Since January 2020, the Legal Services Board (LSB) has been on a mission: to require front-line regulators to assure themselves of the competence of their regulated practitioners throughout their careers. It issued a call for evidence, commissioned reports, and consulted* on its proposals. The process has now resulted in a new statutory statement of policy intended to ensure that regulators “have appropriate frameworks for continuing assurance of professional competence throughout the careers of the people they regulate”. Consequently, “consumers should be able to trust that legal professionals have the necessary skills, knowledge and attributes to provide good quality legal services and that they are kept up to date and relevant over time”.
It is impossible to argue against the good intentions here. But, regrettably, the mission is impossible; both the consequential cost and burden of it to the regulated community (and ultimately to consumers) are disproportionate; the evidence does not support it; and, for me, it is therefore an unwelcome example of inappropriate regulation.
Absence of evidence
The consultation paper acknowledged (in paragraph 32) the lack of reliable data within the legal services sector about competence. In fact, in the announcement of the new statement, the Chair of the LSB said that “no one can currently say, with any degree of confidence, how often competence issues arise among regulated lawyers”. In other words, the LSB accepts that there is an absence of data. But it then asserts (also in paragraph 32) that, in effect, absence of evidence of incompetence amounts to evidence of the absence of competence. As I commented in my consultation response*, this is “not a justified logical extension but a flawed leap across a chasm”.
The LSB has a statutory duty under section 3(3)(a) of the Legal Services Act 2007 to direct its regulatory activities in a way that is “targeted only at cases in which action is needed” and then to do so in a way that is “proportionate”. The evidence referred to in the consultation paper suggested, at best, that “action is needed” where:
- there are concerns about competence and quality (as stated in paragraph 27 of the consultation paper, there is some evidence relating to immigration and asylum, criminal advocacy and conveyancing, but not more generally);
- the regulators are failing to assure themselves appropriately about the competence of those they regulate;
- there is insufficient relevant data available to regulators to allow them to fulfil their functions effectively; or
- the regulators are failing to take action against regulated persons in respect of whom there is credible evidence of lack of competence.
Unfortunately, the LSB’s statement of policy is not limited to these areas of need, and therefore inevitably strays into areas where there is no or insufficient evidence to support action. Further, in making the assumption – in the admitted absence of evidence – that there is a lack of competence across the sector, or that there is the risk of it, the requirement that the regulators should assure themselves that every regulated practitioner has and maintains their competence cannot possibly be a targeted or proportionate response to the evidence.
For instance, the practice areas referred to above where some concerns have been identified do not affect costs lawyers, intellectual property lawyers, notaries (in their capacity as notaries), or chartered accountants carrying on probate activities. And yet they are all covered by the new requirements that their regulators must introduce. Is this an instance of the smaller regulators being swept along in the wake of concerns about other groups of authorised practitioners? If not, where is the evidence of equivalent concern? If it is, in what sense can the policy be said to be targeted and proportionate?
The LSB’s final policy statement (unlike the draft) refers to section 3(3)(a) and says that the Board “has had regard to” it. Unhelpfully, it does not explain in what respects it has had such regard and how, having done so, its statement is consistent with it. The available evidence suggests otherwise. Indeed, despite the responses to the consultation paper, the final statement is in substance little different to the draft on which the LSB consulted. More than this, the burden of targeting and proportionality has been shifted primarily to the front-line regulators (by paragraph 14 of the policy statement, which did not appear in the draft).
In my view, the LSB has fallen into the same trap as that identified in relation to self-regulation (see IRLSR: paragraphs 3.7.2 and 126.96.36.199), namely, that the focus is on a higher level of competence and performance than is required for the protection of the public interest or consumers. The IRLSR proposed a requirement for the minimum necessary regulatory intervention (see IRLSR: paragraph 5.4.1), and I believe that this is consistent with the current statutory obligations on legal services regulators in sections 3(3)(a) and 28(3)(a) of the 2007 Act. The LSB’s statement of policy imposes a much higher threshold than this. It is not manifestly risk-based, targeted, or proportionate.
The assurance of competence
It is difficult to disagree with the LSB’s identification of the dimensions of competence in paragraph 21 of the policy statement. However, that identification serves only to confirm how wide-ranging, variable and context-dependent it is. The idea that competence can be adequately defined and assured in advance of its application in the particular circumstances of a client with a specific legal need is difficult to grasp. Ultimately, it is this specific application that is the manifestation of competence (or lack of it) that matters most.
I believe that it is generally accepted that even the Day 1 competencies prescribed by regulators for the award of a professional title and consequent authorisation for the relevant reserved legal activities are not in fact an assurance of the competence of the individual to perform all legal services undertaken immediately on authorisation.
This gives rise to a number of consequential dimensions relevant to the LSB’s approach, all of which give cause for concern. First, the statement in paragraph 25 of the policy statement that regulators must “ensure” that competence standards are maintained is misguided. Regulators can never do that. At best, they can take steps before the event to assure as much competent provision as possible, and take steps after the event to deal with specific instances where appropriate competence has not been demonstrated. But they cannot ensure it.
Second, as is well known, the 2007 Act is framed around the regulation of reserved legal activities carried on by those who are authorised to do so by virtue of a professional title. Interestingly, the statement of policy, though acknowledging such activities as one variable in the context of competence, makes no specific provision for the maintenance of competence in relation to those key activities to which Parliament has attributed special significance in the current regulatory framework.
Although the Act is silent on the implications for regulators and authorised persons in relation to the carrying on of non-reserved activities, it must be reasonable to presuppose that Parliament would have intended some difference in the targeting and proportionality of regulatory action in relation to reserved, as opposed to non-reserved, legal activities. The statement of policy draws no such distinction, instead leaving it to be dealt with by each regulator. Potentially, this will mean that the requirement for “consistent” regulatory action in sections 3(3)(a) and 28(3)(a) will not be met for competence in relation to reserved legal activities – or, indeed, more widely.
Similarly, the statement of policy draws no distinction between the competence required for maintaining authorisation in respect of one or more of the reserved legal activities, and that required in respect of other legal activities. In fact, the statement appears to focus on assuring continuing competence ‘in the round’, that is, generically and perpetually, rather than on the competence required in the moment to undertake the specific legal activities for which a practitioner has been retained by a particular client.
This leads to a broader third point. Given the emerging and changing nature of the competence required of practitioners as their careers develop, any attempt to define the required competencies in advance (which would necessarily be required for assurance) is bound – as the consultation paper recognised – to “end up being so generalised that it would be ineffective at setting the standards of competence, or, it could end up being too complex to be effectively implemented” (paragraph 55).
Finally, the principal difficulty in the LSB’s quest in relation to ongoing competence is that it seeks to secure an unattainable positive, namely, the assured and continuing competence of every practitioner for any activity that they might undertake during their career in serving the legal needs of clients. It is not that such a goal is unworthy; it is that it is impracticable and inconsistent with the LSB’s duties under section 3(3)(a) of the Act.
Achieving such before-the-event assurance will be brutally expensive in terms of resource, burden and cost. Again, in the absence of evidence, the imposition of such across-the-board expense on regulators and practitioners – and, ultimately, on clients – cannot be justified. The assertion of consumers that they would be willing to pay more for greater confidence (paragraph 89 of the consultation paper) is only a hypothetical one: faced with the future reality of more expensive legal services, then, as the IRLSR supplementary report on consumer harm set out, they are more likely to exclude themselves from advice and representation, or perhaps seek the services of cheaper unregulated providers of non-reserved activities. In both cases, this would be to the greater detriment of access to justice (and therefore risks being inconsistent with the regulatory objective in section 1(1)(c) of the 2007 Act).
In the end, the recognition in paragraph 21d of the policy statement that “competence varies according to circumstances” encapsulates perfectly why any before-the-event assurance of competence is an expensive, burdensome and ultimately ineffective process. The harm that needs addressing – and for which there will most likely always be evidence – is incompetence. This will necessarily be an after-the-event issue.
I agree that consumers should be able to trust their providers of legal services and the regulators of those providers, such that if something goes wrong remedies will be available. This does not, however, necessarily extend to before-the-event assurance of competence for every practitioner. What it requires is that a practitioner should be able to demonstrate that their practice (including maintaining relevant competence) has been adequate to the task in respect of which their competence is now in question. If they are found lacking, then regulatory action, compensation and sanctions should certainly follow.
The LSB’s approach to sector-wide assurance of ongoing competence is disproportionate in effect, burden and cost. The process leading up to the policy statement has not offered any evidence of widespread harm arising currently from practitioner incompetence. Nor is there any analysis of where any harm is focused, in terms of the practitioners most likely to cause it, the legal services most likely to give rise to it, and the consumers most likely to be affected.
As such, the basis for the broad requirements of the policy statement is flawed. The nature of the Legal Services Act 2007 is that regulation is imposed by reference to reserved activities and professional titles. This means that the same legal activities can be carried on by differently qualified professionals who are subject to the requirements of different regulators. The policy statement is not founded on any evidence of harm being caused by lack of competence arising from particular types of legal activities, particular types of professionals, or practitioners regulated by particular regulators.
Despite this, the LSB has imposed an obligation on all regulators to assure themselves of the competence of all practitioners irrespective of their place in this patchwork of different activities, carried on by different professions, and subject to different regulators. Nor has the LSB’s process explained why dealing more effectively with instances of known incompetence is not a more risk-based, proportionate, targeted and cost-effective solution than their preferred and universal assurance of competence.
In developing the policy statement, the LSB has done little more than demonstrate that:
- it does not have the evidence needed to support its policy;
- it is acting in a way that cannot on the face of it be justified as targeted “only at cases in which action is needed” and that is “proportionate”, as required by section 3(3)(a) of the 2007 Act;
- its new requirements now carry the risk of failing to support the regulatory objective of improving access to justice (by placing unduly onerous obligations on regulators and practitioners that will be reflected in higher prices for legal services);
- front-line regulators may have been remiss in collecting evidence of concerns about competence among their own regulated communities, as well as in taking appropriate enforcement and remedial action where lack of competence has been identified or raised; and therefore
- the Board might itself have been less than effective in its own oversight of front-line regulators and appropriate enforcement in relation to incompetence.
The policy statement has the feel of a sledgehammer to crack a nut – and an unevidenced nut, at that. The use of better-designed nutcrackers would have been a more appropriate and justifiable response to any concerns.
Rather than leaping from some apprehension about a possible lack of competence to mandatory requirements for the universal assurance of competence (which the LSB recognises will be “challenging” and will “require more complex policy development” by the regulators), the absence of evidence could have been used as the starting point. Instead, the LSB could have said to front-line regulators: “There is little direct evidence of competence issues. Let us investigate together whether or not there is any real basis for concern. If there is, we can work towards validating and quantifying that concern, and understanding where, when and why it arises. We can then consider the most appropriate way of targeting proportionate and consistent interventions to address it.”
It is unlikely that such an approach would have led to the new policy in its current form. Taking steps to find the evidence of a problem is preferable to assuming or exaggerating the existence of one. It would also have been a more convincing demonstration of the LSB’s focus on discharging its core responsibilities in an evidence-based, targeted and proportionate way.
* I submitted a response to the consultation, which is available from the LSB site. Parts of this post are based on the contents of that response.
Very thought-provoking and important article Stephen – thank you. In other regulatory domains, there’s much talk of “upstream regulation” and “preventative regulation”, and I fear muddled thinking on what that might mean. Regulators might, I think, give greater thought to the wider ecosystem around the effective practitioner, and the role they might play in fostering its effective function – by their influence and their analysis of what lies behind failure in service delivery, rather than by their statutory power to control.
Well said. And how will they test the competence of specialists? I am reminded of the comment attributed to the nineteenth century Liverpool City Organist, W T Best, who was asked by a lady what qualifications he had, and responded (with more than a grain of truth), ‘Madam, there is no one fit to examine me’.