LSB backs law centres in call for suitable regulation

Law centres and other not-for-profit legal services organisations should be allowed to charge for advice, the Legal Services Board has said as it urged the Solicitors Regulation Authority to make the setting up of a specific regulatory framework a priority.

Law centres have been left in regulatory limbo after the Legal Services Act came into effect, with the SRA acting as legacy regulator for the entities while also regulating the individual solicitors they employ, and the Law Centres Federation providing a professional structure for its members.

Under SRA rules they are also not allowed to charge for services, which has led some such as Islington and Rochdale law centres to set up separate vehicles to enable arm’s length charging – a wholly-owned community interest company, Rochdale Legal Enterprise, in the case of Rochdale, and Islington going down the alternative business structure route for its own CIC.

The current situation was not appropriate, according to LSB chief executive Chris Kenny (pictured) following the publication today of the LSB’s response to its consultation earlier this year on the regulation of not-for-profit legal services providers, also known as ‘special bodies’.

“Special bodies are a vital component of the justice system,” Kenny said. “They need a regulatory framework that is proportionate and reflective of the needs of consumers and organisations alike, but does not generate unnecessary costs and complexity. Our consultation has concluded that such a framework does not exist at present.”

The Legal Services Act provides for a transition period at the end of which frontline regulators are expected to have put in place a regulatory framework for special bodies.

Following its consultation on the issue, which ran between April and July, the LSB has now said that not-for-profit entities should be able to start making applications to become licensed organisations under the Act by April 2014 and be operational a year later.

Kenny said he hoped setting these deadlines would “provide certainty to special bodies and incentives to regulators to develop the necessary proportionate controls in the course of 2013-14. But if the sector is to be able to seek new opportunities to help meet the inevitable challenges ahead, it also needs to see an early end to existing and unnecessary regulatory controls”.

In its response to the LSB’s consultation, the Law Centres Network said it was “extremely concerned by the Solicitors Regulation Authority’s lack of response to the Law Centres Federation’s request for a waiver to allow centres to charge for some areas of advice.”

It called for the removal of regulatory restrictions preventing law centres from charging for some of their services “as soon as possible”.

“We do not see the risks of charging presenting any different issues or be any greater in non-commercial bodies than private solicitors,” it said.

The response also expressed concern over the costs involved in applying for ABS status, the ongoing fees, and whether they would be proportionate to the regulatory risks posed by law centres.

A spokesperson for the SRA said: “We are aware of the LSB’s views and will be discussing them in due course. We fed back our position to the LSB during the consultation, and we will now have to decide on the best way forward.”