As is usual at this time of the year, our final Board meeting of 2020 involved looking back on the last 12 months and looking forward to the year ahead – and beyond.
We started with a rich discussion about a draft strategy for the legal services sector, which we have developed in response to the challenges laid out in our State of Legal Services 2020 report. The report concludes that although there have been achievements over the last decade, there remain significant levels of unmet legal need. Among many other things, everyone involved in the sector needs to make it easier for people who need legal help to know they have a problem and find the right provider. We also all need to work to increase diversity at all levels of the profession, and improve access to redress for consumers when things go wrong.
The draft strategy is informed by conversations with numerous stakeholders over the last few months, and I am grateful to everyone who took the time to meet with us and share their views, insights, and evidence. The strategy is centred on collaboration because it is only by working together that we will be able to tackle the challenges facing the sector. The strategy lays out the areas where the LSB can make the most significant difference, and it invites others to say how they will help address the priorities.
We have an ambitious vision, and during the meeting, we discussed how our draft business plan and budget for 2021-22 would enable us to begin delivering our strategy commitments. Of course, we also considered the impact of Covid-19. The pandemic has led to increased levels of legal need for many citizens and is exacerbating levels of vulnerability for some sections of society. It is also causing disruption and uncertainty for many law firms. We have developed our draft business plan and budget with this context front of mind, and they reflect the urgent need to build a market that delivers on the three strategic themes we have identified: fairer outcomes, stronger confidence and better services.
We plan to consult on the strategy, business plan and budget shortly.
One of the issues identified in our State of Legal Services 2020 report is what many see as a growth in unregulated providers in some areas of the market. We know from our research that consumers tend – wrongly – to assume all legal service providers are regulated.
In light of this, the Board discussed whether the LSB’s draft business plan for 2021-22 should include work to understand the size and scale of the unregulated market, including by exploring the impact of increased use of technology in legal services. After all, the Legal Services Act was written before recent developments in technology which are rapidly changing the face of legal services. We need to make sure that consumers are properly protected but also counter the risk that regulation limits technological innovation in the sector.
This work would be of value to all us in the sector, and as well as supporting the regulatory objectives, it would strengthen confidence in the profession.
The Board moved on to considering the Office for Legal Complaints’ (OLC) draft budget and business plan for 2021-2022. This was an early discussion ahead of the OLC asking us formally to approve its budget in March next year. The OLC currently intends to ask for a budget of £15.260 million in 2021/22, which would be an annual increase of 19% (£12.808 million in 2020/21).
For the discussion, we were joined by the OLC’s Chair Elisabeth Davies and colleagues from the Legal Ombudsman. The meeting gave us a chance to ask probing questions about the OLC’s plans and to understand changes made to their budget setting process since last year. We got assurance that the OLC now has a more rigorous approach to budget setting and financial management.
Once again, we had an honest and frank conversation about the Legal Ombudsman’s underperformance and the need to improve the service offered to its customers – both consumers and law firms. The OLC explained how their budget proposals were intended to fund a multi-year transformation programme. They also explained that they had held pre-consultation meetings with stakeholders to understand the likely response to the budget increase being sought.
The Board challenged the OLC on whether its budget proposals were justifiable and how long it would take for customers to see the benefits of the investment being sought. It emphasised the need for innovative approaches that could make a step-change in tackling the backlog and was interested to hear about plans that were in development. The Board also challenged the OLC to develop its approach to demonstrating value for money, including in relation to the strand of its work that involves sharing insights to achieve sector improvement.
The Board also noted that the OLC had significant financial reserves, although it does not currently have access to them for good reasons to do with government accounting. The Board noted, however, that there were three areas of discomfort facing the sector: continued backlogs due to under-resourcing at the Legal Ombudsman, asking the sector to pay more to address that resourcing gap and accessing the OLC’s reserves to lighten the load.
This early discussion was beneficial, and it was pleasing to see the increased transparency in the OLC’s budgeting setting process. We agreed to ensure there is ongoing communication between the two organisations ahead of the Board receiving the formal budget application next year.
We moved on to discuss a summary of the feedback received to our recent consultation on plans to increase practising certificate fee (PCF) transparency and drive greater accountability.
The PCF is a mandatory cost of regulation, and it is vital that those paying it can see where their money goes. We have worked with approved regulators to develop a draft framework that will put the onus on them to clearly articulate the purpose, value and costs of regulation. Most of the respondents to our consultation generally support our core proposals, although some have raised issues which are we are considering carefully ahead of publishing the updated rules and guidance in January 2021.
I want to end my final blog of the year by once again thanking everyone who has met with us over the last 12 months to help inform and shape our work. We look forward to sharing more detail about our plans in due course, and I look forward to us working together to reshape legal services to better meet the needs of society.