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Clementi recommends...

Sir David Clementi, who was appointed in July 2003 to undertake a review of the regulation of legal services in England and Wales, has published his recommendations in a long-awaited report.

15 February 2005

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Arising from his review, Clementi identifies three key concerns. First, he draws attention to the current regulatory framework for legal services, in particular its complexity, inconsistency and insufficient regard for the consumer’s interest. Second, he questions the efficiency of the current complaints system, including the principle of lawyers examining complaints against other lawyers. Third, Clementi draws attention to the restrictive nature of current business structures, which he says have changed little over a considerable period of time, and include a number of restrictive practices covering the way lawyers work.

To address these issues, Clementi makes several recommendations, including the establishment of a new regulatory framework, including a Legal Services Board, which would provide oversight of front-line bodies such as the Law Society and Bar Council. It would also have statutory objectives to include promotion of the public and consumer interest. Regulatory powers would be vested in the Legal Services Board, with powers to devolve regulatory functions to front-line bodies, subject to their competence and governance arrangements. Clementi also recommends that front-line bodies should be required to make governance arrangements to separate their regulatory and representative functions.

Other recommendations include the establishment of a single independent body, The Office for Legal Complaints, to better handle consumer complaints. It would be subject to oversight by the Legal Services Board.

Clementi also approves the concept of legal disciplinary practices, which would bring together lawyers from different professional bodies, for example, solicitors and barristers, and permit non-lawyers to be involved in management and ownership. The safeguards to be proposed by the Legal Services Board should include a ‘fit to own’ test. Such practices should encourage new capital and ideas in promoting cost-effective consumer-friendly legal services.

Commenting on his recommendations on the regulatory framework, Clementi said: “The current regulatory system is focused on those who provide legal services. The new framework will place the interests of consumers at its centre.

“The current regulatory system is flawed. There are no clear objectives and principles which underlie the system, and it has insufficient regard to the interests of consumers. The current system of oversight of the front-line bodies such as the Law Society and Bar Council is confused.

“I believe that the current governance arrangements of the Law Society and Bar Council are inappropriate for the regulatory tasks they face. I am recommending that these bodies should split their regulatory and representative functions.”

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