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‘Not the right time’ for regulation shakeup

By John Hyde » The Law Society warned the government last week that now is the ‘wrong time’ for a shakeup of legal services regulation – stressing that the profession will be focusing on supporting its clients through a period of unprecedented change in the wake of the Brexit vote.

Speaking before giving evidence to the House of Commons Justice Committee, chief executive Catherine Dixon pledged that Chancery Lane would work with solicitors, clients, the public and government to support a ‘calm transition’ after the UK voted to leave the EU.

But with a consultation expected soon on options including a formal separation of legal representative bodies from regulators, she pointed to the overriding need for stability.

The Law Society has a ‘vital role’, said Dixon, in convening legal expertise to help the country deal with the aftermath of the Brexit poll.

She alerted MPs to what she described as ‘the dangers of picking away at the finely balanced legal services sector when the sector, constitution and economy are going through a period of such unprecedented change’.

She also outlined some of the issues to be addressed when article 50 is triggered. These include: maintaining single market access; enabling solicitors to continue to practise across the EU; maintaining financial services passporting arrangements; ensuring the mutual recognition of judgments; maintaining extradition arrangements including the European arrest warrant; and maintaining England and Wales as the jurisdiction of choice, and the use of English and Welsh law across the globe.

The prospect of separation of the SRA and Law Society – along with other legal regulators from their representative bodies – was raised by the Treasury last year, with a consultation expected to be published this summer.

Dixon disagreed with SRA counterpart Paul Philip (pictured) during the evidence session over which body should ‘own’ professional standards, legal education and e n t r y into the profession, and the award of the professional title of solicitor.

She said that in the event that government is minded to review legal services regulation, the Society’s vision is for the profession to own and drive professional standards.

She said this would enable the regulator to concentrate on setting rules to ensure effective market regulation and concentrate on addressing the ‘mischief’ from which clients need protection. However, this would require a wholesale review of the current arrangements and now is not the time to embark on such a review, she added.

There was a divergence of opinion over the need for a review of the current arrangements. Philip said the retained links between bodies gave the perception of a lack of independence. But Dixon suggested that if there is a perception issue, then that issue should be dealt with – rather than embracing wholesale change to legal services regulation when the regulator already operates independently. Dixon said: ‘The current system is broadly effective. It would be the wrong time, given the outcome of the referendum, to undertake a full review of legal services.’

Philip claimed the SRA receives 20 calls a day from people confused about whether the regulator is part of the Law Society and said the status quo leads to a ‘crisis of confidence’.

He added: ‘Although we do treat them fairly and act in their interests, it is difficult to convince them that this is the case when we are essentially part of the Law Society.’

Dixon responded: ‘If there is a perception issue the key thing is we tackle [it]. If the public is confused we should be focusing on public legal education.

‘It would be a bit of a sledgehammer to crack a nut to go through a complex process of changing primary legislation to change what seems to be a perception issue.’

Philip rejected the idea the Society could manage and drive professional standards. ‘Professional standards must be owned by the regulator,’ he said. ‘It is the standards the public can expect of a solicitor: to give it to the organisation that represents solicitors would appear to be a conflict of interests.’

  • The SRA’s chief executive Paul Philip also told the select committee he is ‘not sure’ much more can be done to tighten the ban on referral fees – despite misgivings about how firms have approached it.

Under the Legal Aid, Sentencing and Punishment of Offenders Act, personal injury firms have been banned from paying referral fees since 2013 but some continue to flout the spirit – if not the letter – of the law.

Philip told the committee that a small minority of the profession is ‘doing stuff they ought not to do’, adding: ‘Claims management companies essentially engage in a variety of activities, some of which are legitimate, some of which are definitely not legitimate in terms of advertising and harvesting legitimate claims.

‘The extent to which they do that tastefully or indeed ethically from time to time is questionable. We have a few such solicitor firms in our disciplinary processes at the moment.’

Questioned by Conservative MP Alex Chalk on whether stricter measures might be possible, Philip said the SRA was ‘not too sure’ what more could be done.

‘It is quite difficult because people get round it,’ he said.

[Courtesy: The Law Society Gazette]