Time and again I hear (or read) that the Legal Services Act is deregulating the legal services market. It is not. Everything that is currently regulated remains so.
It is true that people who are not authorised persons (shorthand = legally qualified) are able to offer legal services that are not reserved activities. This was true before the Act, which makes no difference to this situation. So no deregulation there.
It is true that the Act now gives the power for the reserved activities to be changed. It would therefore be possible for something that is currently regulated through reservation to authorised persons to become deregulated if the activity ceases to be reserved. But I have heard not a whisper that this is likely to happen. So no deregulation there, either.
Now, an activity that is presently not reserved could become so (the Legal Services Board is just starting to look at will writing and estate administration). But that would bring what is presently unregulated – if not done by authorised persons – within the regulatory framework. So still no deregulation.
Existing regulators – or even new ones looking for approval – can apply to regulate more reserved activities, but that will bring their members within (or more firmly within) regulation. Still no deregulation.
And finally, people who are not authorised persons can apply to become members of legal disciplinary practices (until the ABS licensing framework comes into play), or members of ABSs, or to be approved as Heads of Finance & Administration (or the SRA-equivalent of Compliance Officers for Finance & Administration), and ABSs as entities will need licences. In other words, more people who are not currently regulated will have to become regulated in order to operate. No deregulation.
For the life of me, I can’t find any deregulation. Perhaps what the ‘deregulators’ are really griping about is the increase in regulated competition. But that’s a gripe about competition, not deregulation.
I’m left with the feeling that the complaint is really about new regulated competitors who will do things differently. For the detractors, the issue seems to be the supposed hordes of ‘pile-it-high, sell-it-cheap’ merchants who are going to swamp the market and who will ‘inevitably’ ignore professional standards and produce low-quality services. To them, ‘different’ couldn’t possibly mean better, more client-friendly, or cost-effective (yes, alright, cheaper). This difference could be described as ‘liberalisation’, but it’s not deregulation.
The fact is, it’s time to face up to three uncomfortable truths. First, there is a risk that the future will see more unregulated providers offering non-reserved legal services. However, that could always have happened, and is not a result of provisions of the Act or a form of deregulation.
Second, there is indeed a risk that the new regulated competitors might rip off their clients, provide poor service or behave unethically. However, they will be regulated, so the response does not lie in barring their entry or shouting ‘foul’ about their scale or methods, but in the regulators doing their job and taking robust action against the transgressors.
Third, and perhaps most difficult, is accepting that the present regulated community has authorised persons who are not doing a good job. Sadly, some of them are incompetent, unethical, engaging in criminal activity, misleading clients, overcharging, providing poor service, or running their businesses in ways which would, frankly, be laughable if they weren’t so serious in their consequences.
I know it’s not the majority of practitioners who behave in these reprehensible ways; but for professionals to adopt a ‘holier than thou’ stance, and assert that all new entrants are ‘bound’ to cut corners, behave unethically and sell cheap, low-quality services, hardly does them any favours. It can only be interpreted as self-serving objection dressed up as concern for clients. Unfortunately, those same professionals have for years defiantly ignored a mountain of evidence – and still mounting evidence – that they are not delivering what the market or clients really want. This focus on concern for clients I’m afraid has a hollow ring to it.
Until the professions accept that they are not universally made up of competent, ethical, high-quality, individuals and firms who are of undoubted integrity AND that the new regulated competitors are not inevitably all unruly shysters and charlatans, they are not likely to gain much of a serious hearing about the effects of liberalisation. After all, the Parliamentary intent is to liberalise.
So, please, no more talk of deregulation. And because none of us knows how many unethical and poor quality providers there are in the currently regulated community, let’s stop taking cheap shots at new regulated entrants who are collectively likely to have no different a profile to the professions’. It’s time to get on with the new world rather than seek to deny, defer or avoid it.
If there comes a time when there’s incontrovertible evidence that regulated practitioners and firms have failed in their obligations (rather than just assertions and assumptions that they surely will), and when there’s incontrovertible evidence that the regulators have failed in their duties of identifying and dealing with transgressors (rather than just assertions and assumptions that they surely will), then that will be the time to create a fuss – and, believe me, someone will.
Until then, let’s get on with it, instead of wasting time and energy misdescribing the inevitable.
Postscript: There is also an excellent post by Richard Moorhead on this topic: The Deregulation Debate – My Twopennyworth.