Activity-based authorisation of legal practice in Engand and Wales – thoughts on an LSB Seminar

So I attended the Legal Services Board (LSB) Seminar at the University of Warwick on Activity-based Authorisation (18 April 2012) where Professor Julian Webb, Professor of Legal Education at Warwick School of Law (and LETR lead), and Crispin Passmore, Strategy Director at LSB joined by Samantha Barrass, Executive Director Education and Training, Supervision, Risk and International Affairs, Solicitors Regulation Authority and Professor Richard Moorhead, Deputy Head of School, Cardiff Law School gave a series of short presentations, followed by discussion and questions. The LSB had published Education and Training: Its Role in Regulation?  in advance of the seminar series.

Liberalisation of the legal services market in England and Wales does not mean that consumers of such services do not still want good quality legal advice/services that is not too expensive and which represents good value for money. This means that some method of ensuring the competence of legal services providers is still required to avoid excessive risk to consumers.  This will increase the cost of the service. Legal education and training are only one of the possible tools available to regulators to ensure competence. Others include codes of business conduct etc. If legal activities are to be cut loose from being reserved to members of the legal professions and instead be deliverable by others,  should some form of standards be imposed, and if so what should they be (uniform across the whole spectrum or variable according to regulator) and imposed by whom, how?(Webb/Passmore)

If the service is not regulated or reserved the highly competent, lengthily trained lawyer will be competing with others who may or may not have the competence, but they will lack the professional reputational benefits and ethical restraints of belonging to a professional body that is (?) well regarded. There is a risk that such non-lawyer competitors may not appreciate the forest as they decide which tree to cut down. There may not be the red light – alarm bells going off – that signal mechanism that helps lawyers protect consumers from the unexpected sidewinds of the law.

Of course in England and Wales the legal services market is already very open when compared say to the US market or some of the continental European markets where the practice of law is reserved to lawyers alone. In England and Wales those that consume the services are accustomed to relying on the professional titles (solicitor / barrister /licensed conveyancer etc ) as a guarantee of professional competence. If particular aspects of legal work (legal activities)  (See Legal Services Act 2007 S.12(3)) are to be reserved and licensed to non-lawyers and lawyers alike what standards if any should be applied? This issue was debated but not answered in the seminar.

Why should anything be reserved?

One question that can be  raised is why should anything be reserved to ‘qualified suppliers’? In the Scandinavian countries very little is reserved to the official lawyers except their title. (See further Finland, Sweden) Why should conveyancying for example be reserved? At the seminar an intervener opined that conveyancing was very much carried out by non-lawyers under supervision,and, of course, by licensed conveyancers..

What basis is there for regulating non member individuals who are not part of a regulated entity?

Another issue raised by me, was ‘by what right would existing frontline regulators regulate individuals who were not already members of their professions or part of a regulated entity?’

Central or variable standards?

Assuming that this issue is easily resolvable (but is it?) who should decide on the standards? Surely no-one would want innovation stifled by strict centralised regulations? If not then could each regulator set its own standards? This would unleash the regulatory competition that the Legal Services 2007 Act seems designed to promote, but at potential risk to consumers. Caveat emptor. (Regulatory objective of the LSA 2007, See LSB summary) Whatever standards are in place should be related to the risks that exist from that particular activity and should, in my view, be minimum standards so as to avoid both overpricing of the services and allowing for innovative methods of reaching an outcome to emerge.

Outcome based regulation

If the regulation is outcome based (as is the current preferred mode of regulation) then simply stated outcomes could be set, and individuals and entities (be they lawyers or not) would either individually have to show how they would met the required outcomes or if in an entity, then that entity would have to show how it would ensure the outcome. Again there is a risk of variable outcomes in such an approach, but innovation would not be stifled.

Specialisation

The discussion at one point turned to specialisation (Moorhead), considered by many to be a marker for quality. Does this need to be ‘regulated’ by competence assessment? If so, the same issues of by whom  and how arises. There are specialist professions (e.g. licensed conveyancers) without the generalist knowledge but with entry competence tests in their field of expertise and generalist solicitors who are de facto specialist or who have joined one of the panels of the Law Society for example. In non reserved areas non lawyers can build up quite an expertise that covers some aspects of legal work which are are not reserved – so a surveyor who mediates in construction disputes for example.

European dimensions

Specialisation:

Of course in the EU  Member States  matters are treated differently in each country. In the Netherlands, for example, lawyers have themselves created around 25 specialist associations, and some of them police entrants rigorously and ensure that they  maintain the high standards that help their business. The Bar does nor legislature have a hand in this – it is a matter of self-regulation by market forces. In Germany the Fachanwalt (specialist lawyer) accounts for about 20% of lawyers and there are strict regulations about experience and training that are applied. (Para 3 of the Fachanwaltsordnung). In a system, as in England and Wales, that admits non lawyers to legal practice, perhaps a market forces hands-off approach would appeal. Consumers can then choose a panel (or not) solicitor or some one else entirely. This is what currently happens in most cases. How to find appropriate advice is a problem for consumers, but an EU funded CCBE project on finding lawyers may provide some help.

Continuing Training

It was clear that post-entry maintaining of competence is under consideration; again at the European level there are a range of models to view and assess.

Entry Barriers

Competence at entry for all is not a model that works in a system where anyone can provide the service as they need not belong to a particular profession. If a series of legal activities are to be reserved to those licensed and the questions of the standards to be applied (linked to risk and outcome based)  and who will apply the standards are sorted out, then they are still other considerations to take into account. The restraint imposed must not breach competition law and the regime must be open to EEA nationals who must have their pre-existing qualifications recognised and taken into account. In creating new entry barriers European scrutiny on these two accounts is certain.

See related post on  Activity based regulation – EU perspectives on partial access to reserved activities

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