The Legal Services Act 2007
A. Context
Government abandoned some of the proposals of the 1989 Green Papers, for example, that barristers should be able to form partnerships, in enacting the Courts and Legal Services Act.107 Other issues, like allowing lawyers, accountants and others to practise together in multi-disciplinary partnerships had not been tackled.
In 2003 the Department of Constitutional Affairs published a report that concluded that the regulatory framework for legal services was ‘outdated, inflexible, over-complex and104 Response from Law Society to request for information.
105 Courts and Legal Services Act 1990, ss 19(1), 19(2) and (3).
106 Burrage (n 39) at 562.
107 Lord Chancellor’s Department, The Work and Organisation of the Legal Profession (n 55). insufficiently accountable or transparent’.[509] Sir David Clementi, who was then asked to undertake a review of the regulatory framework for legal services, added to this list that they were ‘inconsistent’.[510]
The Clementi Review encouraged opponents of the legal profession. The National Consumer Council (NCC), for example, which assesses goods and services against criteria such as access, choice, information, quality and value for money, safety and representation,[511] was a consistent critic.[512] The NCC had achieved success with previous suggested regulatory reform. It particularly advocated having a consumer voice in professional regulation[513] and the expansion of the advice sector through legal aid funding.[514] The NCC continued to be an agent for reform of the profession throughout the period leading to the enactment of the Legal Services Act 2007 (LSA 2007). In 2006 it produced a survey showing public confidence in solicitors at ‘rock bottom’.[515]
Clementi’s consultation paper, issued in March 2004, floated the idea that the regulatory functions of the professional bodies, entry standards, rule-making, monitoring and enforcement, complaints and discipline, should be placed with a single regulator, leaving them with only representative functions on behalf of their members.
He favoured, however, a ‘half-way house’, whereby the professional bodies would separate their representative and regulatory functions and an oversight regulator would monitor and approve regulatory changes made by the professions.The NCC welcomed the Legal Services Bill, demanding that the proposals for independent complaints handling were not watered down. The government accepted the recommendations of the Clementi Report proposing a compromise regulatory structure. This involved separation of the representative and regulatory functions of the professions and increased lay representation on their regulatory committees. The Law Society broadly welcomed the changes, which were much less stringent than predicted at the start of the process.[516] It warned, however, that the government must not be allowed to make its own appointments to positions of power over the profession or change regulatory objectives through secondary legislation.[517]
The LSA 2007 was an opportunity to finally curtail the power of the legal professions and bring lawyers under state control. This would have been a radical move, sure to excite enormous opposition. It would also have been inconsistent with the philosophy of the small state and the policy of competition. Perhaps for these reasons, the LSA 2007 preserved the professions while considerably constraining their activities. This may have been seen as an interim step towards de-professionalisation.
B. Main Provisions
i. Introduction of Alternative Business Structures
The theme of competition was evident in the consultation leading up to the LSA 2007.[518] The introduction of Alternative Business Structures (ABS) was one of the radical features of the LSA 2007. This was a move that had not been recommended by Clementi, but was intended by government to be the final step in providing competition to lawyer owned and run legal businesses. ABS were conceived as organisations employing lawyers and delivering legal services, yet owned and managed by non-lawyers.
Nor were potential regulators of ABS confined to established professions. They could even include the LSB itself if no other regulator came forward.ii. Regulatory Objectives
The LSA 2007 imposed a statutory duty on approved regulators of lawyers to observe and to comply with eight regulatory objectives. These objectives, together with the ‘professional principles’, which must be promoted under one of the regulatory objectives, provide a framework for the professional role of lawyers. Support for the rule of law is the second regulatory objective. Otherwise, these duties attempt to place in balance the interests of producers (lawyers) and consumers (clients).
The interests of the profession are protected by subjecting the LSB to duties to support the constitutional principle of the rule of law and encourage a strong legal profession. The interests of consumers are protected by the objectives of improving access to justice, promoting the interests of consumers and encouraging competition in the legal services market. The last of these is assumed to benefit consumers by forcing down the price of legal services. The professional principles identified by the LSA 2007 represent the main principles of lawyers’ ethics evolved over the previous centuries.
V.