Should the LSB be abolished?

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Posted by Neil Rose, Editor, Legal Futures

Parliament: strong opposition to Public Bodies Bill

Here’s an interesting thought I’ve heard of late: in a few months’ time, will we need the Legal Services Board (LSB)?

When it was set up, the board’s three main purposes were to secure the independence of regulation from representation, set up the Legal Ombudsman, and deliver alternative business structures (ABSs). The first two of these have been done, with the other due in less than eight months.

As Russell Wallman, head of government relations at the Law Society, put it to me recently: “Once the immediate work of the LSB is concluded and ABSs are in place, what is it producing for the £5m it is costing the profession?” (To be clear, he was not asking this question in an aggressive manner.)

This is undoubtedly a question of our quango-culling times. The LSB is in the now infamous schedule 7 of the Public Bodies Bill, which would allow ministers to bring it within the abolishing powers of the bill by ministerial order alone (although this is under sustained parliamentary attack).

A less high-profile element of this debate is the growth review being carried out jointly by the Treasury and the Department for Business, Innovation and Skills. This aims to ensure that all government departments are doing everything they can to help the country grow and recover from recession.

Chancellor George Osborne should report on its progress in next month’s Budget, and a BIS spokesman confirmed to Legal Futures that professional regulation/self-regulation form part of the review. In fact, I had heard from a good source that the likes of the Law Society and Bar Council were using the review to push for abolition of the LSB, but Mr Wallman denied this.

The final element is pressure from the frontline regulators, who are moaning about what they see as the unnecessary work a micro-managing LSB puts them to. 

Arguably the ombudsman can largely look after itself without much help from the LSB, while ABSs will mainly be the concern of the frontline regulators. Independence will need more active oversight, however, to ensure that the separation does not get blurred and to resolve any disputes that occur.

Also on the LSB’s work programme are:

• Putting consumers and the public interest at the heart of regulation (which it mainly does through listening to its consumer panel and commissioning research);
• “Developing a workforce for a changing market” – this encompasses the LSB’s work on diversity, which some people think should not the concern of an oversight regulator;
• Developing excellence in legal services regulation – having built the machinery for oversight regulation, this now mainly means considering applications for new regulators, ABS regulators and so on; and
• Developing research and public legal education – it has a programme for the former but there has been no evidence of the latter to date.

Could all of this be done equally as well by the Ministry of Justice? Probably, but the principal argument against such a move would, of course, be the independence of the profession from government. I’ve blogged before about the importance of this from an international perspective, if nothing else, but it is worth bearing in mind that most of the ‘big’ decisions the LSB makes – such as approving ABS regulators or changing the list of reserved legal activities – have to be agreed and enacted by the Lord Chancellor anyway.

Saying that, I would instinctively feel happier if the recommendations that went to the Lord Chancellor came from an arm’s length body, rather than from inside his own department. That, essentially, is the limit of the profession’s independence, but it is arguably better than before the LSB, when the Lord Chancellor (and others) had a more direct oversight role.

As an issue, this will be a slow-burner, especially as there is no financial gain – for the government, at least – in abolishing the LSB. But it is one to keep an eye on.