The themes of 2011, part 1

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Posted by Neil Rose, Editor, Legal Futures

Equality and diversity: forefront of legal argument

It is hard to resist the journalist’s natural inclination at this time of the year to fill space with predictions for the year ahead. But 2011 is a hard year to predict – 6 October is unlikely to be the big bang so beloved of headline-writers over the years (myself included), although undoubtedly some organisations will seek first-mover advantage by making announcements that day.

But it is worth looking at some of the issues I expect to be covering in considerable detail over the next 12 months on Legal Futures.

Alternative business structures

There will, of course, be much to write about alternative business structures in the year to come, and so I won’t dwell on them here except to flag up one seemingly esoteric but actually crucial issue that is really starting to exercise minds: the separate business rule. Can the regulators draw their rules tightly enough to stop a big business structuring their legal offerings so that the ABS just focuses on reserved work, while the unreserved work is hived off into an unregulated business?

This leads onto the issue of reserved legal activities, but as the Legal Services Board (LSB) won’t , and has not seemingly done much work on the wider issue, I don’t suppose we’ll see much substantive progress on that front in 2011. Goodness knows when the will-writing decision would have been made had it not been, erm, fast-tracked.

The Legal Services Board

I am hearing more and more complaints from the approved regulators about what they view as the LSB’s micro-management and excessive requests of information. The regulators won one battle when it forced the LSB to back down over its intention to conduct the education and training review itself. None has yet wanted to go public in the interests of good relations, but maybe their frustrations will eventually get the better of them.

The outcome of the stand-off over quality assurance for advocates will be an interesting one. Having talked tough, the LSB backed down feebly over its demands for immediate lay majorities on the boards of the Solicitors Regulation Authority and Bar Standards Board (which now won’t happen until 2013 and 2012 respectively). If it doesn’t get its way over QAA (and I should think the Bar Standards Board will fight its corner hard on this one), will it see through its threat to take action this time?

Also, the three-year term of LSB chairman David Edmonds is up this spring. I believe he wants to be reappointed and for the Ministry of Justice not to do so would arguably send a mixed message on ABSs.

Equality and diversity

It is hard to get away from equality and diversity on many fronts, especially with the Legal Services Board having unveiled a model of the questionnaire it expects staff at every law firm, chambers and other legal business under its jurisdiction to carry out. It is notable how often we are now seeing arguments over the impact of various reforms – from legal aid to naming and shaming lawyers against whom the Legal Ombudsman has upheld complaints – on black and minority ethnic lawyers as one of the main reasons not to move forward with them.

The main diversity ‘strands’ are well known, but it says much about the legal profession that class is an extra element in law’s diversity debate, pushed along by the Milburn report on fair access to the professions. The survey issued shortly before Christmas about City law firms discrimination against those with working class accents, while the cause of some amusement, also struck a bit of a chord. This is a deep and multi-faceted issue for another day.

There are some more themes to pick out, and I will continue this next week.

Readers Comments

• Richard Moorhead says:

  January 14, 2011 at 11:25 am

  Interesting. The separate business/unreserved work issues are potentially the most important. They lay bare the unresolved tensions underlying both the legal services act and the multi-faceted (or fragmented, take your pick) identity of solicitors. I can see this causing difficulties within the legal education review. The most interesting thing to emerge, for me, from the College of Law/Legal Service Institute paper was that they were proposing that the solicitors’ qualification should not cover reserved activity and was pitched, in reality, at the needs of the commercial firms (who of course dominate entry into the professions). That is they proposed a professional qualification based on an area where (as things stand) the regulators feel there is no need for regulation, with top-ups where regulation IS needed. Unless a clear regulatory rationale is developed for the idea, It is difficult to see this as anything other than anti-competitive.

  For me, the long-term problem posed to the solicitors’ profession is not just ABSs, but this kind of incoherence. In reality, they are not one profession but several: will the markets or regulators be the first to recognise this and respond?

  Reply
• Ian Dodd says:

  January 17, 2011 at 11:54 am

  My, my – what an introspective, fact-denial, protectionist article this is. The legal profession ought, perhaps, to wake up to the fact that folk like the LSB are representing the will of government and the wishes of consumers. The medieval management methods loved by so many are loking increasingly unwanted, outdated and endangered.
  It’s time for some empirical changes arounf here.

  Reply
• Duncan Finlyson says:

  January 17, 2011 at 5:41 pm

  Whilst I believe, and have stated on this site on many occasions, that many in the legal profession need to wake up in terms of their approach to business, I disagree with Mr Dodd completely that this is either a fact-denying or a protectionist article. Indeed, it raises three very cogent issues which need to be addressed as we move forward into our brave new regulatory world.

  The changes which are taking place may ultimately benefit the consumer. However, I think it is a fallacy to pretend, for example, that the public will be better served by a large organisation, driven purely by profits, than by a small local firm accountable to its own community. One has only to look at the banks to see how little the needs of consumers can figure in the process of business.

  Yes we need to make changes, but we need also to avoid throwing the baby out with the bathwater.

  This article highlights that there are three areas we need to be aware of when making changes:

  1.We need a level playing field. As long as the SRA clings to restrictions such as the separate business rule which impairs the abilities of existing law firms to compete effectively, but does little to curb the activities of potential ABSs, then we will not have competition but simply a new form of protectionism. The separate business rule needs to be reviewed now – not in 9 months time when the ABSs are already with us.

  It should be replaced with a requirement that reserved work be handled only through a regulated business and that solicitors should be free to undertake all other forms of work – whether or not it is of the kind that solicitors can undertake – through other business PROVIDED it is made clear that the business is not a regulated practice.

  2. The LSB, and for that matter the Legal Services Consumer Panel, have their own agendas – and they are not always to be confused with operating in the public interests. Organisations of this sort operate, to an extent, in a philosophical vacuum remote from the needs of the real world. They become, to an extent, victims of their own rhetoric – as has happened on many occasions in the past with bodies such as the FSA and more recently the SRA.

  3.Diversity is always a difficult area to express any opinion about – since any opinion which puts forward a view that in any way contradicts the “diversity proponents” is immediately branded as discriminatory.

  Proposed changes to the ways in which regulatory matters are taken forward should be looked at holistically. If changes are in the general interests of the majority then the interests of a minority should not be allowed to prevent them from happening.

  Reply

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