Adjusting the Regulator – Author: Joshua Rozenberg

Can lawyers eliminate their regulator? I was only half-serious when I suggested it last month that the growing dispute over the regulation of lawyers could end up in the courts. But that now looks more likely.

Those unfamiliar with the background should start with my earlier songThe key thing to understand is that representative bodies such as Law Societythis Bar Council and Chartered Institute of Legal Executives — CILEX for short — are “approved regulators” under the Legal Services Act. However, they must delegate their regulatory powers to independent bodies — frontline regulators such as Legal Advisers Regulatory Authority and Bar Standards Council.

There is also a super regulator, or supervisory body, called Legal Services Council. The Board creates internal management principles to ensure that the regulatory functions of an approved regulatory body are exercised independently of its representative functions.

This On 1 July, the Solicitors Regulation Authority announced that it would be willing to regulate CILEX members — as the legal directors are now called. If CILEX decides to go ahead, the body supervising the activities of law firms stated thatthere would be benefits in the public interest. And lawyers would not have to pay anything for the restructuring.

But it is up to CILEX to decide. And any decision to re-delegate – to change the regulatory body – would require the approval of the Legal Services Board.

Currently, the legal management staff is supervised by a company called CILEx Regulation Ltd. No wonder they don’t want to be put out of business. More importantly, they say the lawyers they regulate would be breaking the law if they went to another regulator.

John Barwick, Chief Executive of CILEx Regulation, told me this week:

CILEx Regulation Ltd continues to believe that the CILEX proposal to re-delegate regulation of authorised and non-authorised CILEX members is unlawful. This view is based on the advice of two CCs.

The Legal Services Act 2007 introduced a careful balance between the historical role of representative bodies (such as the Bar Association, the Bar Council and CILEX) and the need for strong independent regulation.

CILEx Regulation Ltd believes that Parliament did not intend, when drafting the Legal Services Bill, to enable approved regulators such as CILEX to re-delegate regulatory responsibility in the manner proposed. This could have a chilling effect on the independence of regulators, thereby undermining the stable and effective regulation introduced by the 2007 Act.

Could all this end up in court?

“In terms of the timing of potential legal action by CILEx Regulation Ltd,” Barwick added, “we understand that the CILEX board is due to consider the Solicitors Regulation Authority’s regulatory proposals at a board meeting later this month. The CILEx Regulation Ltd board will consider the outcome before deciding on any further steps it may wish to take.”

go to CILEX. It said:

Following confirmation of the Solicitors Regulation Authority’s decision to seek regulation of CILEX members, CILEX will hold a Board meeting on 16 July to discuss the Solicitors Regulation Authority’s updated proposals following the recent public consultation, stakeholder feedback and updated impact assessments.

The CILEX Board will consider whether further action is necessary before making a final decision later this year on whether to submit an application to the Legal Services Board.

What about the regulator’s view that re-delegation would be unlawful?

CILEX is based on supervisory authority report published in April. According to the Legal Services Board, “an approved regulator generally retains the power to revoke a delegation to a regulator and re-delegate its regulatory functions elsewhere.”

In explaining the reasons for its conclusions, the Legal Services Board he said:

• Customarily in public law, a delegation of powers may be revoked or repealed.

• This rule can be repealed by statute, but there is nothing in the Legal Services Act that prevents re-delegation.

• the approved regulatory body retains only a residual role, which suggests that the delegation of functions is not complete and irrevocable.

All this is about more than just a change of regulator. The Law Society, which represents solicitors, says it would bring no benefits to legal executives and increase risks for consumers.

A change of regulator was not something that lawyers wanted, their representatives said, and there was little evidence that CILEX members wanted it either. I understand that the Law Society has also not ruled out the possibility of a legal challenge.

As defined by the CILEX Chairman“a solicitor is a specialist lawyer; a solicitor qualifies as a generalist lawyer.” Professor Chris Bones complained last year that solicitors continued to look down on solicitors.

But lawyers say that if CILEX members start advertising themselves simply as solicitors, they will soon have clients with a range of problems seeking advice on issues that individual CILEX members may not be qualified to handle. Clients who instruct a “solicitor regulated by the Solicitors Regulation Authority” may assume, with good reason, that their solicitor is a generalist solicitor.

Ian Jeffery, chief executive of the Bar Association, told me this week:

We are deeply concerned by the decision of the Solicitors Regulation Authority to introduce regulations for CILEX members.

This change came despite opposition from its own regulated community and CILEX members to the idea of ​​changing the rules. The Legal Services Consumer Panel also found that a consumer case had not been brought.

We have repeatedly opposed this change, expressing concerns that it would have a negative impact on consumers, the broader public interest and regulatory objectives.

The Solicitors Regulation Authority has a difficult task. It is coping with the fallout from the collapse of Axiom Ince and SSB Group, as well as the findings of the Post Office Horizon IT Inquiry. The Solicitors Regulation Authority should not be distracted by an unnecessary programme of major change when it needs to focus on its core business.

The next steps are for CILEX and if the proposals are accepted they will need to be assessed by the Legal Services Council. However, it is unclear to the Law Society at what point the Solicitors Regulation Authority Limited intends to seek the required approval from the Law Society’s board as its sole member.

This last point is new and striking. The Solicitors Regulation Authority Limited is a limited company. It has many officers but is under the exclusive control of the Law Society. Could the solicitors’ representatives prevent it from regulating CILEX members as a last resort? And what would the Legal Services Board say about that?

See you in court, perhaps.