The Legal Services Board – reforming legal regulation Alex Roy, Head of Development and Research

1. The Legal Services Board – reforming legal regulation Alex Roy, Head of Development and Research

2. The Legal Services Act 2007 and the LSB • What organisations did the Act create? • The Legal Services Board – LSB • The Legal Services Consumer Panel • The Office of Legal Complaints – The Legal Ombudsman • About the LSB • Nine board members • 30 Staff • Annual expenditure of under £4.6million in 2011/12 • Funded by a levy on the profession

3. The regulatory objectives • Protecting and promoting the public interest • Supporting the constitutional principle of the rule of law • Improving access to justice • Protecting and promoting the interests of consumers • Promoting competition in the provision of services • Encouraging an independent, strong, diverse and effective legal profession • Increasing public understanding of the citizen’s legal rights and duties • Promoting and maintaining adherence to the professional principles

4. Standards of regulation, education and training • Regulatory activities should be: • Transparent • Accountable • Proportionate • Consistent • Targeted only at cases in which action is needed • The board must assist in the maintenance and development of standards in relation to: • The regulation of lawyers by Approved Regulators • The education and training of Lawyers

5. Oversight regulation and our vision • Oversight • Not watching and reacting but involvement and intervention • Leadership in new ideas and future directions • Vision for the market (the unofficial version) • Affordable legal services delivered at the right quality for consumers • Delivered by: • minimising the burden of regulation • reforming regulation so that it encourages innovation

6. The market

7. Regulation of legal services Ministry of Justice Office of Fair Trading European law Legal Services Board Case law Consumer Law Master of the Faculties Trading standards CLSB Consumer Bodies Competition Law Approved Regulators CLC IP RB Empowered consumers e.g. Large corporate Professional bodies/trade associations ILEX PS SRA BSB Custom & Practice Media Other regulators e.g. FSA, ACCA etc.

8. The Approved Regulators * Joint registrants are shared between CIPA and ITMA

9. Our early priorities • Independence of regulation • Redress for consumers when things go wrong • & • ABS liberalising the market to increase competition

10. Priorities for 2012-15 • The strategic priorities for the LSB for the coming three-year period: • Assuring and improving the performance of approved regulators • Helping consumers to choose and use legal services with confidence • Helping the changing legal sector to flourish by delivering appropriate regulation to address risks

11. Looking at changes to regulators rules and authorisations • Working with regulators to improve their regulation • Outcomes • Risks • Entities • Improving the regulatory environment and encouraging innovation • Regulatory framework (reserved activities) • Workforce (education, diversity, quality) • Developing the evidence base and evaluating Which means… 3 areas of work.

12. Focus on regulatory framework: The Reserved Activities • the exercise of rights of audience (i.e. appearing as an advocate before a court); • the conduct of litigation (i.e. issuing proceedings before a court and commencing, prosecuting or defending those proceedings); • reserved instrument activities (i.e. dealing with the transfer of land or property under specific legal provisions); • probate activities (i.e. handling probate matters for clients); • notarial activities (i.e. work governed by the Public Notaries Act 1801); and • the administration of oaths (i.e. taking oaths, swearing affidavits etc).

13. Focus on regulatory framework: Structure of regulation Regulation Legal advice Existing six reserved activities New activities? Individuals with protected titles Entities Other individuals

14. Focus on regulatory framework: Possible regulatory tools When? Remediation Prevention Conduct e.g. Minimum service standards e.g. Client money e.g. Ombudsman Scheme Services Tools? Market access and structure Systems and processes Pricing Compensation e.g. Training requirements e.g. Maximum prices Information Behaviour e.g. Code of ethics e.g. Referral fee disclosure

15. Focus on regulatory framework: Changing the reserved activities Extension of reserved legal activities (s24/ 6 LSA 2007) • Lord Chancellor may extend (or reduce) list of reserved activities • Only upon recommendation of LSB Formal process set out in LSA 2007 Schedule 6 • LSB has powers to investigate whether to recommend list of reserved activities • Consultation and advice are built into process

16. Focus on regulatory framework: Looking at wills 97 interviews completed Individual discussions Business Interviews Legal Services Consumer Panel Joint LSB, Consumer Panel, OFT, SRA team Call for evidence Consumer survey 400 case studies and 20 policy submissions 500 consumers surveyed 101 wills assessed All clients submitting wills interviewed Testing will quality Interviews with clients Joint LSB, Consumer Panel, OFT, SRA team

17. Focus on regulatory framework: Shadow shopping results

18. Focus on regulatory framework: Shadow shopping reasons for failure Inadequacy – where the content of the will does not account for an estate fully, fails to make adequate provision or neglects to take certain outcomes in to consideration. It also includes wills which are legally invalid. Requirements – where the client’s requests have not been met (as specified in the testator questionnaire) through omission or conflicting specification. Legality – where the actions specified in the will are potentially illegal; Inconsistency – where the language, logic and/or content of the will is contradictory; Detail – where items, people and requests are described in insufficient detail; and Presentation – where the language and format of the document is lacking.

19. Focus on regulatory framework: Will-writing conclusions Shadow shopping demonstrated that quality of wills inconsistent and harming many consumers Case study evidence that arrangements for safe-keeping of wills by will-writing companies inadequate Consumer survey reveals significant concerns over sales practices, particularly by will-writing companies Compensation arrangements patchy and largely unenforceable outside of regulated firms Need for reservation and appropriate regulation

20. Conclusions LSB is a small, ambitious organisation with potentially a short lifespan The Legal Services Act 2007 has led to a significant drive to reform the legal services market in England and Wales Significant reforms have already been introduced – independent regulation and Alternative Business Structures The next phase of work is challenging but could significantly improve the market for legal firms and consumers You may have some questions...