhaps illustrate this with quotes from the Bar Council’s submission to the review:
“...the LSB should be actively discouraged by the government from abusing its regulatory and oversight powers...”;
“...the LSB has not left the [Bar Standards Board] BSB to get on with its job properly. Instead it has sought to micro-manage in areas where...the BSB requires no assistance...”;
“...demonstrable propensity to exceed its remit...”.

While I find use of such language interesting, it is also somewhat depressing to hear it as the considered response of a professional body to three years of work by its oversight regulator, a body which plays such a key role in the context of its membership and with which it will need to work in the future. And this is in spite of regular open and frank dialogue with the Bar Council (and, of course, the BSB) at every level, and frequent consultation through which we listen to views on every issue we consider.

My disappointment is compounded by the increasing evidence of individual barristers and chambers being ever more keen to explore the opportunities LSA 2007 presents to enable new ways of working in a modern and consumer-focused manner.  Not all share the Bar Council’s gloomy assessment of the LSB. The conclusion of the triennial review, which was informed by evidence from a wide range of organisations and individuals, was that we are performing statutory functions that need to be retained and that should be retained in their current form, independent of government. We were also commended for our corporate governance arrangements. Following this endorsement, my board’s response was that we would press on with implementation of our ambitious programme.


Working together

I have explained this to the incumbent and incoming chairmen of the Bar and have suggested that we spend more time in future working out effective ways of working together. Of course the Bar Council will want properly to represent the views and interests of its members – I do not dispute for a moment the absolute legitimacy of the representative body to have views on regulation. Indeed, better regulation will only be delivered with the benefit of that practical and experienced input. But my starting point is that the LSB has a statutory legitimacy deriving from LSA 2007. We share the same regulatory objectives as the regulators and we take those deeply seriously.

We should remember that we exist because Parliament deemed that self-regulation had failed, because the public were no longer convinced that their interests were at the core of legal services regulation or in complaints resolution. There was also a sense that legal services were not being delivered in the most effective ways – often because of historic conventions around practice. As a consequence, Parliament gave the LSB a pivotal role in driving necessary improvements. But Parliament did not require us to start from scratch. The Act sought to build on the best of self-regulation by retaining the professional bodies as approved regulators, requiring us to work closely with them all and binding us to act in adherence with the principles of better regulation and consistency with the eight regulatory objectives.

We must hold the regulators to account against these standards. While our role is one of oversight, we do not believe we can deliver that by being passive – by just sitting, watching and reacting to developments. Oversight has to be active. It means we need to be informed and, often involved. It means intervening and providing leadership where we need to do so to ensure that the regulatory objectives are promoted, protected and delivered. That’s why the agenda after the triennial review is all about ensuring that regulation is kept to the minimum needed to secure clear outcomes, but is absolutely ruthless in targeting risks.

Achieving that balance between freedom and protection is of great importance to consumers, the public and, of course, on behalf of legal practitioners, who must have confidence in their regulators.


What have we achieved since 2009?

I would point to independence in regulation, improvements in complaints-handling and opening up the market.

On independence, regulators now have boards with lay majorities (or are on a path to). With time, compliance with our rules to embed independence is being achieved, including addressing issues in shared services and the setting of strategy and resources. In 2012, for the first time, we assessed the Bar’s arrangements to be “potentially compliant”. This means we believe that the structures are in place but that it is too early to assess the success of their operation.

As to improved complaint resolution, the establishment of the Legal Ombudsman means we have a dispute resolution scheme that is effective for complainants and lawyers alike. Lessons from the ombudsman’s investigations are beginning to inform wider policy-making and drive better standards of service. We have also asked the BSB and Solicitors Regulation Authority (SRA) to work together to address some of the practical issues which have been raised in implementing changes in signposting rules, for example.

Our third area of focus has been the opening up of the legal services market place to new forms of service delivery. The introduction of alternative business structures (ABSs) and shift toward outcomes-focused regulation are steps towards an open market and better targeted consumer protection. Many barristers are keen to take part in this exciting and increasingly dynamic market, and regulators need to facilitate rather than restrict that innovation.

That does not need to be to the cost of legal practitioners. Liberalisation, if introduced carefully and with an open mind, should also deliver benefits to those who simply wish to continue to provide legal services in the way that they always have. The key point is that the change is facilitative rather than prescriptive – it’s about letting lawyers and new entrants do new things rather than saying they must organise in a certain way. It is about removing unnecessary barriers to innovation and flexibility, and allowing the conditions for entrepreneurial practitioners to develop.

In all that we do, we are guided by our vision of “a competitive market, underpinned by appropriate regulation, delivering the regulatory objectives”. For us, such a market will be characterised by more competition and innovation, improved access to justice, empowered consumers getting better value for money, a better consumer experience and redress, more diverse and ethical profession that’s constantly improving, and clear, proportionate trusted regulation.

There has been improvement in all of these areas over the course of the last three years. Some areas have improved far more (competition and innovation, trusted regulation) than others (empowering consumers, access to justice).


Future priorities

Looking forward, our priorities are to ensure that we perform our statutory functions in ways that drive the legal services market to work better, and at the same time reinforce the regulatory objectives. We intend to assure and improve the performance of regulators, help consumers to choose and use legal services with confidence, and help the changing legal sector to flourish by delivering appropriate regulation to address risks.

Simply put, the challenge is to continue to open the legal sector up while at the same time growing the regulatory capacity to deal with these changes. Our dialogue with the BSB continues. It is surely true that many members of the Bar recognise that change in the current market structures and underlying economics require change in the way in which they operate. Everyone has a free choice. We believe that we act in the interests of the consumer – and the citizen. My board has a major programme for the next three years of continuing reform with a heavy focus on the capabilities and competencies of the front line regulators.

We will be walking forward briskly.

David Edmonds, Chairman of the Legal Services Board

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