LSB Newsletter - February 2017

Issue 9 :: Winter 2017

Welcome to this winter edition of LSB news.

Diversity in legal services is an issue on which we at the LSB place great significance and we are not alone in this; the Lord Chancellor and the Supreme Court President have identified the issue as one of the key priorities for the sector. We have just published our revised diversity guidance, which offers new flexibility to legal services regulators and will support them as they tackle the diversity challenge.

The Competition and Markets Authority (CMA) published its long awaited legal services market study in mid-December. It makes for sobering reading as it found that competition in the legal services sector is not working well for individual consumers and small businesses. It also suggested that the current legal services regulatory framework is not sustainable in the long run.

In this edition, we also highlight some of the recent developments in the legal services arena. We also provide information on some of our ongoing research, an update on some appointments to the Legal Services Consumer Panel, and an outline of what our 2017/18 business plan will look like.

As always please do get in touch if you would like discuss any aspect of our work.

Neil Buckley, Chief Executive.

The Legal Services Board has issued revised statutory guidance for regulators on diversity. The changes outlined place a focus on outcomes encouraging regulators to take their work beyond data collection.

The revised guidance allows regulators more flexibility in determining their own, targeted approaches to encouraging diversity in their respective professions, whilst also stimulating those who have not taken their work as far to keep developing.

The LSB places great significance on diversity and a more diverse profession will better support the delivery of legal services and encourage innovation in the sector.

The new guidance takes a less prescriptive approach than its predecessor, which will help both regulators and the sector itself find new ways of developing diversity and assist in new ways of using the valuable data gathered in the last five years.

More information can be found here

The Competition and Markets Authority (CMA) issued its final legal services market study report and recommendations in mid-December.

The CMA has found that competition in the legal services sector is not working well for individual consumers and small businesses. It identified adverse outcomes for consumers, including:

lack of information about legal services, which in turn contributes to unmet legal need
a considerable spread of prices for the same legal service suggesting that consumers could make sizeable savings from shopping around; and
limited innovation, leading to consumers not having access to new and different services that might better meet their needs.

The CMA made recommendations to remedy the failures it has identified. These include:

recommendations to legal services regulators to increase provider transparency of price and quality information, to facilitate the development of comparison websites and to develop a consumer information hub based on the existing Legal Choices website.
recommendations to the Ministry of Justice, including:
to review the case for extending redress to consumers using unregulated providers
to undertake a review of the independence of the legal services regulators
in the longer term, to undertake a review of the regulatory framework, and
recommendations to the LSB relating to monitoring and reporting on the progress of the legal services regulators in implementing the recommendations directed to them, and taking appropriate action where regulators fail to address information gaps.

The CMA also examined independence in legal services regulation in its report. It said the Ministry of Justice should carry out its planned review of the independence of legal regulators as soon as possible and stated that it supported independence as a “key principle”.

The CMA has also stated that it believes the current legal services regulatory framework is not sustainable in the long run. This echoes the LSB’s own views which we outlined in our September 2016 Vision Paper.

The CMA’s report can be found here. The LSB's initial response, and subsequent comments, to the CMA regarding this study can be found here.

The LSB has decided to launch a formal investigation into the governance arrangements between the Law Society (TLS) and the Solicitors Regulation Authority (SRA).

Having reviewed the information provided by both sides, we have decided that we should commence an investigation into those arrangements and whether they are in line with Part 4 of the Schedule to our Internal Governance Rules which require that the arrangements must not impair the independence or the effectiveness of the performance of regulatory functions.

This investigation is in an initial phase and will last a number of months. For reasons of due process we will not be providing any further information until the investigation has closed. The LSB announcement can be found here.

The LSB is currently undertaking work to identify barriers to investment in legal services. The aim of the research project is to identify any barriers to investment that might exist.

We are focusing this research on four particular interest groups: investors, licencing authorities, ABS firms and traditional firms.

The bulk of the work is being carried out in-house through a mixture of primary and secondary research activities.

We are updating our 2016 prices of legal services research and expect to publish results in the summer.

We are also undertaking research to understand how vulnerable consumers access legal services. Research is on track to deliver 60 in-depth interviews (30 with a mental health focus and 30 focusing on dementia).

We will be looking at opportunities to maximise the impact of this vulnerable consumers research at the time of launch.

More information can be found here and here

The LSB is finalising its 2017/18 business plan. This period is the final year of the LSB’s current three year strategic planning period.

We have consulted on our expected programme of statutory duties and the areas where we intend to continue to press for regulatory improvement such as independence and transparency, and a small number of new themes.

The proposed projects outlined in this three strategic objectives:

breaking down regulatory barriers to competition, growth and innovation
enabling the need for legal services to be met more effectively, and
ensuring that regulators and the Legal Ombudsman are operating effectively and that there is a shared understanding of the legal services market.

They also have another element of common purpose which is to inspire greater public trust and adherence to professional standards, elements that underpin a successful legal sector.

This we will do while continuing to reduce our own costs with further proposed cuts to our budget of £150,000 from the 2016/17 period.

We expect to publish this business plan at the end of March. More information can be found here.

Dr Jane Martin was appointed as the new Chair of Legal Service Consumer Panel in December and started at the beginning of January. Dr Martin succeeded Elisabeth Davies who stepped down from her role at the end of December 2016.

Dr Martin was the Local Government Ombudsman and Chair of the Commission for Local Administration in England. In that role she was also a non-executive member of the Board of the Parliamentary and Health Service Ombudsman. She has also recently been appointed to the Committee on Standards in Public Life.

In a career dedicated to understanding and promoting public service accountability, she has conducted research at the Universities of Birmingham and Warwick respectively and worked with local authorities across England. She was the first Director of the Centre for Public Scrutiny.

Mark McLaren has also been appointed to the Consumer Panel as a member.

More information can be found here

LSB publishes advice and representations in respect to ICAEW designation application.

LSB approved the Bar Council / Bar Standards Board annual PCF application.

More information on what we have being doing can be found here.

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