Shake up of legal services not backed by evidence

Widespread concerns about deregulation of the solicitor profession must be taken into account and new rules rejected by the oversight regulator, the Law Society of England and Wales said today as the Legal Services Board (LSB) considers proposals to create different tiers of solicitors and reduce consumer protections.

Law Society president Christina Blacklaws said: "The Solicitors Regulation Authority (SRA) appears to be pursuing a deregulatory agenda based on flawed premises and at the expense of consumers.

"The misguided proposals now being considered by the oversight regulator fail the litmus tests for regulation: they jeopardise the public interest and risk weakening the rule of law.

"The proposals are not supported by robust impact assessments or cost-benefit analysis appropriate for rule changes that will fundamentally change the legal services landscape.

"The rule change application to the LSB is misleading. It overstates support and understates opposition, disregarding consumer groups, legal experts and evidence stacked against its propositions.

"We urge the LSB - as the oversight regulator - to reject the SRA's ill-conceived scheme to create a dangerously complex marketplace for legal services. Flexibility for solicitors should never come at the expense of protection for consumers."

Christina Blacklaws added: "We would welcome simpler rules governing solicitors, but there is no evidence that consumers would benefit from the changes proposed by the SRA, and ample evidence that consumer protection would be reduced and consumers confused.

"Unnecessary complexity would make it much more difficult for consumers to reach informed choices about legal services. This could put consumers at risk and ultimately undermine trust in legal services.

"The SRA has not evidenced any strategy to mitigate the risk that multiple solicitor brands would result in consumers and the public being misled and losing confidence in the system.

"We are concerned that unmet legal demand would increase as vulnerable clients could become less confident about seeking legal advice. The regulator has even acknowledged that vulnerable clients are less likely to benefit from the remedies it proposes to mitigate consumer confusion.

Today, anyone who consults a solicitor can be confident their adviser is highly trained and operating within a robust regulatory framework that ensures consistent and comprehensive protection to give people peace of mind in case something goes wrong. This allows consumers to make a clear choice between regulated and unregulated legal advisers.

"The Legal Services Board must apply the rules for changes to regulatory arrangements rigorously, and reject the SRA's rule change application because it is prejudicial to regulatory objectives and contrary to the public interest."

Notes to editors

Key proposals and analysis

SRA proposal for rule change Law Society viewpoint Other stakeholders with similar viewpoints
To permit 'sole solicitors' (freelance solicitors) to act outside the protections of a recognised sole practice. These solicitors would not be subject to entity regulation.

Freelance solicitors could deliver non-reserved services. They could also deliver reserved services, subject to certain requirements, ie being engaged directly by the client, and not holding client money.

Freelance solicitors would need to hold adequate insurance cover for both reserved and non-reserved work.




 
 
This proposal removes some of the protections that clients benefit from if they use a regulated sole practitioner and a regulated firm.

For example, a regulated sole practitioner and firm must have professional indemnity insurance equivalent to the SRA's minimum terms and conditions, and a person with three years' practising experience, whereas a freelance solicitor would not need to purchase insurance to this level and would be free to deliver non-reserved services without prior work experience.

It is unreasonable and unrealistic to expect clients to understand the difference between a recognised sole practice and a sole solicitor and the difference in the protection they might afford their clients.

The Law Society opposes this proposal.
Citizens Advice, the Legal Services Consumer Panel and the Legal Ombudsman expressed concerns about weakening consumer redress protections, and the risk of consumer confusion arising from this proposal.
























Allowing solicitors to deliver non-reserved legal services from unregulated entities.






 
















 




 




This proposal would remove or reduce crucial client protections, such as mandatory professional indemnity insurance, access to the compensation fund, and legal professional privilege.

We have seen no evidence that this rule change will deliver benefits or reduce the price of legal services. At the same time, it places an unrealistic burden on clients to understand the different regulatory status of solicitors working in different entities and different models of practice.

We oppose this proposal.















Citizens Advice expressed concern regarding the proposals to remove the requirement for professional indemnity insurance and the restriction of access to the compensation fund.

The Legal Services Consumer Panel raised concerns about consumer confusion, weakened consumer protections (no compulsory professional indemnity insurance and no access to the compensation fund), and the Legal Ombudsman's jurisdiction over complaints arising against unregulated entities.

The Legal Ombudsman was concerned about the removal of compulsory professional indemnity insurance and the compensation fund requirements. In addition, it was concerned about the lack of clarity over its jurisdiction, and potential problems with investigating complaints and enforcement of judgments.

About the Law Society

The Law Society is the independent professional body that works globally to support and represent solicitors, promoting the highest professional standards, the public interest and the rule of law.

Press office contact: Harriet Beaumont | harriet.beaumont@lawsociety.org.uk | 020 8049 3854