Modernising legal services: the LSB’s latest business plan

Baroness Deech, chair of the Bar Standards Board, looks at the final year of the three-year strategic plan to modernise regulatory frameworks.

During 2014/15, alongside its core responsibilities, the LSB has made clear in its business plan that it will continue to tackle burdensome, disproportionate and growth-restricting regulation. It believes particular emphasis on this is necessary in order to speed up the pace of change and deliver the benefits to businesses and consumers alike. Its latest business plan represents the final year of its three-year strategic plan.

What are the main focus areas of the LSB’s business plan?

The plan is broadly a consolidation or continuation of activity the LSB has been engaged in for several years now – it is the plan for the final year of a three year strategy. It sets out how they will continue to deliver under the three broad headings they have used for the past two years. The three strands are labelled as:

• regulator performance and oversight;

• strategy development and research;

• statutory decision making.

These strands sit within their overall strategic priorities for 2012-15, previously published.

Under the first strand, they will require front line regulators to report on progress in adopting the Regulatory Standards Framework the LSB introduced in 2012. Regulators are being told to make an interim self-assessment against the standards framework, prior to a full assessment taking place in 2015/16.

The LSB also proposes to undertake some “thematic reviews”, looking especially at what they see as over-restrictive regulation as identified in the Blueprint for Regulatory Reform they issued last year in response to the Ministry of Justice’s (MoJ) call for evidence on the regulatory architecture for legal services. Specifically, the Legal Services Act 2007, s 15 and Sch 13 (LSA 2007) will be reviewed. They intend to look at entity and alternative business structures (ABS) regulation and in particular consider how to make the test for ABS ownership “more targeted and proportionate”. They are also targeting the SRA’s separate business rule in this context. All this work purports further to liberalise the legal services market which has been the LSB’s main driver since 2010.

Under the second strand the LSB wants to look at the cost of regulation – both its direct costs and the costs of compliance. They intend also to keep an eye on the front line regulators’ plans for the reform of legal education and training, having issued statutory guidance on this in March 2014.

They will also do further work on approaches to quality and on complaints handling, from a consumer perspective, and in particular want to look at the consumer experience of online divorce services and look at the market in alternative dispute resolution (ADR).

The third strand is the LSB “day job”—approving changes in front line regulators’ rules and arrangements as well as their budgets and practising certificate fee proposals.

How are they seeking to implement their plan?

The plan is less ambitious, less stridently expressed—and may therefore be more realistic—than in previous years.

This may well be because of the uncertainty they face in relation to:

• the outcome of the MoJ regulatory review, and

• a new chair and two new members of the board at the start of the year.

Will the style and approach of the LSB be modified to produce more constructive dialogues with front line regulators and the profession than has been the case sometimes in the past? We must hope so.

Notably, the significant piece of work on the cost of regulation and compliance is not set out in much detail at all. Such work is notoriously complex and challenging to undertake and the LSB may need to enhance its skill-set as well as extend the proposed timeline to deliver it successfully.

The LSB’s budget appears to be reduced for the year, but this is largely because of reduced premises costs. As ever, they do not tell us what proportion of their budget is to be spent on and which of the strands of activity they will undertake, so it is hard to know if we get value for money or whether what they are doing is proportionate.

Is the plan welcomed by the legal sector?

Many of the previous criticisms from those regulated and the front line regulators will persist with this plan – an impression of an organisation creating work for itself and duplicating or micro-managing what the front line regulators are planning to do anyway. Legal professionals will doubtless welcome scrutiny of the costs of regulation and compliance – we must hope that the LSB gives full consideration to the costs imposed both directly and indirectly by its own work programmes.

It should be noted that the LSB intends to shine a light on those costs imposed on practitioners via practising certificate fees by the representative rather than regulatory bodies, and this may lead to some discomfort for, eg the Law Society and the Bar Council.

But there is overall a welcome sense of scaling back and more moderate approaches to be read between the lines of the plan.

What are the implications for lawyers?

Further developments in relation to new business models and alternative business structures, and possible changes to the ways lawyers are trained, would seem to be the most obvious implications. Handling of consumer complaints remains a priority for the LSB, and lawyers may also see the start of “comparison websites” towards the end of the plan.

How does this fit in with other developments in this area?

One development worth looking at in the context of where the LSB may be heading next is the Law Commission’s recent report on health care regulation. In a draft Bill accompanying the report, the Law Commission proposes an oversight regulator a little along the lines of the Legal Services Board. Notably, the Bill does not give the proposed oversight regulator in health care any role in approving the regulatory arrangements of the existing front line regulators – thus avoiding the duplication of effort that was built into LSA 2007.

Interviewed by Anne Bruce. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.

First published on Lexis®PSL

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