Regulatory maze

 In Practice Management

Disclaimer: LawSkills provides training for the legal industry and does not provide legal advice to members of the public. For help or guidance please seek the services of a qualified practitioner.

Here Gill forges a way through the legal regulatory system and looks at likely future changes.

NB: This article first appeared in Taxation on 21 February 2019 and reproduced by kind permission

Are your clients getting the best out of their lawyer? I ask this not to have a dig at lawyers – after all, I am a solicitor – but to highlight consumers’ lack of awareness of the regulatory minefield that has existed since the Legal Services Act 2007. As tax professionals, our work often overlaps with legal professionals and the chances are the ones you deal with are all regulated, trained and insured. However, many legal services are not regulated so anyone can offer them – will drafting, for example.

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I curate an active website for practitioners in the wills, probate, trust, tax and elderly client field. Although the site is directed at professionals, I receive a steady stream of enquiries from members of the public, many of whom are unsure how they can obtain redress when things go wrong.

No one likes to pay more than necessary for fees to have problems put right, move house, make a will, get divorced and everyone likes a bargain. But is it a bargain if there is no guarantee of redress if the worst happens?

Legal Services Act 2007

The Legal Services Act confirms the list and scope of reserved activities for which the provider must be regulated and creates the framework for regulation. It created the oversight regulator: the Legal Services Board (LSB) (tinyurl.com/y8d72ka5). This authorises regulatory bodies for each of the different types of regulated lawyers; the main ones are shown in Regulatory Bodies.

REGULATORY BODIES

As Sir David Clementi pointed out in his final report Review of the Regulatory Framework for Legal Services in England and Wales:

‘The definition of reserved legal services is relatively straightforward since those areas are contained in statute … These areas could be termed the inner circle of legal services. In order to provide such services, a practitioner must be certified by a regulatory body which has itself been authorised to do so. A “lawyer” could therefore be defined as any duly certified member of such a body.’

Legal Services Board

The LSB has been in operation since 1 January 2009 and oversees all the regulatory bodies. It delegates day-to-day oversight of their members to the relevant regulatory body, reserving oversight to itself only. The Legal Services Act 2007 established a comprehensive ombudsman scheme for the handling of complaints about regulated legal activities. Under the Act the LSB is charged to promote and maintain regulatory objectives relating to the provision of legal services, namely:

  • protecting and promoting public interest;
  • supporting the constitutional principle of the rule of law;
  • improving access to justice;
  • protecting and promoting the interests of consumers;
  • promoting competition in the provision of legal services;
  • encouraging an independent, strong, diverse and effective legal profession;
  • increasing public understanding of the citizen’s legal rights and duties; and
  • promoting and maintaining adherence to professional principles.

The professional principles are:

  • acting with independence and integrity;
  • maintaining proper standards of work;
  • acting in the best interests of clients;
  • complying with the duty to the court to act with independence in the interests of justice in relation to litigation and advocacy; and
  • keeping the affairs of clients confidential.

Under s 28, approved regulators are under a statutory duty to act in a way that is compatible with the regulatory objectives. Approved regulators must also have regard to the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted.

The Act has created a system whereby the providers of legal services have a choice of approved regulators. For example, a probate practitioner can choose from the Solicitors Regulation Authority (SRA), the Chartered Institute of Legal Executives, the Society of Notaries or the Council for Licensed Conveyancers. From 31 March 2009, firms of solicitors carrying out conveyancing and probate only may choose to be regulated by the Council for Licensed Conveyancers instead of the SRA. As many readers will know, the Institute of Chartered Accountants in England and Wales can also regulate its members in the provision of probate services.

If a person remains as a solicitor, their firm might be regulated by the Council for Licensed Conveyancers but as an individual, the solicitor would be regulated by the SRA.

Regulated legal activities

In 2010, Stephen Mayson on behalf of the Legal Services Institute wrote:

‘Reserved legal activities are one of the fundamental building blocks of the Legal Services Act 2007. For example, they are pivotal to the definition of an “authorised person” (s 18), to the designation of a regulator as an “approved regulator” (s 20(5)), to the grant of licences to alternative business structures (s 11 (1)), and to the appointment of a head of legal practice for an ABS (Sch 11, para 11(30)(b)).’

Section 12 of the Act sets out the six specific legal services activities that only those who are authorised – or those who are exempt – can carry on. These are called reserved legal activities and their scope is set out in Sch 2. They are:

  • The exercise of a right of audience – which includes the right to appear before and address a court and examine witnesses.
  • The conduct of litigation – which includes the issuing, commencement, prosecution and defence of proceedings before any court in England and Wales, and the performance of any ancillary functions.
  • Reserved instrument activities – which includes the preparation of any instrument of transfer or charge for the purposes of Land Registration Act 2002 or ancillary documents relating to real or personal estate under the law of England and Wales; or other instruments relating to court proceedings in England and Wales.
  • Probate activities – which includes preparing any probate papers for the purpose of the law of or in relation to any proceedings within England and Wales.
  • Notarial activities – includes activities which were customarily carried on by notaries in accordance with the Public Notaries Act 1801.
  • The administration of oaths – which is the exercise of the powers conferred on a commissioner for oaths by the Commissioners for Oaths Acts 1889 and 1891 and Stamp Duties Management Act 1891, s 24.

Specified people are exempt from being authorised even though they carry on the reserved activities. These include a litigant in person, who is someone conducting their own legal work even though they are not a lawyer.

Equally, it is possible for probate activity to be carried out by an individual who is not authorised to do the work but carries this on under the direction and supervision of an employer, manager or colleague who is an authorised person. They include a paralegal working in a solicitors’ firm or a person who carries on the activities without being paid – perhaps with Citizen’s Advice or a charity.

The regulatory framework is made more complex because the Legal Services Act 2007 regulates some activities that are not reserved within s 12. These are activities performed by individuals who are regulated in all the services they offer – all legal activities conducted by solicitors or barristers who are each regulated by either the SRA or the Bar Standards Board – or that are otherwise regulated by statute even though they are not reserved legal activities, such as immigration, claims management and insolvency work.

Non-regulated legal activities

Many activities are not regulated either by the Legal Services Act 2007 or by any other statute. Surprisingly, many of the legal services an individual needs to use are in this regulatory desert.

A non-regulated legal activity may be offered by a regulated person such as a solicitor, barrister or legal executive. In which case the protections their regulators offer to consumers for regulated legal activities will also apply to these services because it is the provider who is regulated in all that they do.

However, a non-regulated legal activity offered by a non-regulated person is simply unregulated and the consumer using this provider’s services gains none of the protections that a regulated provider offers.

Non-regulated legal activities include:

  • advice and representation at a police station;
  • assistance with non-contentious employment issues;
  • advice about mental health issues and detention; and
  • will writing.

It is particularly surprising that will drafting is not regulated. This is an area where many unregulated providers offer services. Some may belong to a trade group that offers some form of protection to users of its members’ services such as the Institute of Professional Will Writers or the Society of Will Writers. However, there is no obligation to belong to such a trade group and their ability to protect consumers in the same way as, for example, the SRA, is limited.

Although there was strong debate about whether will writing should be regulated at the time of the Legal Services Act 2007 it was not included. It was left to the LSB to consider whether it should use its powers to make it a reserved legal activity.

The Competition and Markets Authority recommended in its report of December 2016 (tinyurl.com/yavutb7b) that the Ministry of Justice should undertake a review of the independence of regulators immediately and, in the longer term, review the entire system of regulation.

However, in the government’s response (December 2017), the justice minister Lord Keen of Elie QC said there will be no commitment to a formal review. Instead incremental change can bring about improvements. No doubt this lack of will to change the regulatory system is linked to the UK’s exit from the EU.

Lord Keen did say the government accepted that it should review the case for extending redress to consumers using unauthorised providers of legal services. Currently, clients using such providers are unable to make any complaint to the legal ombudsman for redress, whereas clients of regulated firms may do so when they have exhausted a firm’s internal complaints procedures.

Finding the right lawyer

When a client needs advice not only should their tax adviser consider the credentials of the lawyer to whom they may refer them but also the type of organisation that might best suit the client.

There would be no point sending a vulnerable client to a call centre operation when they need one-to-one support. Likewise, sophisticated business people may have undertaken similar transactions before and might be happy with such a service if it is cheaper.

My book The Streetwise Guide to Getting The Best From Your Lawyer covers this subject in more detail. It is available on Amazon.

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