LSB Newsletter - Issue 12 :: December 2018

Welcome to this last edition of LSB News before Christmas.

The Legal Services Board works hard to ensure that the legal services market in England and Wales works to benefit the consumer and in the wider public interest.

I’m keen to highlight the following developments since our last newsletter:

• In November, we approved the SRA’s ‘Looking to the Future’ rule change application – and will be watching closely to ensure that the SRA carries through on its commitments to monitor the impact of these reforms.
• Following our decision in the summer to introduce new internal governance rules (IGR) for legal services regulators, we are now consulting on the proposed new IGR and accompanying statutory guidance.
• Last week, we published our draft business plan 2019-20, and we’re inviting comment on it and on three new policy objectives.

I continue to be impressed by the strength of feeling on display from those who take the time to respond to consultations, contribute to our surveys or engage with us in other ways.

At the end of November, the Board travelled to Cardiff to broaden its understanding of the issues facing the sector in Wales. We would like to thank all those who participated in our roundtable event, and are particularly grateful to Jeremy Miles AM, Counsel General for Wales who attended our Board meeting to speak on his priorities for the sector in Wales.

Finally, I am particularly pleased to highlight our latest research report on the use of innovation and technology in legal services. We launched the full report on 29 November, and I encourage all of you with an interest in legal services, technology and innovation to read the report.

As always, please do not hesitate to get in touch if you would like to discuss any of our work

Neil Buckley, Chief Executive

The LSB approved the SRA’s ‘Looking to the Future’ rule-change application in full on 5 November 2018.

In making the decision to approve the application, we assessed the application against the refusal criteria laid down in the Legal Services Act 2007.

While the majority of the application was less controversial, significant debate within the sector hinged around two proposals, namely:

• proposals to introduce so-called “freelancer” solicitors, and
• proposals to allow regulated individual solicitors to offer non-reserved services to the public from unregulated businesses.

Despite there being no statutory consultation process for rule-change applications, we received detailed representations in opposition to these two proposals from both the Law Society and the Legal Services Consumer Panel, and a further 130 individuals wrote in to share their views (both positive and negative) on the potential impact of the proposals.

We considered all the information in these submissions alongside the information provided to us by the SRA. In doing so, we concluded that the proposal to introduce “freelance solicitors” did not present any grounds for refusal.

We acknowledged that there is some risk in allowing solicitors to practise from unregulated firms, but the Board was not convinced that this would outweigh the potential benefits, so as to have a prejudicial overall impact on the regulatory objectives or to be deemed contrary to the public interest. As such, we did not find that there were sufficient grounds to refuse this part of the application.

In our decision notice we made clear our expectations of the SRA in regards to monitoring the impact of these changes.

For more information on the application as well as the LSB’s decision to approve, read the decision notice here.

On 29 November, we published our latest report on the use of technology and innovation in legal services.

While noting that overall levels of service innovation by providers of legal services are unchanged since we conducted our last survey in 2015, the report highlights the importance of intensity of competition as an influence on service development.

We were pleased to see that two thirds of providers did not see regulation as a constraint to development of new and innovative services - up from just under a half in 2015.

Headline findings of the report also include:

• Good news for consumers, for whom improving the quality of services was seen by providers as the primary benefit of technology, and
• Numerous factors continue to prevent wider adoption of technology, including the ethical questions raised and a lack of IT expertise among providers.

LSB Research Manager Rob Cross launched the report at the Legal Futures Annual Innovation Conference 2018, sharing the key findings of the report with delegates and taking questions alongside a panel of experts in the field. The LSB used the opportunity to highlight its project: developing approaches to regulation for the use of technology in legal services

Read the report and view the associated infographics here.

Last week, we published our draft 2019/20 Business plan, and we're currently seeking input from stakeholders on the work streams included within.

We are particularly keen to highlight three new five-year policy objectives for the LSB, introduced for the first time as part of this consultation. These are that:

• regulators have appropriate frameworks for continuing assurance of professional competence throughout the careers of the people they regulate,
• the LSB is perceived as being at the forefront of enhancing public legal education, and
• access to legal services is increased through the promotion of responsible technological innovation that carries public trust.

Our intention is that these objectives will be key markers of our success in delivering our strategic objectives as set out in our three year strategic plan 2018-21, which remain unchanged and which relate to effective regulation, access to legal services and increasing innovation and growth.

Alongside the new five-year objectives, the draft plan also includes proposals to review the process through which we approve the regulators’ practising certificate fees, work with the regulators to ensure a robust response to the regulatory consequences of EU exit, and to continue to build on our extensive research base.

We also restate our commitment to consumer transparency, embedding our revised regulatory performance framework and implementing the revised internal governance rules, while continuing our day-to-day statutory decision-making work.

Click here for more information about the plan and our five year policy objectives.

The LSB visited Cardiff at the end of November for its annual out-of-London Board meeting.

Taking up residence for the day at Cardiff and Vale College, Board members got stuck into the key issues on their agenda before hosting a roundtable event for representatives of the legal services sector in Wales, members of the Welsh Assembly, and those with an interest in legal services.

Sir Wyn Williams, our Chair for the evening, led those present in an informative and enjoyable discussion, during which the LSB’s Head of Research & Development, Steve Brooker, delivered a presentation on innovation and access to justice in Wales.

Earlier that day, the LSB’s Chief Executive met with Jeremy Miles AM, Counsel General for Wales to discuss key issues of mutual concern for the LSB and the Welsh Government.

We would like to extend our gratitude to those AMs who were able to join us on the day; particular thanks go to the Counsel General who addressed the Board directly – and to Sir Wyn Williams, who kindly stepped in to chair the roundtable.

Special mention goes to the team at Cardiff and Vale College, without whom the event would not have been the success that it was.

In our September issue, we reported on our decision to consult on new internal governance rules to enhance the independence of the approved regulators’ regulatory bodies from their representative functions so far as is possible under the current legislative framework.

In November, we published the consultation and outlined the proposed new rules as well as the statutory guidance that will accompany them. We have sought to create new rules which are principled and outcome-focused, but which more detailed obligations where the evidence showed these to be necessary. We want the new rules to be clear and understandable as well as straightforward to comply with and enforce.

As part of the consultation, we are seeking input from the approved regulators and regulatory bodies on anticipated costs of implementation, in order to inform our impact assessment of the changes.

This consultation will close at 5pm on Monday 21 January 2019. Stakeholder meetings will be held before the end of the year to help inform stakeholders’ final responses.

We hope to publish a final version of the IGR in the New Year with a view to taking them live in the spring. The ARs would then have a six month transition period in which to make the necessary changes to their governance arrangements in order to comply with the new rules.

Read more about the proposed new IGR here.

More information on what we have been doing can be found here