A new world of Tesco-style law for all

SIX artfully stacked cans of baked beans adorn the desk of the Legal Services Board&rsquo;s first chairman David Edmonds. This isn&rsquo;t some clever executive desk toy nor is it evidence of a limited culinary imagination. Instead it&rsquo;s a playful reference to &ldquo;Tesco Law&rdquo;, the shorthand for the ongoing liberalisation of the legal profession under the Legal Services Act which 15 months ago created the LSB as the profession&rsquo;s arch-regulator.<br /><br />&ldquo;My hope is that the legal services market will, as markets tend to, lead to the evolution of new kinds of services, support and help for the consumer,&rdquo; reflects Edmonds, who spent five years as director general of Oftel and so knows a thing or two about the transforming powers of competition. &ldquo;If you always focus on what the consumer needs then consumer demand for those services comes through, be it the value baked beans or the premium baked beans, to use a controversial metaphor.&rdquo;<br /><br />Indeed, the government minister Bridget Prentice once observed that she didn&rsquo;t see why consumers should not be able to access legal services &ldquo;as easily as they can buy a tin of beans&rdquo;. Lawyers balked at the idea of a future stuck on aisle 15 of their local supermarket flogging legal services somewhere between tinned veg and cleaning appliances. <br /><br />The law &ldquo;isn&rsquo;t about selling baked beans&rdquo;, Edmonds asserts. &ldquo;But in a baked bean market, as I have demonstrated for myself in recent weeks, there&rsquo;s a heck of a lot of different types of beans. I want to see a variety of provision in legal services, which goes right from the difficult social welfare case all the way up.&rdquo;<br /><br /><strong>INCREDIBLY EXCITING</strong><br />On 2 January 2010 the LSB finally comes into full effect with powers to approve the rules under which the providers of legal services must operate. Edmonds says that he has been approached at least three times over the past year by agitated lawyers saying: &ldquo;Mr Edmonds, you&rsquo;re not going to change something that has over 800 years of history behind it.&rdquo; To which he proudly replies: &ldquo;The Legal Services Act gives me a set of duties and responsibilities which might well mean me changing 800 years of history &ndash; and is the fact that there are 800 years of history necessarily a good thing?&rdquo;<br /><br />Next month the LSB launches a major consultation on the shape of alternative business structures (ABSs), the most revolutionary aspect of the reforms allowing firms to be majority-owned by external investors (as well as Tesco et al) by 2011/12. Edmonds describes ABSs as &ldquo;incredibly exciting&rdquo;. &ldquo;The ABS&rsquo;s structure is all about opening the market up by aligning alternative service providers with other professionals, by using the economies that come through scale and using marketing in a different kind of way.&rdquo;<br /><br />Edmonds says his board will be listening to all sides (lawyers, new market entrants and potential sources of external capital). The LSB has a tiny staff of 42 and total running costs of &ldquo;less than 0.0001 per cent&rdquo; of the sector&rsquo;s turnover. Edmonds claims to have been &ldquo;around long enough in business&rdquo; to know that regulators who &ldquo;seek to forecast the marketplace almost always get it wrong&rdquo; and says his job &ldquo;isn&rsquo;t about sitting here imposing a regulatory regime&rdquo;.<br /><br /><strong>RADICAL AND PRAGMATIC</strong><br />Last week Lord Hunt of Wirral delivered a Law Society-commissioned report into regulation of the profession. The Tory peer made 88 recommendations ranging from a greater degree of regulatory autonomy for firms with strong governance mechanisms and a clean track record, to the more out-there recommendation of a Hippocratic Oath for solicitors.<br />&nbsp;<br />Edmonds calls the Hunt report &ldquo;radical and pragmatic&rdquo;. Hunt urges the Law Society to &ldquo;establish the concept of its separation of functions&rdquo; so people understand better the different roles of the Law Society as representative body and the Solicitors Regulation Authority (SRA). Edmonds notes that greater clarity might &ldquo;remove some of the fairly acrimonious dispute that has happened over the last year&rdquo; between the Law Society and SRA. &ldquo;My profound belief is that if the Law Society can work with the SRA to create a relationship where independence and integrity of the regulatory side is unquestioned, where the regulatory side believes that it has sufficient resources to do what it needs and doesn&rsquo;t believe that it&rsquo;s being constrained, then that&rsquo;s a significant step forward.&rdquo;<br /><br />Edmonds offers a &ldquo;slightly guarded&rdquo; response to Hunt&rsquo;s proposal for &ldquo;authorised internal regulation&rdquo; &ndash; self-governance for those firms that demonstrate robust compliance and governance standards. City firms argue that their highly sophisticated clients need less protection than the relatively ill-informed clients of high street firms. &ldquo;A regulator &ndash; whether it&rsquo;s me or the SRA &ndash; has powers, duties and responsibilities,&rdquo; he says. &ldquo;You have to be absolutely sure that the standards applied are consistent with good regulation. You do not get off easier because you are a City firm. That&rsquo;s not what regulation is about at all.&rdquo;