Lack of diversity should raise flag about firms, LSB tells regulators

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Diverse workforce: regulatory reward for good performers

Legal regulators should in future make workforce diversity one of the factors when they rate the risk that firms present to the public, and focus supervision on those with the worst records, according to a report.

The Legal Services Board (LSB) report, Diversity data collection and transparency, on regulators’ progress against LSB guidance, also warned that regulators’ performance in ensuring diversity would be judged on whether they made information about workforce characteristics available prominently to consumers.

The LSB highlighted the importance of gathering accurate data. While improvements in diversity in the legal sector had taken place, they were “predominantly at the lower levels of the profession”.

An expected “trickle up effect” had not happened, it said, meaning that decisions in legal businesses on such things as work allocation and reward, and the measurement of success, had to be changed.

The report revealed large disparities between the success of regulators in collecting basic monitoring data on such things as age, gender, disability, ethnic group and religion.

The worst offenders were the Bar Standards Board and the Chartered Institute of Legal Executives, which both managed to extract the information from only around one in 20 among their ‘regulated community’. This performance contrasted wildly with, for example, licensed conveyancers and solicitors, which obtained information from 56% and 42% respectively.

The board tentatively put the differences down to the way each of the regulators went about collecting diversity information. It concluded: “A great deal more work is needed to ensure sufficient collection and publication of data across the profession.”

In future, the LSB would expect regulators to use diversity as a criterion for rating the risk presented by all legal businesses, while “focusing supervision on those with the poorest diversity record”. It would expect regulators to do more to tailor their “regulatory requirements to recognise and reward firms that are doing well”.

Further, the LSB would consider that a regulator had done an “exemplary” job if it insisted on diversity information being published – for instance if “information is made available in a prominent way, [such as] a directory for regulated entities links through to diversity profiles so that consumers can access the information if they choose”.

The report singled out for praise the involvement of Solicitors Regulation Authority equality and diversity staff in supervision visits to firms, and including compliance with diversity requirements in its assessment of risk.

At a roundtable meeting with the LSB last month, regulators agreed to adopt “innovative data collection strategies to improve response rates”, and to discuss the issue more often between themselves and with “equivalent bodies in other sectors”.

 

Readers Comments

• Brian Rogers says:

  October 18, 2013 at 9:50 am

  The LSB has highlighted the importance of gathering accurate data, but a question I have been asked by a number of firms is, “How can a firm’s data be accurate when individuals cannot be compelled to provide it?”

  Other comments include “Whilst completion of surveys or selecting “prefer not to say” are options open to employees, what do regulators expect us to do to increase engagement with staff who are exercising their right to stay silent?”

  I am sure more questions will be forthcoming when firms see the LSB’s comment, “focusing supervision on those with the poorest diversity record”; it would be extremely helpful if the LSB could answer these questions and head others off by explaining what it means by this comment in the context of data collection, and what SRA supervision is expected to look like in the context of encouraging more people to participate?

  In relation to publication of survey data, I would remind firms to look at the SRA guidance which states, ”Firms must comply with the data protection principles and legislation when publishing a summary of their workforce diversity data and these [SRA] regulatory requirements are not intended to override this”. In essence, don’t rush to comply with the SRA obligations by publishing all your data and then find you have breached the Data Protection Act because you have not risk-assessed the possible identification of individuals, even through anonymous data!

  http://www.legaldiversity.co.uk

  Reply
• Peter Luvius says:

  October 18, 2013 at 11:27 am

  Whilst lack of diversity amongst staff may be an indicator or other matters – for example that the firm is discriminating unlawfully – surely it is stretching a point to state that it presents a risk to the public. There will inevitably be many very diverse firms that present a far greater degree of risk to the public than some who, for whatever reason have a workforce totally lacking in diversity.

  It places yet another unreasonable, and potentially unsustainable pressure on those firms operating in places such as Cornwall, Northumberland, Cumbria and the Welsh Marches to create a practice which is diverse when diverse candidates are rarely available to them.

  Reply
• Anon says:

  October 18, 2013 at 2:56 pm

  This is Orwellian: “the LSB would expect regulators to use diversity as a criterion for rating the risk presented by all legal businesses”.

  The message is: change your ethnic/minority make-up or we’ll be all over you like a rash.

  It’s a perversion of proper regulation.

  God, I hope the LSB gets abolished.

  Reply
• Chris Robinson says:

  October 19, 2013 at 12:09 pm

  What possible statistical validity can this data have? Most law firms are small, so they are a tiny sample size, and staff may decide not to respond. Inevitably there will be some groups more likely to respond than others, skewing the figures. Then, the figures are meaningless unless you know the diversity balance of the local population from which you recruit – it’s hardly surprising to find all-white firms in rural Northamptonshire, or all-Asian firms in parts of big cities.
  What are regulators going to do with the data? What possible use is there in the SRA visiting all the rural white and urban BME practices and finding out why they are not more diverse? Whose money are they spending?
  More generally, why should legal practices be subject to requirements that don’t apply to other businesses in the UK, in direct opposition to the Government’s policy of cutting red tape? the assumption that diversity benefits client service is pure politics. The LSB should confine themselves to protecting clients’ interests.

  Reply
• Richard Doughty says:

  October 22, 2013 at 12:56 pm

  Hi Dan,

  I think this report could do with a slight clarification.

  The LSB report compares the CILEx response rates with the rates achieved by all of the other Regulators. The LSB’s expectation was that diversity data collection and publication would take place at legal firm level. CILEx currently regulates individuals and not legal firms and therefore CILEx is not in the same position as the Regulators that regulate entities to require, or obtain, the information from all of its members.

  CILEx members will be working in entities regulated by other Regulators and fall within the ambit of data collected by them. However, CILEx still carried out a data collection exercise through a general membership survey of CILEx’s individual members, which is what the LSB report refers to.

  In addition IPS carried out a survey of entities undertaking unreserved work which fall within its ambit. The results of that survey are available on the IPS website and did not form part of the LSB report. You can read the results of that survey here: http://www.cilex.org.uk/pdf/E%20%20D%20questionnaire%20response%20analysis%202013%20Final%20v2.pdf

  Many thanks,

  Richard Doughty

  Reply
• Dan Bindman says:

  October 23, 2013 at 12:29 am

  Hi Richard

  I take your point, thank you.

  For completeness, this is what the LSB’s report said:

  “CILEx achieved a completion rate of 5.5% in the exercise they undertook to collect data in the eight categories in our guidance. Similarly to the BSB, they are able to supplement the data obtained in this exercise with data gathered in previous surveys to establish a better picture of the make-up of their regulated community. However, they are yet to publish data captured on religion, sexual orientation and caring responsibilities. ILEx Professional Standards, the regulatory arm of CILEx, are shortly to publish workforce data from CILEx members who operate their own legal practices.”

  Thanks

  Dan

  Reply

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