Is a return to self-regulation really on the cards?

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Posted by Neil Rose, Editor, Legal Futures

Chancery Lane: will it once more be master of all it surveys?

Two months ago, I blogged about the Law Society’s surprising submission to the Ministry of Justice’s legal regulation review, which essentially argued for a return to self-regulation, save that disciplinary and enforcement activities would remain the preserve of a much slimmed-down Solicitors Regulation Authority.

On this, at least, the Bar Council is at one with its solicitor counterpart, a point reinforced at last weekend’s bar conference by chair Maura McGowan QC, who laid into the Legal Services Board (LSB) during her address to members.

I was not convinced by the argument then, and I’m not now, and I thought it was just a shot in the dark. But neither body would have made such a submission, I’m told, if they hadn’t been given an indication that it would be entertained at the Ministry of Justice.

I’m now revisiting this issue because from talking to senior figures in the profession, I have a clear sense of growing confidence that the Lord Chancellor, Chris Grayling, is indeed thinking their way. One told me to expect an announcement as soon as January.

Though ultimately primary legislation would be required – which supporters say could possibly be achieved before the 2015 election if a legislative vehicle could be found in short order – the Law Society says much could be done before then by having the LSB redraft the internal governance rules with which the approved regulators have to comply.

Under Chancery Lane’s vision, the LSB in turn would be reformed, made smaller, chaired by a judge and have a far less proactive role than now.

I think this is all being sold to Mr Grayling as an easy pre-election ‘win’, part of the government’s deregulation narrative. I also cannot help but wonder (and I’m not alone in this) whether it could be the sop for legal aid cuts. It recalls the finding of Professor Stephen Mayson a few years back that the conveyancing monopoly came about in 1804 when Prime Minister Pitt the Younger wanted to appease a profession unhappy with his plans to increase taxes on articles of clerkship and practising fees.

Certainly the Lord Chancellor has been talking up the need for deregulation – most recently before the justice select committee – and more than proved his anti-regulation pedigree a few months ago by refusing to make will-writing a reserved legal activity, despite unanimous support from all sides for such a move.

In a message to candidates to become the new LSB chair next spring, Mr Grayling said they must be “passionate about creating an environment in which regulation is as light touch as possible in order to secure quality and propriety for consumers”.

At the same time, he said, “we need a more diverse and innovative legal services market that attracts new providers, offers new opportunities for the current and future legal profession and that meets the needs of current and future consumers.

“Underpinning that we need a modern regulatory framework which encourages entry and innovation, is cost effective, proportionate and flexible in its operations and in which consumers, the public and industry have confidence.”

This last part is one of the biggest stumbling blocks to rolling back the Clementi reforms. I find it hard to see how the Law Society council or the Bar Council can credibly argue that they are able to put the public interest before the profession’s.

A decade ago Sir David Clementi was sure they couldn’t – those running these bodies invariably conflate the two, in my experience – hence the separation of regulation from representation directed by the LSB.

I cannot see what has changed since, except that the LSB has royally got up the noses of those it oversees in the past five years or so. Revenge is nigh, perhaps.

As I have said in the past, given the stark choice, I would favour a move to a single independent regulator over a return to self-regulation. Saying that, the idea of a large bureaucracy divorced from the reality of legal practice doesn’t fill me with joy either.

I take the point made by Bar Council vice-chairman Nick Lavender QC, at a press conference during the event on Saturday, that a new profession of regulators is emerging – it has long bothered me that the CVs of those appointed to various boards and committees tend to be littered with similar roles in other professions as they ride the quango merry-go-round.

To go down the other road, however, would require the kind of fundamental reappraisal of the fitness for purpose of the Law Society council and Bar Council that in the case of the former (I can’t speak to the latter, but can guess), it has historically been unwilling to engage in.

It is fair to note, however, that the Law Society told the Ministry of Justice that its governance would need to be reformed, with lay representation introduced. I suspect it would not see the need for major surgery, however; my experience of the council over many years would indicate otherwise.

Certainly in its current form I cannot see the Law Society council regulating solicitors again with anything approaching credibility. Could it objectively set criteria for licensing alternative business structures, for example? Not a chance.

And while discipline would be dealt with at an arm’s length basis, it would be the council setting the terms of engagement for that discipline in the first place.

I struggle to see the public or MPs having much confidence in a system where solicitors write their own rules, even if a few non-lawyers had been involved in the process.

There is arguably self-interest woven into the very suggestion of a part-return to self-regulation – the society faces a continuing struggle to justify its existence to its members and the prospect of solicitors being able to choose whether to contribute to the society’s work, rather than it being wrapped up in compulsory practising fees as now, is no longer fanciful. This move would secure its future.

But equally the Law Society is no doubt operating with the best of motives in what it sees as the profession and the public’s interests.

That it can be doing both at the same time proves the point. The Law Society and Bar Council may get their way, but I for one will take a lot of convincing that it would be for the better.