The Legal Services Board – reforming legal regulation Alex Roy, Head of Development and Research.

The Legal Services Board – reforming legal regulationAlex Roy, Head of Development and Research

The Legal Services Act 2007 and the LSB

What organisations did the Act create?

– The Legal Services Board – LSB

– The Legal Services Consumer Panel

– The Office of Legal Complaints – The Legal Ombudsman

About the LSB

– Nine board members

– 30 Staff

– Annual expenditure of under £4.6million in 2011/12

– Funded by a levy on the profession

The regulatory objectives

– Protecting and promoting the public interest

– Supporting the constitutional principle of the rule of law

– Improving access to justice

– Protecting and promoting the interests of consumers

– Promoting competition in the provision of services

– Encouraging an independent, strong, diverse and effective legal profession

– Increasing public understanding of the citizen’s legal rights and duties

– Promoting and maintaining adherence to the professional principles

Standards of regulation, education and training

Regulatory activities should be:– Transparent

– Accountable

– Proportionate

– Consistent

– Targeted only at cases in which action is needed

The board must assist in the maintenance and development of standards in relation to:

– The regulation of lawyers by Approved Regulators

– The education and training of Lawyers

Oversight regulation and our vision

Oversight

– Not watching and reacting but involvement and intervention

– Leadership in new ideas and future directions

Vision for the market (the unofficial version)– Affordable legal services delivered at the right quality for consumers

– Delivered by:

– minimising the burden of regulation

– reforming regulation so that it encourages innovation

6

Legal Services in England & Wales331k people employed in legal services in UK

UnreservedUnknown number of persons offering unreserved

services in E&W. In excess of 130,000 people

Legal practice

NFP

E.g. 769 CABs,

56 Law Centres

For Profit

E.g. –

1,823 members of

the Society of Will Writers

In House

NFP For Profit

Reserved147k persons authorised to offer reserved services

80% Legal Practice persons authorised to offer

reserved services

Solicitors

- 87,270

Barristers

- 11,706

Others -

9,672

20% In House persons authorised to offer

reserved services

Solicitors – 23,311

Barristers - 3,040

Others – 1,557

The market

Regulation of legal services

Approved Regulators

SRA

BSB

ILEX PS

CLC IP RB

Master of the Faculties

CLSB

Legal Services Board

Ministry of Justice

Professional bodies/trade associations

Consumer Law

Competition Law

Trading standards

Office of Fair TradingEuropean law

Consumer Bodies

Empowered consumers e.g. Large corporate

Other regulators e.g. FSA, ACCA etc.

MediaCustom &

Practice

Case law

The Approved Regulators

Approved regulator Regulatory body Number of authorised persons at 1 April 2012

Number of entities

The Law Society, The Solicitors Regulation Authority (SRA) 120,202 10,202

The General Council of the Bar, The Bar Standards Board (BSB) 15,204 N/A

The Chartered Institute of Legal Executives (CILEX) ILEX Professional Services (IPS) 7,907 N/A

The Chartered Institute of Patent Attorneys (CIPA) The Intellectual Property

Regulation Board (IPReg),

1,745*170

The Institute of Trade Mark Attorneys (ITMA) 639*

The Council for Licensed Conveyancers (CLC), 1,071 215

The Faculty Office 858 N/A

The Association of Costs Lawyers (formally ALCD)

Costs lawyer Standards Board (CLSB) 565 N/A

* Joint registrants are shared between CIPA and ITMA

Our early priorities

– Independence of regulation

– Redress for consumers when things go wrong

&

– ABS liberalising the market to increase competition

Priorities for 2012-15

The strategic priorities for the LSB for the coming three-year period:

– Assuring and improving the performance of approved regulators

– Helping consumers to choose and use legal services with confidence

– Helping the changing legal sector to flourish by delivering appropriate regulation to address risks

Which means… 3 areas of work.

1. Looking at changes to regulators rules and authorisations

2. Working with regulators to improve their regulation

– Outcomes

– Risks

– Entities

3. Improving the regulatory environment and encouraging innovation

– Regulatory framework (reserved activities)

– Workforce (education, diversity, quality)

– Developing the evidence base and evaluating

Focus on regulatory framework: The Reserved Activities

1. the exercise of rights of audience (i.e. appearing as an advocate before a court);

2. the conduct of litigation (i.e. issuing proceedings before a court and commencing, prosecuting or defending those proceedings);

3. reserved instrument activities (i.e. dealing with the transfer of land or property under specific legal provisions);

4. probate activities (i.e. handling probate matters for clients);

5. notarial activities (i.e. work governed by the Public Notaries Act 1801); and

6. the administration of oaths (i.e. taking oaths, swearing affidavits etc).

Reserved Activity

Authorised Person

Approved

Regulator

Legal advice

13

Individuals with protected titles

EntitiesOther individuals

Existing six reserved activities

New activities?

Regulation

Focus on regulatory framework: Structure of regulation

Prevention Conduct RemediationWhen?

Tools? Market access and structure

Pricing

Services

Information

Systems and processes

Behaviour

Compensation

e.g. Training requirements

e.g. Ombudsman Scheme

e.g. Client money

e.g. Referral fee disclosure

e.g. Code of ethics

e.g. Maximum prices

e.g. Minimum service standards

Focus on regulatory framework: Possible regulatory tools

Extension of reserved legal activities (s24/ 6 LSA 2007)

• Lord Chancellor may extend (or reduce) list of reserved activities

• Only upon recommendation of LSB

Formal process set out in LSA 2007 Schedule 6• LSB has powers to investigate whether to recommend list of reserved activities

• Consultation and advice are built into process

Focus on regulatory framework: Changing the reserved activities

Focus on regulatory framework: Looking at wills

Surveys

Shadow shopping

Call for evidence

Legal Services Consumer Panel

Call for evidence

Individual discussions

Joint LSB, Consumer Panel, OFT, SRA team

Business Interviews

Consumer survey

Joint LSB, Consumer Panel, OFT, SRA team

Testing will quality

Interviews with clients

101 wills assessed

400 case studies and 20 policy submissions

97 interviews completed

500 consumers surveyed

All clients submitting wills interviewed

Execution Pass Quality Pass

SolicitorAll 98% 78%Complex 95% 81%Simple 100% 75%

Specialist will-writerAll 92% 79%Complex 93% 73%Simple 89% 89%

Bank or affiliate groupAll 90% 90%Complex 80% 80%Simple 100% 100%

Paper self-completionAll 75% 63%Complex 75% 75%Simple 75% 50%

Online self-completionAll 89% 56%Complex 86% 43%Simple 91% 64%

Total 92% 74%

Focus on regulatory framework: Shadow shopping results

Inadequacy – where the content of the will does not account for an estate fully, fails to make adequate provision or neglects to take certain outcomes in to consideration. It also includes wills which are legally invalid. Requirements – where the client’s requests have not been met (as specified in the testator questionnaire) through omission or conflicting specification. Legality – where the actions specified in the will are potentially illegal; Inconsistency – where the language, logic and/or content of the will is contradictory; Detail – where items, people and requests are described in insufficient detail; and Presentation – where the language and format of the document is lacking.

Focus on regulatory framework: Shadow shopping reasons for failure

1. Shadow shopping demonstrated that quality of wills inconsistent and harming many consumers

2. Case study evidence that arrangements for safe-keeping of wills by will-writing companies inadequate

3. Consumer survey reveals significant concerns over sales practices, particularly by will-writing companies

4. Compensation arrangements patchy and largely unenforceable outside of regulated firms

5. Need for reservation and appropriate regulation

Focus on regulatory framework: Will-writing conclusions

1. LSB is a small, ambitious organisation with potentially a short lifespan

2. The Legal Services Act 2007 has led to a significant drive to reform the legal services market in England and Wales

3. Significant reforms have already been introduced – independent regulation and Alternative Business Structures

4. The next phase of work is challenging but could significantly improve the market for legal firms and consumers

5. You may have some questions...

Conclusions