The Legal Services Board (LSB), in accordance with its statutory powers, has approved the application of the Solicitors Regulation Authority (SRA) for amendments to its regulatory arrangements in respect of its Looking to the Future reforms. The approval is based on the statutory criteria set out in the Legal Services Act 2007.
While there is no consultation process as part of the LSB’s consideration, the LSB received representations from a number of individuals and organisations. The majority expressed concern about two specific aspects of the reforms: allowing regulated solicitors to practise from unregulated firms and allowing a new category of ‘freelance’ solicitor. The concerns about these proposals were explained in detail in representations from The Law Society and the Legal Services Consumer Panel.
The LSB’s assessment of the application included considering the points raised in those representations, which echoed and expanded upon issues raised through the SRA’s public consultations.
The LSB concluded that most of the changes, including in respect of freelancers did not raise grounds for refusal. In relation to the proposal to allow solicitors to practise from unregulated firms, whilst accepting that the changes may present some risk, the Board considered that the potential benefits from the changes could promote access to justice and did not consider that there was sufficient evidence of substantial risk to refuse these changes against the refusal criteria.
Consequently, the application was approved in full. The decision notice was issued to the SRA on 5 November 2018.
Legal Services Board Chair, Dr Helen Phillips said:
“The Board welcomes the SRA’s move to modernise its regulatory arrangements and make them more accessible.
We recognise that one aspect of this package – the changes to permit solicitors to provide unreserved legal services from unregulated firms – presents some potential risks.
The Board’s view was that when set against the potential benefits that the proposal is likely to bring to the regulatory objectives as a whole, these risks do not create compelling grounds for refusing the proposal.
In addition to likely benefits to access to justice, promoting competition and the public interest, we considered that there was some merit in the SRA’s argument that these changes could be seen to increase consumer protection, given that many consumers already use unregulated providers and in doing so receive no regulatory protections.
We are fully aware of the significance of these changes. Our decision notice sets out a clear expectation for the SRA to monitor impact. In the event that its monitoring identifies risks materialising in practice, we will expect the SRA to take action.“
For further information, please contact the LSB’s Communications Manager, Vincent McGovern (020 7271 0068).
Notes for editors:
- The Legal Services Board’s (LSB) decision and other documentation relevant to this application can be found here. An explanation of the proposed changes in relation to solicitors in unregulated firms can be found at paragraphs 23 to 25 of the decision notice.
- The LSB is required by Part 3 of Schedule 4 of the Legal Services Act 2007 (the Act) to review and grant or refuse applications by approved regulators to make alterations to their regulatory arrangements.
- The LSB may only refuse an application to alter regulatory arrangements (or introduce new ones) if it is satisfied that one or more of the grounds for refusal in paragraph 25 of Schedule 4, including the ground for refusal set out in paragraph 25(3)(b). In this instance no grounds for refusal have arisen.
- The Act created the LSB as a new regulator with responsibility for overseeing the regulation of legal services in England and Wales. The new regulatory regime became active on 1 January 2010.
- The LSB oversees ten approved regulators, which in turn regulate individual legal practitioners. The approved regulators, designated under Part 1 of Schedule 4 of the 2007 Act, are the Law Society, the Bar Council, the Master of the Faculties, the Chartered Institute of Legal Executives, the Council for Licensed Conveyancers, the Chartered Institute of Patent Attorneys, the Chartered Institute of Trade Mark Attorneys, the Association of Costs Lawyers, the Institute of Chartered Accountants in England and Wales and the Association of Chartered Certified Accountants.In addition, the Institute of Chartered Accountants of Scotland is an approved regulator for probate activities only but does not currently authorise anyone to offer this service.
- As at 1 April 2017, the legal profession in England and Wales comprised 148,690 solicitors, 15,281 barristers, 6,809 chartered legal executives and 5,958 other individuals operating in other areas of the legal profession such as conveyancing. The UK legal sector turnover was £31 billion per annum (2016) which is up 19% in cash terms since 2012. For more information see here.