Legal services regulation review

First, my apologies to followers who have been waiting for almost a year for another ‘occasional’ thought.  I won’t burden you with the personal and professional reasons for the lull!

I confess to being rather surprised when the Ministry of Justice announced that it was undertaking a comprehensive review of the framework for legal services regulation.  It is not that long since the Clementi Review (although I suppose that if a week is a long time in politics, nine years could be a very long time in legal services).  But we are still in the implementation phase of the Legal Services Act, and just shy of two years since the arrival of alternative business structures.  Surely too early?

Apparently not.  Some of the front-line regulators have been vocal in calling for the abolition of the Legal Services Board (be careful what you wish for, say I).  I have also argued before that the Act was built around some rather tenuous foundations (that is, the reserved legal activities), and some ABSs as well as the Legal Ombudsman have increasingly found these foundations to be inhibiting.

So, taking advantage of the Ministry’s invitation to make a submission, I put a few thoughts together.  The full submission is available here.  For those with a different constitution, my principal conclusions are as follows.

Concerns with the current regulatory framework

The current framework raises concerns in relation to:

  • the centrality of illogical reserved legal activities
  • the complexity of regulatory focus (on activities, individuals, entities and titles) and multiple regulators
  • the ‘missionary zeal’ of regulators
  • over-emphasis on market, competition and consumers
  • inadequately resourced regulators.

Objectives for legal services regulation

For the future, there should be a hierarchy of regulatory objectives:

  • an overriding objective of protecting and promoting the public interest
  • the overriding objective should be supported by primary objectives (such as supporting the rule of law; protecting and supporting access to justice and the proper and effective administration of justice; and encouraging independent, strong and effective legal advice and representation)
  • the overriding and primary objectives should be further supported by subordinate regulatory objectives (such as promoting and maintaining adherence to the professional principles, and enabling competition in the provision of legal services)
  • the need for certain of the current regulatory objectives might be questioned: protecting and promoting the interests of consumers (its functions and intentions are covered by other objectives); increasing public understanding of the citizen’s legal rights and duties (too broad and a multi-agency responsibility); and encouraging a diverse legal profession (too narrow and unnecessary if anti-discrimination laws are applied).

Principles to underpin further reform

Any further reform should be driven by the need to:

  • achieve the regulatory objectives
  • fully separate regulatory and representative functions
  • match public expectations and the scope of regulation
  • generate confidence in justice and legal services
  • achieve an effective regulatory framework which results in simple, appropriate, proportionate, cost-effective and responsive regulation.

The scope and nature of future legal services regulation

Future foundations of legal services regulation should be based on:

  • regulation only where it is in the public interest and either the alternatives to regulation are less effective or regulation provides additional protection
  • a more coherent set of reserved legal activities
  • addressing the current regulatory gap whereby non-reserved legal services provided by non-authorised persons cannot be subject to direct regulation.

A new approach to legal services regulation

A new approach to regulation could be founded on:

  • an investigation of a revised set of reserved legal activities based on the need to secure public good or consumer protection (including legal activities connected to the administration of justice and due process, notarial activities, immigration advice and services, public law advice and services, conveyancing, intellectual property activities, will writing, probate and estate administration, insolvency practice, and claims management services)
  • the regulation of all other ‘legal activities’, with access to the Legal Ombudsman
  • the regulation of all providers of legal services, whether authorised or not
  • one regulator only for each of the reserved legal activities
  • a reassessment of how best to achieve consistency of policy and implementation, and improved cost-efficiency, across the regulation of legal services.

We all now await the Ministry’s processing of submissions and its reaction to the views expressed.  Whoever thought legal services regulation could be so fascinating?

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