News In Focus
Further regulation reform needed in England & Wales, interim report finds
Significant shortcomings and challenges remain despite the reformed regulation of legal services in England & Wales, according to the interim report of the independent review currently taking place.
Professor Stephen Mayson, of the Centre for Ethics & Law in the Faculty of Laws at University College London, is undertaking the review of the system brought in by legislation in 2007, which introduced an overarching Legal Services Board and allows legal services providers to be owned by non-lawyers. He was not appointed by the Government but is exploring issues raised by the Competition & Markets Authority market study in 2016 and its recommendations, to assist the Government in its assessment of the current regulatory framework.
His interim report finds that the system still suffers from problems including:
- inflexibility arising from too much statutory prescription;
- competing and possibly inappropriate regulatory objectives;
- an "anachronistic" set of reserved legal activities that do not necessarily include all activities that ought to be regulated;
- additional burden and cost in relation to some activities being regulated that do not need to be, resulting in higher prices to consumers;
- the unsatisfactory nature of the separation of regulation and representation;
- the existence of unregulated providers who cannot be brought within the current regulatory framework;
- the prospect of LawTech that will be capable of offering legal advice and services, beyond the reach of the current framework;
- a regulatory gap that exposes consumers to potential harm when some activities are not regulated when they ought to be, and puts qualified practitioners at a competitive disadvantage;
- increasing prices of private practice lawyers, reducing further the availability and affordability of legal services and encouraging greater self-lawyering and litigants-in-person, or more use of unregulated providers and LawTech;
- consumer confusion due to the existence of both regulated and unregulated providers for the same legal services, and a profusion of differently regulated professional titles, along with inadequate or incomplete consumer protection; and
- a consequent risk of low public confidence in legal services and their regulation.
Professor Mayson notes that the current structure presents a narrow "entry gate" to regulation, which only applies to those holding a professional title and carrying on a reserved legal activity – but then extends to all the services carried out by such persons.
On the other hand, an individual or business offering only non-reserved activities, and not otherwise subject to legal services regulation, cannot be so regulated, even if they might wish to offer the benefit of regulatory protection to their consumers.
However, rather than fill in the gaps left by the 2007 Act, he explores an alternative approach to regulation under which all providers of legal services should be capable of entering the regulated domain at least at a basic level ("after-the-event"). A risk-based approach would then determine whether additional during- and before-the-event requirements should be applied.
The working assumption of the interim report is that all legal services (to be redefined) would be regarded as low risk unless they are separately defined and identified as either "intermediate risk" or "high risk" services requiring more targeted regulation.
Professional titles would not disappear, but in principle the same requirements should be applied to those who hold a professional title as to those who do not. "To do otherwise would be to create an unlevel regulatory playing field", Professor Mayson states in a blog summarising his paper.
The potential benefits of his alternative approach, he believes, are:
- it would be easier for consumers to check whether their provider or prospective provider is registered or not (including for higher-risk activities);
- different levels of regulation would be applied to providers based on the risks of the services that they actually offer;
- this would offer a more targeted and proportionate response to the public and consumer risks within the legal sector;
- there would be an increase in regulated access, competition and innovation in legal services;
- it would constrain the ability of unregulated (including struck-off) providers to set themselves up as paid advisers in respect of non-reserved activities;
- it could apply to providers of LawTech that substitutes for lawyers in ways that the current framework cannot.
Professor Mayson now wishes to consult on whether such an approach would sufficiently address the identified shortcomings of the current framework, and whether these projected benefits would be worthwhile. He is inviting responses from now until 29 November.
Click here to view the interim report.