Issue 11 :: September 2018

Legal Services Board: Chief Executive’s introduction

Welcome to this Summer 2018 edition of LSB news.

In this edition, we highlight the key developments in the legal services market since the last newsletter and provide an update on our work during this period. We also explain how we have set out to achieve the objectives laid down in our three year strategic plan 2018-21, which we published earlier this year.

We were delighted to hear in June that the Ministry of Justice had appointed Dr Helen Phillips as the LSB’s Chair. Dr Phillips had been in the role in an interim capacity since 1 May 2017, and we’re pleased that she will continue to lead in setting the LSB’s direction until the March 2023.

Last month, we published our response to the Ministry of Justice’s post-implementation review of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO). Many of our research studies yielded relevant evidence, and we hope that our submission will assist the MoJ as they conduct the review.

In May we reported on our investigation into the governance arrangements between the Law Society and the Solicitors Regulation Authority, and issued the Law Society with a public censure. Following consultation, and with additional feedback sought from stakeholders in light of the investigation report, we subsequently published a decision on how we will review the internal governance rules to enhance regulatory independence under the current legislative framework.

We continue to work with all the regulators to improve diversity in the profession, and are currently requesting information to assess their progress against the outcomes and guidance we have established over the last two years.

We have published important research into the legal needs of small businesses - which yielded valuable insight into the drivers of advice seeking - and have been working hard to update the 2015 research we conducted with the SRA on the use of innovation in legal services.

Rounding out a busy 12 months, we submitted our response to the Commission on Justice in Wales in June.

As always please do get in touch if you would like discuss any aspect of our work.

Neil Buckley, Chief Executive

LSB responds to the Ministry of Justice’s post-implementation review of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO)

Last month, the LSB submitted its response to the MoJ's 'Post-implementation review of LASPO'.

Drawing almost exclusively from our extensive research, the response highlights key evidence that:

  • a growing proportion of individuals are handling their legal problems alone and a declining proportion are seeking advice;
  • actual or perceived costs are a key factor in determining what action people take when faced with a legal problem; and
  • Individuals whose finances are stretched, but not severely enough to qualify for legal aid, are the least likely to use a lawyer.

Reductions in legal aid carry the risk of increasing the number of these 'stretched consumers'

Upon publication, our Chair, Dr Helen Phillips, said: "We think it is important to look at what has happened to consumers who are no longer able to access legal aid following the reforms. Research suggests that changes in legal aid may have disproportionately affected certain groups of people such as particular ethnic groups and those from the C2DE social groups.

We are also concerned about whether the reforms may have had knock-on effects elsewhere in the justice system and also more broadly in other areas of public spending such as health."

Our submission - which also suggests further questions the MoJ may wish to consider as part of its review - can be read here.

LSB publishes its strategic plan 2018-21 and business plan 2018/19

After consulting on a draft plan, we published our three year strategic plan for the period 2018-21 in April.

The strategic plan establishes our strategic objectives for the next three years, and sets out how we plan to achieve these objectives through our oversight of the regulators and by acting as an agent for change in the market.

It also describes our commitment to gathering and analysing evidence to assess progress made against the objectives, and maximising the potential of our research by sharing raw data, working in partnership with both regulatory and non-regulatory organisations, and revisiting existing research.

In her foreword, our Chair, Dr Helen Phillips wrote: "Much in our strategy will be familiar to those who know us well. Continuity is a key theme in our next three-year strategy, however, this should not be mistaken for a lack of ambition to make real progress on the collective challenges that we face."

Alongside the strategic plan, we also published our business plan 2018/19, which highlights how our key work streams for the year correspond with the fulfilment of the strategic objectives, and outlines our continued day-to-day work discharging our statutory duties.

Click on the following links to read the strategic and business plans.

Public censure following our investigation into The Law Society’s oversight and monitoring of the Solicitors Regulation Authority

In May, we published our report on our investigation into the relationship between the Law Society and the Solicitors Regulation Authority. We concluded that, in its arrangements for monitoring and oversight of the SRA, the Law Society had breached the internal governance Rules set by the LSB as part of our duties under section 30 of the Legal Services Act.

While we found no evidence that the SRA's independent performance of its regulatory function was impaired, we did conclude that its effectiveness was undermined by the arrangements, which amounted to a failure to protect or promote the public interest.

Despite more recent action by the Law Society to endeavour to remedy the failings prior to the completion of our investigation, this was a serious breach of the IGRs. In response, we made the decision to issue the Law Society with a public censure. This was the first time we have ever had to take such an action, which we did in order to reflect the gravity of our findings.

Alongside our investigation report and censure, we also published a list of undertakings, which the Law Society has agreed to work toward in partnership with the SRA.

Following the publication of the report, our team working on reviewing the Internal Governance Rules (see below) sought additional perspectives from stakeholders to inform that review.

More information, including the full investigation report, censure document and undertakings can be found here.

LSB publishes its decision and response following its consultation on the Internal Governance Rules

In July, we announced our decision on how we will review the internal governance rules (IGR) that govern the relationship between Approved Regulators (ARs) and their independent regulatory arms. Here, our project lead details the next steps for the IGR Review.

Independent regulation gives confidence to consumers, providers, investors and society as a whole that legal services work in the public interest and supports the rule of law.

The Legal Services Act 2007 does not create a framework in which an approved regulator's regulatory functions are structurally separate from representative functions, and does not permit the LSB to require this. Instead, the LSB must make rules (internal governance rules – IGR) that apply to regulators in the sector. These rules set out the requirements that approved regulators must meet to ensure that regulatory bodies can carry out their functions independently.

The LSB published its response following its consultation on the IGR on 24 July 2018 and has decided to develop a new set of rules. The new IGR will be based on principles and focussed on outcomes and there will be supporting guidance. The consultation response document can be found here.

Responding to consultation feedback, in the new IGR we aim to:

  • maximise regulatory independence within the current regulatory framework;
  • provide greater clarity on the oversight role of the approved regulators and the LSB;
  • reduce the number of disagreements between approved regulators and regulatory bodies about independence matters; and
  • provide guidance which explains our expectations on the IGR and supports approved regulators and regulatory bodies to move towards best practice.

It is our intention to have the new rules in place in early spring 2019 and to meet this aim we will be consulting on the new IGR and guidance in the autumn.

Following publication of the new rules we recognise that a reasonable transition period will be required to allow ARs to put in place revised arrangements. The length of this transition period will be part of our consultation.

The consultation response document can be found here.

LSB Research

Earlier in the year, our most recent wave of research into the legal needs of small businesses revealed that the perception among these consumers that legal services are too expensive continues. Just 11% of small businesses agree that lawyers provide a cost effective means to resolve legal issues – a drop of 3% since our last research on the topic.

Further analysis published last month yielded valuable insight into the drivers of advice seeking among these businesses. Our model shows that small businesses that believed 'legal services providers are transparent about costs' were twice as likely to seek legal advice.

In 2015, we published jointly funded research alongside the SRA analysing innovation in legal services.

We've been updating this research in 2018, undertaking the research independently and with expanded survey parameters. This time, we have sought to capture the levels of use of different technologies, and will use our findings to assess the extent to which regulation is operating as a barrier to the sector's use of technology and innovation more generally.

We surveyed 1500 providers of legal services covering both the regulated and unregulated sectors, and expect to publish our findings in November.

Looking further ahead, we hope to be publishing our next wave of research on the legal needs of individual consumers in the coming months.

Head over to our dedicated research pages to learn more about our research, revisit old reports and view the raw data that supports our team's analyses.

Commission on Justice in Wales: LSB response

We submitted our response to the Commission on Justice in Wales in June, following a call for evidence in February.

Chaired by former Lord Chief Justice Lord Thomas of Cwmgiedd, the Commission's long-term vision includes promoting the strength and sustainability of the Welsh legal services sector and maximising its contribution to the prosperity of Wales.

We provided research assessing the market for legal services in Wales and noted interesting differences in experience and need among consumers, citizens and the legal profession.

While recognising that demographic and social factors may mean that different approaches are required, it was clear that similar challenges exist across England and Wales; addressing unmet need and increasing competition existing remain priorities in both nations.

In our response, we explained that legal services regulation should contribute to the Commission's long-term vision in three principle areas:

Supporting a thriving sector through a modern regulatory framework which maintains high standards;
Increasing access to justice through a more transparent market and promoting understanding of how legal services can help to resolve common issues; and
Continuing to build and maintain a strong evidence base on the operation of the legal services market and the administration of justice in Wales.

Our assessment of the legal services market in Wales is available to read here.

Changes at the Legal Services Consumer Panel and Office for Legal Complaints

Since our last update, Dr Jane Martin has stepped down as chair of the Legal Services Consumer Panel (LSCP) to take up a role at the Office for Legal Complaints (OLC).

In May, the LSB announced that Dr Martin's replacement as LSCP Chair would be Sarah Chambers. An expert in regulation, competition and consumer policy, with leadership experience at Board Level, Sarah brings wide-ranging experience to the role. Also appointed to the panel is Adam Cooper, Director of Policy and Engagement at the National Infrastructure Commission, who has considerable experience in regulation and competition and a strong record of senior leadership and delivery across the public and private sectors.

Joining Dr Martin at the OLC are new members Elisabeth Bellamy, a former manging partner of law firm Drummonds, and Annette Lovell, director of engagement at the Financial Ombudsman Service and former head of regulatory policy at the SRA.

Highlighted recent decisions / reports / publications

LSB publishes Internal governance review response
LSB publishes its response to the MoJ review of LASPO
LSB publishes its annual report 2018/19
LSB approves framework for SRA's new admission requirements for solicitors
LSB publishes further research on prices and small businesses legal needs

More information on what we have being doing can be found here.

© 2018

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