Making sense of the legal consultation game

ARE you feeling bemused? You are not alone. The City&rsquo;s legal framework is undergoing profound change in the form of consultations that could define the direction in which the legal profession is heading. The point of consultations is to generate considered input from a wider number of people, leading to improved proposals. The problem for solicitors is that few can keep abreast of what is going on, let alone find time to comment.<br /><br />Among the current consultations are those concerning (1) the independence of their regulator, the SRA; (2) the regulatory regime which should apply to ABSs, or alternative business structures (ie how lawyers and non-lawyers can work together and how external investment can be made in such organisations); (3) the appropriate regulatory rules, monitoring and enforcement regime for solicitors (the Hunt Review) and (4) the reaction of the SRA to the Smedley review of the regulation of firms serving the corporate market.<br /><br />(1) This comes from the Legal Services Board (LSB) and submissions have to be made by 26 June. One of the evils that David Clementi was to resolve in his 2004 review of the provision of legal services was that regulation was done by bodies &ndash; like the Law Society &ndash; which also represented the regulated. The Law Society remained the &ldquo;approved regulator&rdquo; while delegating actual regulation to the SRA. The Legal Services Act followed, and more rules to assure lawyers of regulatory independence.<br /><br />(2) The LSB has an interesting consultation paper regarding ABSs. Comments are required by 14 August. This paper pulls together many of the relevant issues which will need to be addressed and highlights the fact that there is no consensus on the impact which ABSs will have on different sectors of the legal market. Perhaps inevitably (and rightly), the LSB insists any such unproven concerns will be outweighed by the &ldquo;major benefits the LSB foresees from the development of the ABS regime&rdquo;. Notwithstanding, the paper seeks ideas on minimising concerns.<br /><br /><strong>RELEVANT ISSUES</strong><br />The consultation paper also considers whether regulation of ABS structures should be based on principles rather than more prescriptive rules. &nbsp;The LSB sees the six &ldquo;core duties&rdquo; for solicitors (Rule 1 of the SRA Code) as high level principles which might be adapted for ABSs. But if this is to be the route for ABSs, it will surely lead to pressure on the SRA, for instance, to do away with much of its current prescriptive approach for solicitors generally.<br /><br />The LSB also sees &ldquo;synergies&rdquo; between an appropriate regime for ABSs and changes to the regulation of the firms serving the corporate market. This seems to be because the LSB sees both as being organisations which can be expected to have sophisticated compliance systems. &nbsp;While that may be true, the real issue is what the clients of the respective organisations require from the regulator; to the extent that ABSs serve unsophisticated clients, the needs are very different.<br /><br />(4) This leads into the Smedley Report. &nbsp;Smedley has rightly recommended radical change to the way the large firms are regulated. The SRA is deciding whether to implement the proposals. If not, there could be further upheaval as a new regulatory body is established. The SRA is due to announce its intentions soon. In the meantime, the Smedley report is intended as one element of the wider review of solicitors&rsquo; regulation by Lord Hunt.<br /><br />(3) Hunt has just published his Initial Report, but is keen for more input (by the end of June).There are a number of relatively small but significant ideas in relation to the SRA&rsquo;s operations which are suggested in Lord Hunt&rsquo;s Initial Report. At the same time, he is clearly concerned that the LSB is rushing the advent of ABSs. &nbsp;More problematic is an idea that, in addition to the SRA rules, the Law Society should set separate and higher &ldquo;professional standards&rdquo;, with only those subscribing tbeing entitled to call themselves solicitors.<br /><br />Now is the time to delve into the large melting pot of regulation of legal services and have your say before it is too late.Chris Perrin, Chairman of the City of London Law Society&rsquo;s Professional Rules &amp; Regulations Committee, Executive Partner &amp; General Counsel, Clifford Chance LLP<br />