Regulating Legal Services: Time for the Big Bang?
| DOI | http://doi.org/10.1111/j.1468-2230.2004.00513.x |
| Date | 01 September 2004 |
| Author | M. Cave,K. Malleson,R. Baldwin |
| Published date | 01 September 2004 |
REPORT
Regulating Legal Services: T|me for the Big Bang?
R. Baldwin,
n
M. Cave
nn
and K. Malleson
n
In 2002-2003 the regulatoryframeworkgoverning the provision of legal services
became the subject of urgent debate a nd potential reform. During that period the
Government published a consultation paper
1
followed bya report that manifested
its commitment to review the regulatory framework as a whole.
2
In the summer
of 2003 the Lord Chancellor’s Department (as was) set up a review chaired by Sir
DavidClementi to examine theregulation of legal services in England andWales
and to report by the endof 2004. In a press brie¢ng in November 2003, Sir David
made it clear that he did not expect to recommend that the status quo be main-
tained and in March 2004 he published a consultation paper that raised the possi-
bility of radical institutional reforms.
3
A key question being addressed by the review is whether the current ‘maze’ of
over20 regulatorsshould be replacedby one super-regulatoralong the lines of the
Financial Services Authority (FSA). This proposal was strongly put forward by
Ann Abrahams during her time as Legal Services Ombudsman.
4
Her arguments
were that such a changewould allow forsystematic rationalisation, consistencyof
rules, services standards and sanctions and would facilitate coordination of strat-
egy and e⁄cient delivery on that strategy.
This paper assesses the merits of this option, drawing on conclusions reported
in the scoping study on legal services regulation that was undertaken by the
n
Law Department,The London School of Economics and Political Science.
nn
Business School, University of Warwick.
1In the Public Interest (London: LCD, 2002, CP07/02). This consultation responded to the report:
O⁄ce of FairTrading (OFT) Competitionin Professions(London: OFT,March 2001).The¢ve issues
dealt with in the consultation were:Conveyancing; probate; the multi-disciplinary environment
for solicitors, legal professionalprivilege and the QC system.
2 Department for Constitutional A¡airs, Competition and Regulation in the Legal Services Marketplace
(London: DCA,July 2003, CP (R2) 07/02). Comments by the Minister, DavidLammy, made it
clear that far reaching and potentiallycontroversial proposals forthe reform of legal services reg-
ulation werepossibi lities.
3 Legal Services Review,ConsultationPaperon the Review of the Regulatory Frameworkfor LegalServices
in England and Wales (www.legal-services-review.org.uk/content/consult/review.htm)(visited
09.03.2004)(London: DCA, March 2004) hereafter‘Clementi Consultation Paper.’
4 The Government has already acknowledged the potential of this model: the Parliamentary Secre-
tary to the LordCha ncellor’s Department suggested to the Law Society’s 1999 Annual Conference
that a new regulatory regime along FSA lines might be considered if the Government felt the
need to reform regulation (discussed by LSO, Annual Report of the Legal Services Ombudsman
(2001-2002) HC 940 (2002) 15.
rThe Modern LawReview Limited 2004
Published by BlackwellPublishing, 9600 Garsington Road,Oxford OX4 2DQ,UK and 350 Main Street, Malden, MA 02148, USA
(2004) 67(5) MLR 787^817
authors in 2002 for the Lord Chancellor’s Department.
5
We consider the case for
and against such a super-regulator
6
and do so in a number of stages. First, we set
out the background to the current proposal in order to explain why the prospect
of radicalchange has found its way onto the political agenda at this time. Second,
we discuss the regulatory challenges posed by legal services provision. What,
we ask, are the special features of the legal services market that are of regulatory
relevance and what are the market failures that have to be addressed? Third, we
analyse current concerns about legal services regulation.These avenuesof investi-
gation are pursued on the basis that we may want to adjust regulation either to
respond to‘technical’ market failures or in order to address the wider concerns of
consumers, practitione rs or the public. Fourth, we look at the development of the
proposal that a super-regulator be established and we discuss the various forms
and function s that such a body could adopt. Finally, we consider the prospects of
success and failure for such a bodyand discuss how far its establishment might go
to meet the array of regulatory challenges and concerns that confront policy-
makers at the moment. In assessing those expectations we consider di¡erent
accounts of the drivers that are likely to shape legal services regulation.
BACKGROUND TO THE CURRENT REFORM AGENDA
The prospect of the creation of a super-regulator must be seen in the context of a
sustained drive by government to open up the legal services market, increase
competition and remove restrictive practices. Over the last twenty years reform-
ing legal services has been a steady, often bitterly contested, struggle to liberalise
the market. Despite general resistance to these developments by the legal profes-
sion (on the grounds that they undermine legal professionalism) the di¡erent
vested interests of solicitors and barristers have resulted in splits in the profession
over the desirability of particular changes. The removal of the solicitors’ con-
veyancing monopoly in the1980s led them to search for new markets in the ¢eld
of advocacy and so to support the breaking of the Bar’s monopoly in that area in
the 1990s. Moreover, within the two branches of the profession, an increasing
level of specialisation and a growing diverge nce of interests amongst lawyers has
weakened consensus on the changes.The proposal for the introduction of multi-
disciplinary partnerships (MDPs), for example, is generally supported by large
5 R. Baldwin, K. Malleson, M. Cave and S. Spicer Scoping Study forthe Regulatory Reviewof Legal
Services (London: LCD, March 2003.)
6 Our discussion, accordingly focuses on‘Model A’the most radical of the options set out for dis-
cussion in the Clementi Consultation Paperof March 2004. The ConsultationPaper breaks down
the institutional options for reform into three models: Model A would give the Legal Services
Authority (LSA) all regulatory functions vested by statute. These functions would be removed
from the professional bodies, leaving them with representational tasks.The LSA would be the
overarching regulator for the profession and legal services and it would take a‘service driven’
approach to regulation. Model B would keep regulatory functions in the hands of the existing
professional bodies alongside representational functions but would establish a Legal Services
Board to overseethose organizations’ regulatoryactivities. A‘professional driven’ approachto reg-
ulationwould be taken. Mo del B þwould amend ModelB by requiring the professional bodies to
separate their representational and to regulatory functions and to establish separate governance
arrangements forthem. A signi¢cant lay membership would be involved in the regulatoryarm.
Regulating Legal Services
788 rThe Modern Law ReviewLimited 2004
To continue reading
Request your trial