Desmond Hudson, Law Society chief executive
(This article reflects the content of a speech Desmond Hudson made at the ARK 9th annual Risk Management for Law Firms conference on 4 December 2012)
It has been just over one year since the solicitors' profession adopted a new type of regulation in the form of outcomes-focused regulation (OFR). One year would appear to be a good point at which to take stock and look at how the Solicitors Regulation Authority (SRA) and the profession it regulates have fared.
In doing that, it is clear to me that we, as a profession, have a lot of questions that remain unanswered and that more time is needed to see OFR's true impact. However, OFR and regulation in practice is a fluid and shifting process. If the SRA is getting it wrong, the profession will let its voice be heard and the OFR regime has the opportunity to adapt.
Was OFR the right choice?
OFR represented a big and bold strategic choice by the SRA. At present the SRA's position is a lonely one. The route the SRA has taken is not comparable with other regulators – and in particular other legal regulators around the globe who have chosen to respond to the '999' calls, focusing on catching as quickly as possible the rule breakers, to leave complaints about inadequate service in the retail markets to ombudsmen rather than invest in predicting or spotting early those they believe will do wrong.
We want our regulator to be effective, to be proportionate, to root out quickly the dishonest, to give space to the competent and decent and support the mildly incompetent to get better or get out in a humane and informed way, while also recognising the precious and fragile flower that is a firm's reputation. That requires the SRA to be aware, to be informed and to be smart.
How can OFR work better?
The Law Society, in taking stock of OFR one year on, asks on behalf of its members whether the SRA is not trying to do too much, to the wrong people, in the wrong way.
It could be perceived that currently the SRA is fettered to a single approach. Its strategy, its decisions, its raison d'être are all focused on the 'mission' to impose OFR on all aspects of professional life, perhaps without a complete understanding of context or consequence.
With that in mind, the SRA must listen to the profession in order to become a more effective regulator, one that understands those it regulates.
While the SRA regularly holds consultations, what is consultation for if the views of the profession and other informed opinions are frequently ignored or an approach has been decided upon with scant regard paid to the expert profession?
Critical friends
We, the profession, want the SRA to get this right, for OFR to work properly and to one day become the model for legal regulation the world over. So it is understandable for us to ask the difficult questions of the regulator: What if trying to identify early the likely miscreants and help them find a different way is a costly failure? What if the pressures of trying and failing means that they regulate those who are easy to regulate and are co-operative but avoid those that pose difficulties and fail to engage? Will a lack of understanding about how to properly identify real risk and enforce effective solutions prove to be a systemic impediment?
These questions and concerns are perhaps amplified by what we at the Law Society are hearing from our members about delays, poor communication, lengthy response periods, administrative deficiency, a lack of consistency in the ways in which decisions are reached and the problems with the application process for alternative business structures.
In taking stock, we can easily criticise and tell the SRA they are doing this and that wrongly, but I want to stress that with our concerns comes a genuine offer to the SRA to work with us, the national Law Society, and local law societies to shape the regulatory framework for the future.
We may be a critical friend, but criticism is necessary as we all seek to ensure a fair and effective regulatory regime, the decision from which affects not only the public but the profession as well.