Time for the Law Society to cut the cord

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Posted by Neil Rose, Editor, Legal Futures

Law Society HQ: a £38m nest egg

Anyone who has seen the Law Society council in action over the past 20 years will not be surprised by the criticism levelled at it by chief executive Catherine Dixon in her brutally frank resignation letter last week.

Of course, not many people have actually seen the Law Society council in action over that period, but I am in the small group who have.

In truth, since I left the Law Society exactly nine years ago, after 12 years working on the Gazette, I have only been back to sit in on council meetings about three times. This is in large part because the council is now something of a sideshow – the real decisions that affect the solicitors’ profession are made by the board of the Solicitors Regulation Authority (SRA), whose meetings we attend religiously.

This makes it all the more frustrating that the council’s ponderous structure is inhibiting the Law Society from going about the work that is still its preserve.

The other reason I don’t go is that the council conducts hardly any of its business in public now. Meetings are divided into public and private parts, and when I first started reporting on them in the late 1990s, a good amount was held in public.

Today, typically, the report of the chief executive is in the public session, along with the odd technical change to the bye-laws, but that’s about it. It’s generally not worth my effort, even though I can walk there from my office in less than 15 minutes.

Indeed, last time I went, about six months ago, I was standing outside the door (having been asked to leave while the council briefly went into private session) and overheard someone loudly telling his fellow council members to be careful what they said because I was there.

I had attended for any discussion of the budget, in the wake of the £7m loss caused by the Veyo fiasco and subsequent plans to spend £61m (yes, you read that figure right) on new IT systems across the Law Society and SRA. There was no such discussion, at least in public.

The growing culture of secrecy can also be seen in the Law Society’s approach to publishing the working papers of its boards and committees.

Until a couple of years ago, it made much of this information available promptly online; now only the four main boards that oversee the committees and report to the council are included in the governance part of the website, and in the past six months these have pretty much given up publishing anything; most of what they do is dealt with in private anyway.

Try also finding papers for the council anywhere on the Law Society website – I haven’t been able to and the last summary of a meeting was from February last year. How about publishing all the papers coming out of the current governance review and hold the debates in public, rather than just every now and again putting out statements that contain little by way of detail or reasoning?

Before going on, I want to distinguish between the work of the council and that of the specialist committees, like the company law or family law committee. Something like 300 solicitors volunteer for these and they do a huge amount of valuable but unsung work in their specific areas of law, influencing policy and procedure on a regular basis. It is what goes on above them that is the problem.

And that problem is that the council is still structured like it was in the days before the SRA existed, when it had important decisions to make. Now, it is more of a talking shop. While it has policy positions to agree that are important to the profession, the Law Society does not have the power to actually do anything anymore – it can only influence, argue and lobby. But this does not stop there being a large bureaucracy sitting behind it.

There are 100 council members to keep happy – 61 voted in to represent 42 geographical constituencies and 39 representing special interest groups and areas of practice (some elected, some appointed). Around a third are women and 14% from a BME background.

Over the years it has been something of a retirement home for men winding down from practice (when I first started attending, the council member representing women solicitors’ interests was a man), but the list of members today includes many well-known solicitors who contribute significantly to the profession beyond Chancery Lane.

Thus the council is largely democratic – indeed, it is this desire to cover every angle that has made the body as bloated as it is – but in reality elections are often uncontested and few vote when they are not. Can you name your geographic constituency member?

They don’t do it for the money. Council members are paid an annual expense allowance of £1,295 (£3,885 when they chair a board or committee). That includes six or seven meetings a year at Chancery Lane, and meetings of any boards or committees of which they are members.

There are some perks, like fancy black-tie dos with ministers, judges and the like, and council members are often accused of being turkeys unwilling to vote for Christmas when it comes to reducing its size. But these are intelligent people supposedly serving the profession; you would hope they can put that above self-interest.

Certainly there is a need to ‘do’ something, to justify their existence perhaps, and this explains why the society has been so reluctant to cede such control as it has over the SRA. Named as the approved regulator of solicitors in the Legal Services Act 2007, the Law Society is nominally in charge, but has delegated its regulatory powers to the SRA, which remains part of the Law Society ‘group’.

Thus I have reported for years on tensions between the two bodies as the society has tried to maintain some hold over regulation – from one point of view, this is the society fulfilling its role as approved regulator, from another this is the society trying to inappropriately influence supposedly independent regulation. It has also led to intricate oversight structures and yet more bureaucracy.

But as I have written several times before, the nub of this whole issue is the money that the society is currently allowed to levy on the profession for its non-regulatory work. I would recommend you read this blog from last February for a full explanation and discussion, but in short section 51 of the 2007 Act allows the society to recoup the cost of so-called ‘permitted purposes’, activities that are not regulatory but are seen as being in the public interest, such as advice to solicitors on practice management and law reform work.

Around a third of money raised from practising fees, about £35m, goes to the Law Society under this arrangement. Despite its commercial activities, this is overwhelmingly Chancery Lane’s main source of income.

The society has grown fat on this guaranteed source of income. It does not have to prove its value to the profession because the money rolls in come what may. No wonder it is fighting like an alley cat against the notion of the SRA achieving complete independence – that is likely to trigger the end of the gravy train.

Ask yourself whether you would pay, say, £200 to be a Law Society member if it became voluntary. How many of the 130,000 practising solicitors would think it money well spent?

Crucially, I believe its funding also acts as a brake on the Law Society’s work.

Institutional memory recalls 1999, when the then Lord Chancellor, Derry Irvine, reacted so badly to a campaign the society was running on legal aid cuts that the forerunner of section 51 was suddenly inserted into the Access to Justice Bill. The prospect of restrictions on what it could do with practising certificate income was received with horror at Chancery Lane.

I think that this fear persists, that the Law Society holds back, because the income could now be taken away completely if it goes too far. The government may have announced in December 2015 that it would legislate to make the SRA independent, but it has not yet. It may be the sword of Damocles but I bet the delay is also seen as a last-ditch chance to change ministers’ minds.

Instead, I think maybe it is time for the society to cut the cord itself, let the SRA and guaranteed income go, and stand on its own two feet. Represent the profession and the public interest without fear or favour. Be truly responsive to members’ needs and views.

Maybe even devolve some activities (the society instinctively centralises) to the likes of the City of London Law Society and other local law societies, the Association of Personal Injury Lawyers, Resolution and the like, rather than replicate or even compete with such bodies, such as in the training arena. Be at the centre of a federal community without trying to control it.

It would be an extremely brave decision, no doubt, and money would be a problem. The answer to my earlier question is surely that only a relatively small proportion of solicitors would pay towards its upkeep voluntarily.

So after perhaps another year of practising money to prepare, its early years could be funded by selling the Chancery Lane HQ or at the very least the ‘grace and favour’ residence for the president around the corner in Carey Street. Last year’s annual report recorded the open market value of the Chancery Lane building at £38.2m, and £6m for Carey Street. That would keep it going for a bit. A new location for a new Law Society.

The council needs to be completely rethought. It has never embraced reform – when Baroness Usha Prashar was commissioned to review the governance in the early 2000s, her idea of a 30-member council was quickly dismissed – but it needs to face up to its own shortcomings.

The speed of decision making and response from the society at the moment is feeble, and while that is not only the fault of the council, a much slimmed-down governing body could provide the leadership the profession needs. Appoint it robustly, don’t have fig-leaf elections. Is geographic coverage that important? Are the interests of solicitors in Hampshire that distinct from those in Teesside?

Catherine Dixon has finally lifted the lid on an age-old problem. She has issued a challenge that the whole profession has seen. The Law Society has to respond decisively. Which is exactly why I fear that little will change.