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Brexit fallout and Conservative party leadership contest

08 July 2016

Alexandra Cardenas discusses the fallout from the Brexit result on the EU referendum, and the resulting Conservative Party leadership contest. 


This week was again dominated by the fallout from the Brexit result on the EU referendum, and the resulting Conservative Party leadership contest. 

By close of business on Thursday, it became evident that this was a contest between home secretary Theresa May and minister for energy and climate change Andrea Leadsom. The ballot will now go out to all 150,000 Conservative Party members on 17 August, with the new leader and prime minister expected to be in place from 9 September. 

There were a number of keenly anticipated announcements at the end of the week. On Thursday, the Ministry of Justice announced a long awaited public consultation on Alternative Business Structures, which will close on 3 August. The week then closed with the publication of the Competition and Market Authority's interim report that concluded that no formal market investigation of the market is needed. 

Monday 4 July

Nothing to report.

Tuesday 5 July

Parliament

House of Commons: Courts and tribunal fees - debate

A debate on courts and tribunals fees took place in the House of Commons on Tuesday, where the Justice Select Committee's report on the issue was discussed. 

The Law Society briefed MPs ahead of this debate, and the Society was mentioned eight times. The president of the Law Society gave evidence to the Committee on 9 February this year. 

Read the debate in full

See a Storify of live tweets from the session

The debate focused mainly on the issues raised in the report, particularly on employment tribunals fees. A summary of the debate is as follow:

Bob Neill MP (Conservative)

The chair of the Committee expressed his disappointment at the delay of the government review of the impact of employment tribunal fees. He explained that this was the reason why the Committee had decided to discuss its report in the House rather than waiting for the two months the government normally has to reply to a Select Committee report. He also said that the government's behaviour goes 'against the spirit of courtesy, openness and co-operation I have seen from the Ministry of Justice team'. He reiterated that, although the Committee was not in principle against fees for litigants, accessibility of justice should be taken into consideration. He added that the government did not produce adequate evidence in support of its policy, and he quoted the president of the Law Society who said that evidence was poor.

Karl Turner MP (Labour)

The former shadow attorney general also mentioned the Law Society by saying that 'anybody who knew anything about employment tribunals' had warned that the fees were unlikely to work.

Victoria Prentis MP (Conservative)

Ms Prentis, a member of the Committee, highlighted that the Law Society had spent a considerable amount of time looking at fee remission in general and had called for the Ministry of Justice to introduce a system for regular re-rating of the remission thresholds to take account of inflation, saying  'Personally, I think that there is a lot of merit in the suggestion of enabling automatic remission for all basic rate taxpayers. That would simplify the system enormously.'

Marie Rimmer MP (Labour)

Ms Rimmer, a member of the Committee, also mentioned employment tribunals fees, saying that the Law Society claimed that there was emerging evidence of people and employers hanging back to wait to see whether a claim progresses before settling. 

Richard Burgon MP (Labour)

The newly appointed shadow lord chancellor and shadow secretary of state for justice mentioned the Law Society's concern that was the possibility of a two-tier justice system for the rich and the poor.

Justice minister Dominic Raab MP, the minister responding, said: 

• To ensure that the courts and tribunals are properly funded, and access to justice is properly protected, increases to court fees were necessary. He added that the cost of our courts and tribunal system to the taxpayer was 'unsustainably high', and it was 'only right' that those who use the system pay more to balance that burden with the taxpayer.

• In relation to employment tribunals fees, he said that it was obvious that more people will use a service if it is free than if they have to pay to use it: 'The point - this has been missed almost entirely in the debate - is that we are seeing the right kind of behavioural change' and a drop in claims.

• In relation to the delay of the government review on employment tribunal fees, he stated that the government will make the announcement in the near future.

Government 

Cabinet Office: Foreign Affairs Select Committee: newly established EU Unit

On Tuesday, the minister for government policy in the Cabinet Office, Oliver Letwin MP, gave evidence on behalf of the government to the Foreign Affairs Select Committee on the implications of leaving the EU for the UK's role in the world. A major theme which came out of the session was a new EU Unit within the Cabinet Office designed to support the government's Brexit negotiations in the coming years. 

The minister, and the new permanent secretary, Oliver Robbins (who moved across from his current role as second permanent secretary at the Home Office on 4 July), are creating a Unit that will be ready to support the new prime minister's negotiations with the EU. It will eventually co-ordinate negotiations, but until the new Prime Minister is appointed on 9 September, it will undertake three key tasks:

1. Building a team around the Mr Robbins in the Cabinet Office, drawing from departments such as Foreign and Commonwealth Office, the Department of Business, Innovation and Skills, HM Treasury and others, with specifically relevant expertise. The total size of the Unit is yet to be confirmed. Mr Letwin and Mr Robbins are currently identifying gaps in expertise such as trade negotiators. Preparations are underway to either recruit new staff or train current civil servants.

2. Identifying the constraints and background situations that will need to be understood by the UK's negotiators. For example, detailed analysis of tariff and non-tariff barriers that would be faced by specific goods or services without a free trade agreement.

3. Developing options papers for the present Cabinet, showing how a post-Brexit UK-EU arrangement could maintain current agreements such as continuing co-operation on security or funding of innovation and science etc.

The minister said that the task on deciding how to negotiate Brexit could only be undertaken by a new prime minister and Cabinet, and negotiations should only begin once the new administration is in place. Over the next eight weeks, the Unit's members will be based in their own departments but will be virtually working for the Unit and attending regular meetings. The future structure of the team will be determined by the next prime minister in the autumn. 

The new Unit is gathering the views of a wide number of stakeholders and all evidence will be considered when the government develops its negotiating position.

Wednesday 6 July

Nothing to report.

Thursday 7 July

Parliament

House of Commons: ministerial statement - legal services regulation 

Lord Faulks, the minister of state for civil justice, made a written statement yesterday on legal services regulation. 

The main points of the statement are:  

• The government is committed to a strong, independent and competitive legal services market, which will promote consumer choice and quality services at lower prices, ensuring greater access to justice for all. 

• The government needs to ensure that the statutory frameworks underpinning regulatory regimes allow regulators to regulate in a way that is proportionate and promotes competition and innovation.

• The Better Deal document included a pledge to consult on making changes to the regulatory framework for legal services to remove barriers to Alternative Business Structures and on making legal services regulators independent from professional representative bodies.

• The government intends to consider the detail and timing of a consultation on regulatory independence, in the context of the preliminary findings of the Competition and Markets Authority study into the legal services market, which are due to be published shortly.

• A consultation on ABSs is being launched today. It aims to enable legal services regulators to reduce regulatory burdens on ABS while taking a more effective, risk-based approach to regulation. 

• Recent research has indicated that ABSs are more likely to be innovative than other regulated legal services firms. 

• ABSs have increased competition in the market which encourages a wider variety of legal services that are more accessible and affordable to consumers.

• As a result of concerns raised at the time about the potential risks of these new and unknown business models, the legislative framework for the regulation of ABS businesses, set out in the Legal Services Act 2007, is more onerous and prescriptive than that for traditional law firms.

• In practice, ABSs have not been shown to attract any greater regulatory risk than traditional law firms.

• The Legal Services Board and front-line regulators suggest that the current statutory requirements act as a deterrent and an unnecessary barrier to firms wanting to change their current business model to a more innovative one, as well as to new businesses considering entering the market.

Read the full statement

Read the consultation paper

The deadline for responses is 3 August 2016.

Friday 8 July

Government

Competition and Markets Authority: Decision on legal services market investigation 

An interim report into the legal services market was released today by the Competition and Markets Authority (CMA), which the Law Society welcomes, owing to its conclusion that no formal market investigation is needed. 

There were, however, other findings which will impact on the profession. These include recommendations on transparency of pricing and service quality, and on the burdens of regulation.

The report went into further detail, stating that:

• The competitive market for legal services could be improved with greater transparency of pricing. The Law Society has previously stressed that the market for legal services is already highly competitive and contributes £25.7 billion to the economy and supports 370,000 jobs. The Society has also previously said it would work with the CMA to support more information being supplied to clients while ensuring that critical client protections remain in place.

• It considered whether legal services regulation has an adverse effect on competition. Its provisional view is that this regulation does not create significant barriers to entry or distort competition between regulated and unregulated providers of legal services, but that it does impose significant costs on providers that in some cases may be excessive relative to the benefits in consumer protection.

• It welcomes the liberalising steps that have already been taken by regulators to address these issues within the current regulatory framework. It is open to more fundamental change of the regime, but at this stage believes that there is a risk that such change might lead to increased regulation and might involve significant transitional costs as well as regulatory uncertainty. It has, however, noted the complexity of the current regulatory framework with its multiplicity of regulators and questions around regulatory independence. In this context, the CMA has noted that the government intends to examine the issue of regulatory independence.

The services covered by the market study include areas such as commercial law, employment law, family law, conveyancing, immigration, wills and probate and personal injury and represent an estimated annual turnover of around £11 to £12 billion. 

The CEO of the Law Society, Catherine Dixon, said this morning that:

"We believe that the market for legal services is already competitive and solicitors offer exceptional services to their clients as a consequence of rigorous training and years of experience. We are pleased that the CMA recognises that there is no requirement for a full market investigation

"Making information available about the range of services and ensuring that pricing information is on offer to clients to enable them to judge on quality and price is always important.

"Recent research commissioned by the Law Society and the Legal Services Board showed that solicitors were already more likely than other advisers to provide information on costs and indicate how long the work would take. 78 per cent of those who sought professional advice were satisfied with the outcome of their problem."

Tags: Investigatory Powers Bill | Westminster weekly update | Parliament | Brexit

About the author

Alexandra Cardenas is Head of Public Affairs and Campaigns at the Law Society. Public Affairs manages the relationships with parliament and government. She is a dual qualified solicitor in England and Wales (2014), and Colombia (2002). Prior to the Society, she practised as a human rights lawyer and worked at Macmillan Cancer Support and Animal Defenders International.

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