Wednesday, March 28, 2012

Why Do We Need the Legal Services Board?

Public bodies such as the Legal Services Board have to undergo triennial reviews to see if they should continue and if so in what form. 2012 is the LSB's turn.

The Ministry of Justice is the reviewer and has held some seminars to canvass views among those interested. I am interested so I have just submitted my views on the future role of the LSB. They focus on research and coordination. This latter point will appeal to those who have read Steven Lukes' little but invaluable book, Power: A Radical View. I consider the LSB to embody the ideas of the second and third dimensions of power as Lukes represents them. It is not domination as such but the ability to create environments where the participants want to engage in collective action. If one can set the agenda, that's far more powerful than merely telling someone to do something.

Here are my views. My statement is short and relates to the role of the LSB in coordination and research.

Let me take coordination first. Contrary to the way we speak there is no single legal profession but a set of professions that have varied in type and number over the centuries. For example, there were approximately 12 legal professions in the 15th century. Apart from the judiciary and some parts of government, there has not been any significant coherent regulation of the legal professions until recent times. One result is that different professions saw themselves as competing fiefdoms fighting over turf, eg, rights of audience in the courts, control of judicial appointments and control of conveyancing. These turf battles have generally favoured the professions' self-interest at the expense of the client's interests. This is not to say that legal professions have not done magnificent work in areas like pro bono and legal aid.

Although there have been reviews of the legal services market and professions before, any attempts at reform have been piecemeal and resisted strenuously by the professions. Indeed the OFT reports on professions through the Clementi Review to the Legal Services Act 2007 represent the first major wholesale analysis and reform of the professions and their regulation. The Legal Services Act has introduced a systematic process of regulation that allows for degrees of self-regulation to command and control where necessary. At the same time it has opened up the framework of the legal services market and introduced, in a formal way, the greater participation of "non-lawyers" as active producers in this market.

These are tremendous changes running counter to centuries of tradition. It takes time for such change to bed down and be accepted. For lawyers to realize they are one of several "producers" in the legal services market as opposed to the only participants is shocking. The results of these changes and shocks to the system are profound and as such require managing. They cannot be left to chance alone. The problem of management is a subtle and delicate one that must manage expectations and potentialities.

The present setup is fragmented and based on traditional divisions between different professions. There is nothing wrong in this as it reflects the situation we are faced with. It does, however, mean that the differences and distinctions between the professions continue to resonate in the market. Turf battles have not disappeared; they have been reconstructed. Not only are the Approved Regulators asked to regulate their own professions and activities but in some cases--where ABS are concerned--other professionals. One of the risks inherent in this situation is that of regulatory arbitrage, which should be best avoided.

To achieve a coherent regulatory process takes time and continuing communication among the different parts. Experience shows us that without the intermediation of a knowledgeable body this communication may only be partial at best. In part the role of the LSB is to act as an intermediary to ensure the Approved Regulators adhere to the letter and spirit of the Regulatory Objectives laid out in the Legal Services Act.

The role then of the Legal Services Board is to facilitate communication, consistency and coherence between the Approved Regulators, and to ensure the legal services market serves the needs of consumers and the public interest. The changes being wrought in the legal services market are creating challenges never hitherto faced by the professions. New providers, new organizational structures, and new modes of delivery need proper coordination across the differing regulatory structures which the intercession of the LSB can help deliver.

The introduction of Alternative Business Structures is a case in point. There was much speculation about whether the introduction of ABS would imitate the "Big Bang" in financial services. Clearly this has not occurred but the drive towards ABS is gathering speed. These are unknown quantities which lawyers have not traditionally had to contend with. Without the facilitation of the LSB the ABS process would have been strewn with obstacles. Besides encouragement the LSB possesses powers to compel where obstacles resist removal. The possession of such power is often sufficient in itself to smooth out implementation.

From this perspective the role of the LSB is to exercise power in a way that does not coerce or cajole but rather sets the agenda and determines the environment of the debates needed. This is not brute force; it is engagement and it is what makes the LSB so valuable. It is also what makes the LSB necessary. The constitution of the Approved Regulators will not support these processes. Until they have matured (and the legal services market) and fully adapted to their roles, they require the presence of the LSB, however welcome they consider it.

I now turn to research. Previous incarnations of the Approved Regulators, eg, the Law Society and Bar Council, have from time to time undertaken research on the professions and legal markets. It has not been a sustained process. We need more research on the legal services market to understand how it works, what it does, who its occupants are and so on. I have been engaged in research in this area for some years, but I realize we need more. One of the key services of the Legal Services Board has been to engage in research, both as research funder and as facilitator. This is invaluable. In the few years of the LSB's existence research on the professions and the legal services market has increased dramatically. Moreover, the LSB has taken on the role of analysing the research done and attempted to systematize it so we can see the gaps. Legal services are no different from medical services in that decisions about the allocation of resources, what constitutes the proper operation of the market and its providers are best taken on the basis of evidence rather than conjecture or anecdote. We know from earlier reviews and reports little sustained research was done which created doubts about the quality of decisionmaking.

The Legal Services Board's explicit aim to make all research available is to be applauded and will help to dispel many of the mists that enwrap the provision of legal services. The Approved Regulators have not yet sought to take on this role and therefore the LSB is necessary and will continue to be so for some time yet.

I am therefore convinced the Legal Services Board should continue in its present incarnation. Without it the legal services market would be diminished.


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Tuesday, March 06, 2012

Becoming a Cosmpolitan Lawyer




Peter Lederer and I have revised our paper, "Becoming a Cosmopolitan Lawyer". It's available at SSRN here.

The paper is based on extensive interviews that Peter and I have done over a few years. It is presented as an oral history--rather different to anything I've done before.

Comments most welcome.


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Monday, March 05, 2012

Will There Be Fallout from Clementi?

I've revised, updated and expanded my paper, "Will There Be Fallout from Clementi? The Repercussions for the Legal Profession after the Legal Services Act 2007". It's available from SSRN here.

I have sketched out some of the new types of business that are now being promoted under the Alternative Business Structure regime which came into force in January 2012. There have been over 130 licence applications to the SRA. And don't forget the first ABS was approved by the Licensed Conveyancers last October.

What the legal services landscape will look like say five or ten years from now is anybody's guess. It's wide open.

Say goodbye to the legal profession and welcome the legal services providers......



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