FOR IMMEDIATE RELEASE
Wednesday, 18 March 2015
Small firms value regulation but object to cost
The LSB has completed the first stage of a substantial research project which puts the cost of regulation to the legal profession under the spotlight.
Despite some anecdotal information, there is a general lack of evidence as to what the cost of regulation actually is. To remedy this, the Legal Services Board (LSB) publishes today a report that shares the results of a survey of nearly 1000 lawyers (from all branches of the profession) as part of our cost of regulation project which started in October 2014.
Phase two of this project, which focuses in more depth on assigning actual costs to specific areas of regulation, is currently underway. This next phase of the project will attempt to understand which costs of regulation arise only as a consequence of legal sector regulation and which of those costs firms would have incurred anyway as part of good business practice [1].
Key findings from this first part of the project suggest that:
- over a quarter of respondents who were small businesses would keep all current regulations, and for those that nominated a specific area of regulation to keep, over half saw that regulation as providing wider benefits to business
- however attitudes towards value for money vary. Single practitioners and entities with fewer than 50 employees tend to regard Practising Certificate Fees as poor value for money, compared with larger employers who are less concerned
- to respondents, the cost of regulation means the cost of both regulation specific to the legal sector and broader cross-economy regulation that applies to all businesses
- a proportion of authorised professionals, whether entities or individuals do not distinguish between statutory regulatory requirements and discretionary costs such as those associated with joining accreditation schemes.
Legal Services Board Chairman, Sir Michael Pitt, said:
"I am determined that we minimise regulatory burdens on the legal profession. This is important because ultimately those costs are passed on to business and consumers. We also know from other research that cost is one of the reasons why consumers don’t seek legal advice, so there are clear consumer and public benefits to a lower cost regulatory regime.
This report shares the results of the first stage of our work on this issue. It is the first of its type undertaken across the whole of the legal sector and it is something that the LSB is uniquely well placed to do.
Our work on the cost of regulation is of considerable importance. Once it is complete, it will help all practitioners to better understand how costs arise and help all of us prioritise how we ensure costs are kept to a minimum."
[1] For more information please see notes for editors point 4.
ENDS
For further information, please contact LSB Communications Manager Vincent McGovern or by calling 020 7271 0068.
Notes for editors:
- The full report and further information on this process can be found here.
- The cost of regulation project started with an online survey of the legal practitioners which opened on October 13, 2014. For more information on the project please see here.
- This All information and background documentation related to this project can be found on the LSB’s legal research website here.
- The LSB has commissioned ICF International to undertake this more detailed second round of research. This study will help the LSB to reduce the regulatory burdens faced by lawyers and the profession. Should any lawyer wish to tell the LSB how regulation affects you and your profession, please contactLSB-study@icfi.com or Melanie Dubuis on +44 (0) 20 3096 4912 for further information.
- A final report will be published later this year which will draw together all the research from the initial phase of the cost of regulation project. It will discuss the possible reasons for the results and draw conclusions around areas that may need further investigation and policy analysis before the LSB can set out policy proposals.
- The Legal Services Act created the LSB as a new regulator with responsibility for overseeing the regulation of legal services in England and Wales. The new regulatory regime became active on 1 January 2010.
- The LSB oversees nine approved regulators, which in turn regulate individual legal practitioners. The approved regulators, designated under Part 1 of Schedule 4 of the 2007 Act, are the Law Society, the Bar Council, the Master of the Faculties, the Chartered Institute of Legal Executives, the Council for Licensed Conveyancers, the Chartered Institute of Patent Attorneys, the Institute of Trade Mark Attorneys, the Association of Costs Lawyers and the Institute of Chartered Accountants in England and Wales.
In addition, the Institute of Chartered Accountants of Scotland and the Association of Chartered Certified Accountants are listed as approved regulators in relation only to reserved probate activities.
- As at 1 April 2014, the legal profession comprised 138,243 solicitors, 326 alternative business structures, 15,279 barristers, 7,927 chartered legal executives and 5,404 other individuals operating in other areas of the legal profession such as conveyancing. The sector was valued at £29.2 billion in 2013 (total turnover).