Jayne Willetts outlines concerns about the SRA's consultation on proposals which may deregulate the legal market.
The SRA consultation Looking to the future launched on 1 June includes a section on 'Allowing more flexible practice'. The intention is to permit solicitors to work for unregulated entities providing unreserved legal activities to the public. Solicitors would be regulated as individuals, but clients of individual solicitors would be unlikely to have the benefit of professional indemnity insurance or access to the Compensation Fund and the Legal Ombudsman. Also, those clients would not be able to claim legal professional privilege.
On the other hand, a solicitor working in a regulated entity, whether delivering reserved or unreserved legal activities to the public, will continue to be required to provide the usual client protections to clients. These may well be the hallmarks of our well-respected profession but they do inevitably add to the cost of legal services.
Too much choice
For the unsuspecting members of the public, there is already a bewildering array of legal advisers. How can the public judge whether a licensed conveyancer is better than a legal executive for a conveyancing transaction, or whether an unqualified employment adviser is better than a solicitor or direct access barrister for employment advice?
Is price the main differential? It is, regrettably, often the only factor that the lay public can rely upon in choosing from the existing range of legal advisers.
To add to the current confusion, the SRA's proposals, if accepted, would result in two different levels of solicitor - one that would provide client protection measures and one that would not. An inevitable consequence would be that the solicitor in the regulated entity would have to bear higher overheads such as insurance so would be more expensive than the solicitor in the unregulated entity. Both, however, would be entitled to describe themselves as a 'solicitor'.
Enid Rowlands, chair of the SRA Board, is heralding these changes as 'freeing up solicitors to provide some legal services outside of regulated firms. This change is designed to benefit the public by allowing solicitors to work in the emerging 'alternative' legal market and provide high-quality services.'
Are these aims of benefiting the public and providing high-quality legal services compatible and indeed achievable? Or is it just another example of spin?
Reducing costs - at what price?
In support of this campaign for cheaper legal services, the SRA relies upon research that 'many people and small businesses still cannot access the legal advice that they need, at an affordable price.'
To reduce cost further, the SRA's proposition is that solicitors working in these alternative legal services providers should not be required to have personal professional indemnity insurance. There would be no need for professional indemnity insurance which would ensure that solicitors were operating and competing on the same terms as others in this market. The SRA emphasises that it would also mean that the public could access affordable services, as insurance costs can be high.
There may be an advantage for solicitors (as opposed to the public) in delivering unreserved legal activities through an unregulated entity without client protections in place. It could be more profitable to split off the unreserved work and maintain a much smaller entity for the reserved work, although the experience of the Co-op might suggest otherwise.
This, in turn, might well result in a smaller number of regulated firms. The next question could be - are solicitors required to undertake the unreserved work or could an entire team of non-solicitor unregulated staff be put in place? A reduction in the number of solicitors could follow.
Undoing the foundations
We must not permit the SRA to divide and fragment the profession in this way. It becomes impossible to regulate. It becomes impossible to market as a homogenous profession both in the domestic and international marketplace. It also becomes impossible to maintain the client protections that are the very foundation stones of our profession.
The SRA is a regulator. In trying to reduce the cost of legal services and manipulate the legal market, it could be described as exceeding its jurisdiction. The SRA would no doubt contend that protecting and promoting the interests of consumers and promoting competition are two of the eight regulatory objectives required of the SRA by the Legal Services Act. However, these two objectives should not be allowed to supplant the most important objective under the Act, which is protecting and promoting the public interest. The public interest must be paramount. Surely the Legal Services Board could not argue about that.
The SRA needs to confine itself to maintaining high standards and exerting effective disciplinary measures in the interests of the profession and clients. If it can achieve those aims successfully, then it will have complied with the objectives imposed by the Legal Services Act.
The consultation ends on 21 September – please have your say.
Respond to the SRA consultation
Read our press release on the proposed changes