Law Society of England and Wales

Council Report (April 2009)

Election fever dominated the March meeting of Council as the five candidates seeking to become the next Deputy Vice President of the Law Society addressed us at hustings which took place the evening before the meeting. All five made greater contributions to the following day’s debates than has been their custom; the issues we discussed may have been of particular interest to them, but they may have resorted to more subtle electioneering.

We should know the outcome of the election shortly after Easter. Whoever wins the election will, subject to no intervening disaster befalling him/her, ascend to the presidency of the Society in 2011/2012. This is likely to be either the year when alternative business structures (ABSs) are introduced or the year before their introduction. Whoever is president that year must have both an insight into the impact upon the legal services sector (and especially our profession) that ABSs will cause, and an ability to deflect from the profession the threats they pose. His/her three year mission will be to explore the strange new world of legal practice which is evolving, to seek out new life for the profession and to boldly go where no-one has gone before.

The pace of change has accelerated since the last issue of Legal News with the introduction of firm-based regulation and the introduction of legal disciplinary partnerships. Both changes came into force on 31 March.

Legal Disciplinary Partnerships

The Law Society Gazette states that the legal world has been underwhelmed by LDPs, as only 14 came into operation on 31 March. Given the economic climate that’s not surprising for most firms will be more concerned about running their existing businesses as efficiently and as profitably as possible than in changing their ownership structure. Furthermore, non-lawyer professionals within firms may not aspire to partnership and its attendant risks during a recession. However, that doesn’t mean that LDPs will not flourish within the legal services market. Given time and a more optimistic economic outlook, more firms may wish to become LDPs. If your firm is thinking about taking this step, or if you’re interested, you can find out more about the potential risks and benefits of an LDP by reading the practice notes on legal disciplinary partnerships and firm-based regulation, to which you can obtain access from the Law Society’s homepage.

The LSB business plan

The Legal Services Board has published its draft business plan for 2009/2010. The Law Society has given it a cautious welcome, emphasising that Parliament decided that the lead role in regulation of legal services should rest with the approved regulator (for solicitors, this is the Law Society), rather than the LSB, and that the LSB should only intervene when the approved regulator is clearly failing. The LSB does not appear to share these views. It sees itself as far more proactive than that. It is also keen to provide greater separation of the profession’s regulatory and representative bodies. The LSB will set rules requiring approved regulators to establish a clear and demonstrable separation between these functions and design mechanisms that will test the degree to which this separation has been achieved. The Law Society thinks it has managed to create a separate regulatory body already – the entity which calls itself the SRA. The SRA’s opinion is that there is insufficient separation between the two. We await the LSB’s verdict. The LSB’s consultation on regulatory independence, which closes on 26 June 2009, is thus an important paper for the profession and local law societies and the Law Society should respond to it.

Law Society/SRA conflict resolution

The issue which causes most conflict between the Law Society and the SRA is the provision of shared services. The staff of the Law Society and SRA work on the same salary scales, benefits and grading structure, because all of them are Law Society employees. Similarly, they use the same IT equipment. The SRA wants to buy its own dedicated IT system and to pay its employees what it wants; the Law Society, while recognising that the SRA is responsible for its own management, wishes to ensure that the cost of the SRA (which is significantly greater than the representative Law Society) is kept as low as is reasonably possible. Higher salaries for SRA staff result in higher pension liability for the Law Society – that is an issue that should concern all of you, since in 2008/2009 every one with a practising certificate had to pay a £45 levy to cover higher than expected pension contributions. Furthermore, the Law Society’s IT expenditure is extremely high, and the chief executive has tried to control this by keeping the Law Society, SRA and LCS IT expenditure under control.

Until now, the arbiter of any conflict concerning shared services between the two bodies has been the council. In the March meeting we agreed to create a new Support Services Resolution Board to arbitrate these disputes. This board will be chaired by a council member, have equal council and SRA membership and will include two lay members. We hope this board will resolve such disputes in future and will demonstrate to the SRA that council is committed to separating the approved regulator’s regulatory and representative functions.

The Smedley report

The Smedley report on the regulation of corporate legal work was published on 26 March. The report states that “regulation of corporate legal work is in urgent need of modernisation… The current arrangements for regulating this vital sector of the UK economy and legal services sector are not robust enough.”

The report concludes that there is a need for greater expertise and understanding at the SRA; for greater engagement with the profession and its clients; and for a sophisticated regulatory approach which recognises the differences between different parts of the solicitors’ profession. It is important to regulate to avoid failures, rather than to deal with failures after the event, says Smedley. The City has welcomed the findings. As far as the rest of the profession is concerned, the issues must be the cost of implementing the changes to the SRA that Smedley has said are necessary and whether Lord Hunt will agree with him.

Lord Hunt’s review of regulation

I am writing this piece on the Monday before Easter, so the deadline for responding to Lord Hunt’s call for evidence has not yet passed. However, since Maundy Thursday is that deadline, I can confidently predict that the deadline will have passed by the time you read this. The Regulatory Affairs Board is responding on behalf of the Law Society. Cardiff Law Society has also responded. Your next chance to have your say on this issue is on 14 May, when Lord Hunt visits Capital Tower for a free roadshow. You can register for this event from the Law Society’s website.

Ethics report

The RAB education and training committee (on which I sit) commissioned a report from Professor Kim Economides dealing with the teaching of ethics in legal education, running from undergraduate study through to CPD. The report was launched in Chancery Lane on 24 March. Amongst those who attended were various academics, three member of the SRA board (including Jonathan Spencer, the chair of its education and training committee, Sedley LJ and Pill LJ and Cranston J, who as Ross Cranston QC was Solicitor-General from 1998-2001. Ethics training is, of course, also undertaken by barristers, so we had invited members of the Bar Council and Bar Standards Board to the event. Sadly, no-one from either body attended, so we had to console ourselves with the knowledge that we had attracted more Court of Appeal judges than barristers to the launch. 

HHJ Terry John

Now I’ve reached the subject of the judiciary, I should congratulate HHJ Terry John on his deserved promotion from the district bench, on which he served with distinction, to the circuit bench. We have been well-served by solicitor circuit judges over the years, with HHJ Graham Jones and Hickinbottom J (as he now is) having been our designated civil judges. The route from district judge to circuit judge is not particularly well-travelled, but HHJ HDH Jones blazed the trail twenty years ago, and HHJ John has now joined HHJ Wyn Rees in that select company.

David Dixon

 

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