Category Archives: Legal Services Act

One more time: we are NOT deregulating

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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.

Does my BUT look big in this?

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As we move closer to October, I have an increasing sense that the reality of change is hitting home. Nevertheless, there are still some nay-sayers and delaying tactics in evidence. Here are the common objections, along with my response.

“I didn’t become a lawyer to be a businessperson”
Maybe you didn’t, BUT that’s what it takes in the 21st century, so if you don’t want to do it, don’t: shut up shop.

“I can’t make enough money from what I’m doing”
You’re right, and I sympathise, BUT to make more you need to change what you’re doing or how you’re doing it. You won’t make enough from doing the same things in the same old way.

“The Law Society should do more to represent us and protect us”
To whom and from whom? You have a point about your representative body, BUT remember that there are members who welcome the changes and the opportunities right across the spectrum of size, type of practice and geography, and there are many clients who are desperate for more relevant, accessible, user-friendly and cost-effective legal services. There are a lot of disparate and conflicting views to represent!

“The SRA should protect us from competition”
Wrong: that’s not part of a regulator’s job. BUT what the regulator should do is create a regulatory playing field that’s level (in the sense that all those who fall within the regulated community should be subject to the same ‘rules of the game’).

“It’s not fair, though, because we can’t compete on equal terms”
You’re probably right. The regulatory playing field might be level, but the competitive one isn’t if others have more reach, more resources, better technology, closer contact with consumers, and so on. BUT that’s what competition is about – winners and losers. Find your competitive advantage by offering something that’s more meaningful and valuable to your clients, and you won’t lose them to anyone else. That’s fair, isn’t it?

“We’re too small to invest in technology and marketing”
You might be right, BUT you do have the opportunity to combine with others to offer a broader or deeper range of services and provide a platform to investment and development. Do it.

“We act for vulnerable clients, and they won’t be able to afford access to justice if we pull out”
This might be true, BUT it’s a political issue, not a regulatory one. The advent of ABSs is not inherently likely to reduce access to justice or quality (and might improve both); and the regulatory objectives in the Legal Services Act require us all to work to improve access to justice.

“ABSs don’t offer anything to me; and I don’t want to grow, or be managed by someone else, or have external funding”
It’s your right to make that choice, BUT what you want and what you need aren’t necessarily the same thing. The days of being the only arbiter of how you’re in business are now behind us.

CPD: compliance, competence or development?

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I attended the Bar Standards Board’s Clementi Debate on 26 May.  The subject was whether the education and training of lawyers in England & Wales is fit for purpose.  The content and debate, however, were more narrowly focussed on the fitness for purpose of continuing professional development (CPD) for barristers.  It seems to me, though, that the issues are of broader application and importance.

I don’t need to rehearse here the content of the presentations.  Thankfully, not all speakers started from an assumption that the present approach was fit for purpose.  What disturbed me was my own growing sense of unease through the evening – for reasons I couldn’t initially pinpoint.

All present seemed to agree that CPD was ‘a good thing’, with its implicit consequence that lawyers who undertook sufficient and relevant CPD would be (and were) better practitioners.  I would not dissent from that proposition – even if we might (and the panellists did) differ on the meanings of ‘sufficient’, ‘relevant’ and ‘better’.

What the Debate did not address, despite some suggestions that it should, was the public interest in regulatory intervention in CPD.  It is a regulator’s function to determine whether or not a practitioner is competent to practise.  It might even be their function to require CPD to be undertaken.  But how prescriptive should that requirement be?  And in whose interests is the intervention made?

The current approach is to require a certain number of hours to be undertaken (the proposal for the Bar is that from January 2013 this should rise to 24 hours a year).  My sense of the meeting was that all agreed that a ‘one size fits all’ approach was not sensible, because the nature of practice changes over time, as do personal development needs.  I must be missing the point, though, because it seems to me that a universal requirement for 24 hours a year is a one-size-fits-all requirement.  So the ‘sufficiency’ proposition appears to be on shaky foundations if framed in terms of an input (hours) rather than an outcome (competence).  But at least a minimum number of hours makes compliance easy to assess (for the regulator and the regulated) … even if it actually fails to assure continuing competence.  That might explain part of my unease.

There is clear evidence from CPD providers – and it has changed little during this country’s 25-year experience of professional CPD – that, as the CPD year-end approaches, lawyers will attend (in body, though rarely in mind or spirit) any CPD event that will get them over the hours threshold.  The content can be entirely irrelevant (to competence); and the behaviour (in making the choice and in not being truly ‘present’) is not what one might expect from a professional.

Some maintain, against this background, that CPD is fit for purpose.  That begs a fundamental question about what the purpose is.  The reality in the circumstances I’m describing is that the CPD obligation has achieved compliance, but not competence or development.  Compliance without competence or development strikes me as a rather sterile objective. (It might be true that education is never wasted – if, in the circumstances I assume here, there has been any; but that is still not necessarily the same as competence or development.)  The relevance requirement therefore also lies on some shaky foundations.  My unease mounts.

I confess to admiration for the New Zealand approach (thanks to panellist and BSB board member Matthew Nicklin for this): a requirement in the code of practice that a practitioner “must undertake the continuing education and professional development necessary to ensure an adequate level of knowledge and competence in his or her fields of practice”.  What a refreshing approach: treating practitioners as responsible professionals, able to make their own judgement about sufficiency and relevance – and being willing to be judged and held accountable after the event (on the basis of competence demonstrated, or not) rather than being told before it to satisfy some arbitrary input proxy (hours spent).

So, does this sometimes insufficient and irrelevant process nevertheless produce ‘better’ lawyers?  Of course it might.  But I’m not sure that this should be the objective for a regulator (as opposed to a representative body).  Surely, regulators, through regulation, should confine themselves to securing minimum levels of competence (which might nevertheless be set at high levels) rather than pursuing aspirations based on relative competence beyond that minimum level?  After all, regulation is an intervention in otherwise private activity, and such intervention should in my view be justified in the public interest.  What, then, is the public interest here?  My conclusion would have to be that it is to protect clients from incompetent practitioners, and to achieve a broader confidence of the public in the competence of those authorised to provide legal services through maintaining standards for authorisation and removing those practitioners who fall below them.

My contention, therefore, is that the regulator should assure competence.  This is in part an issue of the qualification and entry requirements sufficient for becoming an authorised person under the Legal Services Act.  CPD has nothing to do with this.  The regulators must then over time be satisfied that a practitioner is suitable to remain an authorised person.  Is CPD relevant to this?  Yes of course; but only, I think, in a sense more limited than current CPD requirements assume.

If a practitioner is the subject of a serious complaint about competence or service, or is found to have been professionally negligent, there must be questions to be asked about their competence and the public interest in them remaining able to practise.  I would regard it as an entirely relevant question then to ask whether or not they had undertaken any CPD to maintain the currency and relevance of their competence, and to explore in detail exactly what CPD they had done and when.  That should legitimately inform a regulator’s judgement about the extent of culpability in relation to the professional lapses complained of and the assessment of continuing fitness to practise.  But that judgement will be exercised in the specific circumstances of a particular complaint, at a certain point in time, and in the context of the practitioner’s performance at that time and in the period leading up to it.

I’m led to the conclusion that the true value and utility of CPD as a regulatory obligation can only be judged in retrospect, and that to seek to prescribe in advance (especially by something so crude as an input measure of time spent) misses the point.  The public interest requires an assurance of competence at the point of authorisation, and action to remove from practice those who subsequently fall short.  It is not well served by universal and broad-brush requirements that ensure compliance rather than competence.

In the end, therefore, I’m drawn to the New Zealand approach.  Every lawyer should be under a regulatory obligation to maintain their competence and fitness to practise.  The New Zealand approach requires that.  Of course, CPD should be encouraged: development beyond the minimum required to practise should be a lifelong quest for any self-respecting professional.  Personal aspiration and motivation will drive this, supported by the professional representative bodies.  I question, however, whether the regulator should be focusing on professional development beyond the minimum competence required for practice.

The regulator should certainly remove from practice those who have been demonstrated not to be up to the required standard of competence.  That is a specific judgement required after the event in light of a range of circumstances, including whether ‘sufficient’ and ‘relevant’ CPD had taken place.  Disciplinary proceedings against those who have not undertaken enough CPD hours (failure to comply) does not actually assure their continuing knowledge and ability (failure of competence) – and probably costs the professions something in practising certificate fees to no great avail.

My unease therefore relates to:

  • the confusion of compliance with competence and development; and
  • regulators’ focus on achieving some abstract and relative notion of ‘better’ when their attention should be directed to removing the incompetent and unethical from practice.

Consequently, CPD should relate to competence; it is not secured by compliance with an hours threshold, and development beyond the required minimum level of competence is a personal and relative matter.  Whether someone has fallen below that minimum level cannot be assured by CPD, and can only be judged confidently in retrospect.

My conclusion is that the scope for prescription of CPD requirements is therefore more limited than current approaches appear to acknowledge, with the result that regulatory intervention relating to CPD goes further than the public interest requires.