Edmonds challenges profession to throw away its regulatory rule books

It is only one step from the proposal that there should be a single regulator, to the suggestion that there should be one legal profession. And it's a step that Legal Services Board chair David Edmonds is keen for the sector to consider. The thrust of the LSB's response last week to the government's consultation on the review of legal services regulation is "a move in this direction". Equally, he says, "coming out with a statement such as 'who needs barristers, who needs solicitors, or who needs QCs' will create perhaps a storm of comment and objection which might obscure what we're trying to create, which is a blueprint for reforming regulation."

So at this stage the LSB's suggestion is merely to work with existing rules and make tweaks that do not require a whole new piece of legislation. Parliamentary timetable is such that the far-reaching reforms are unlikely to be considered for some time.

Edmonds' biggest disappointment is that, deep down, despite the separation of representative and regulatory functions, little has changed in the way the sector is regulated. "There was a blurring of the edges then, which has led to a blurring of responsibilities since. It's wrong," he says referring to the latest spat between the SRA and the Law Society over ownership of regulatory powers.

Edmonds' new legal services authority would be "a totally different regulator, constructed from first principles."

After the Legal Services Act came into force, "all the existing regulators were maintained, reformed and driven through a process of moving forward. The confusion and overlap, and failure to move away from rules-based regulation, is a real drag on the sector, a real deterrent from producing the kind of legal services that society needs."

Rules-based approach

The result, he says, is that large numbers of individuals and businesses are unable to access affordable legal services, market failure in the "classical sense". This is exacerbated by rules-based reglation, which makes it more difficult for new entities offering different services to enter the marketplace.

Ideally, Edmonds would like all regulators to throw away their thick rulebooks and start again, but this won't happen for at least four of five years.

"If I have a single regret about my past five years of tenure, it is that I didn't say to the BSB and the SRA to throw away what they [had] got and start again," he says. In fact, it could have been beyond the LSB's powers, which are only to check that the regulators have designed suitable rules, but looking back, Edmonds says he would have leveraged the board's powers to steer the regulators in a different direction.

Edmonds is particularly frustrated by the negative effect the old-fashioned rules have had on innovation, saying they have made it too difficult for reputable non-legal businesses to get a foot in the market. He doesn't deny that a growing number of firms have embraced innovation, even before the Legal Services Act. But competition drives innovation, and until new entrants are able to enter the market more easily, that competitive pressure will not exist.

Royal college of solicitoring

Under the Edmonds masterplan, the creation of the new legal services authority would lead to the abolition of all current frontline regulators. Regulation would be based on function rather than title. There would be divisions whose remit would be based on activities, "much like Ofcom, where one division looks at content, another at spectrum, etc." So, rather than regulating barristers, or solicitors, or legal executive, the regulator will regulate advocacy, or will writing, or the conduct of litigation, irrespective of the title of the provider.

The LSB's current theory is that authorisation and the statutory basis for the regulator wouldn't be the professional bodies, but there would still be a role of them. They could represent the profession and promote standards but they would not have that statutory basis to authorise people to carry out restrictive activities based on title. "The Royal Colleges is the example we've used to illustrate the relationship between profession and regulation. We could have a Royal College of Solicitoring, or of Advocacy - we don't have all the answers yet," Edmonds muses.

Would he then keep specific title regulation? "I don't think you need to," Edmonds says. "Take advocacy, it's about highly trained advocates - but should barristers and solicitor advocates continue to be regulated by different bodies? At the moment the BSB and the SRA have different provisions regulating advocacy in their respective rulebook. Under our proposal, the single regulator would draw up a single set of rules."

What advocates would be called is yet unknown - maybe just that. But this also raises the related issue of risk management through regulated or reserved activities. At present, the LSB's idea is to apply a matrix taking account of the risk and nature of the service, and whether the individual or the entity should be regulated. It is just about workable for advocacy but is likely to be less so for many other areas.

 

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Malodorous regulation should be reformed

If the legal services market was a perfume, it would be called 'Complexity'. And if ever there was a pervasive odour around the regulation of legal services in Britain it is complexity. The sector is a mess and the Ministry of Justice regulation review is needed. Why? Because the Legal Services Act 2007 is the bastard child born of the turf wars between the warring factions of the legal profession. And six years later these wars are still being fought, by profession and regulator.

We have introduced a system of such startling complexity that it is a lawyers' delight. Even though it is outcomes focused and principles based, little agreement exists as to how it should be implemented. At a conference I argued that the UK system would lead the world. Another speaker expressed incredulity at the labyrinthine procedures that any would be-ABS had to go through to get a licence. In Australia, he said, incorporated legal practices were granted licences quickly. The key vetting was done afterwards to ensure it followed proper practices. To become an ABS in the UK is difficult, complex, expensive and could take as long as a trip to Mars. This is not what the 'new' regulatory system was set up to do.

One of the drivers of the Legal Services Board is to increase competition in the market and also to simplify the provision of services. Within the constraints of the LSA there is only so much the LSB can do. But trying to herd a bevy of regulators towards a new pasture is hard.

Time then to simplify and remove complexity. Yes, we should move to a single regulator for legal services. And furthermore we should move towards a single legal services supplier. Let's scrap solicitors, barristers and the other categories and go for a single supplier with specialisation. Perhaps consumers will begin to understand the market.

John Flood is Leverhulme Research Fellow and Professor of Law and Sociology, University of Westminster

 

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Beyond vested interests

David Edmonds' comments on the idea of a single regulator are not brand new and not likely to be greeted by a wave of enthusiasm from the other existing (and likely to disappear as a result) regulators. They represent, nevertheless, a rare instance of a regulator willing to abolish itself and look beyond the vested interests which tend to inhabit the corridors of legal power.

The "regulatory maze" which was identified over ten years ago is even more labyrinthine than ever before and from a consumer view is very difficult to negotiate. If Mr Edmonds' proposals for a modular approach to regulation are adopted then the new Legal Services Authority (or whatever is to be called) will achieve much. It is clear that his proposals stop short of fusion of the professions, as did David Clementi's paper in 2004, but they do take us one step closer to that end, which is one of many reasons why they will be widely criticised. I got the impression then that Clementi wanted an all-embracing Legal Services Authority, which may now be only five years away.

Stuart Bushell is legal director at SIFA (www.sifa.co.uk)