Our final Board meeting of the year (30 November 2021) saw the culmination of several projects focused on reshaping legal services and making a difference for consumers and society more broadly.
We began by discussing our draft business plan for 2022/23, which lays out a programme of activity to address the challenges outlined in our strategy for the sector. We agreed that it is essential for us to remain flexible in our approach, as we have throughout the Covid-19 pandemic. This enables us to respond to changes in the external environment and focus our efforts and resources on the most significant areas for people who need legal services.
Indeed, some of the proposed workstreams for 2022/23 are in response to developments in the sector over the last 12 months. For example, looking at financial protection arrangements, including professional indemnity insurance and compensation funds, that are in place to protect consumers. This workstream will help improve transparency and support public confidence in legal services.
Building public trust and confidence in legal services
Another potential workstream to help build confidence in the sector is exploring the role of legal services regulation in supporting the constitutional principle of the rule of law – one of the regulatory objectives. Over the last year, there has been increasing public criticism of legal professionals, and the legal sector, and questions about professional ethics. We want to ensure the essential role legal professionals play in the functioning of society continues to be valued and promoted and properly supported through regulation.
Meeting the scale of the challenges facing the sector requires additional resources for regulatory activity. We agreed an expenditure budget for 2022-23 of £4.287m, which represents an increase of £189k (4.6%) on the 2021/22 budget of £3.923m, or the equivalent of about £1 for every authorised person..
We will consult on our new business plan and budget in early December. We will also hold a stakeholder event as part of the consultation in January 2022.
The theme of public trust in legal services was central to our discussion about ongoing competence, which we identified as one of our five-year priority policy objectives in September 2018. Since then, we have collaborated with people across the sector, including internationally, to understand whether legal regulators in England and Wales have appropriate frameworks in place to ensure that the professionals they regulate remain competent throughout their careers.
We now know that consumers expect more robust checks to be in place. Also, when provided with information about the current arrangements, most people think regulators should adopt more specific measures to ensure ongoing competence. We also know that the current approach is out of step compared with other professions, where there is a greater focus on assessing and understanding levels of competence.
The Board has concluded that the status quo is not an option. We want the regulators to do more to understand levels of competence and develop risk-based approaches that contribute to improved outcomes for consumers and build public trust. We agreed that a statement of policy would provide an effective, proportionate, and targeted regulatory tool to secure the necessary outcomes regarding the ongoing competence of legal professionals.
The Covid-19 pandemic has shown how essential it is for legal services professionals to be competent and have up to-date-skills. Lawyers must adapt to the market’s changing needs, whether it’s embracing new technology, working differently, or providing high customer service standards to people in vulnerable circumstances.
We have tested our early thinking with stakeholders, and this has helped us to refine our approach. We will consult formally on the statement in December.
Regulators’ performance: sharpening the focus on the regulatory objectives
The Board discussed proposals for revising our regulatory performance framework, which we use to assess the performance of the regulatory bodies. The approach was developed in 2011 and updated in 2017. Recently, we have found that there are several areas where the framework could be more effective. For example, there could be a sharper focus on strategic leadership, resources, capability, and culture. We want the regulators to take ownership of the regulatory objectives and that these are at the centre of their regulatory approaches.
We agreed that our current rating system (red, amber, green) was too simplistic and should be revised to bring a more explicit focus on how the regulatory bodies have advanced the regulatory objectives. This could mean a more narrative assessment, which would also be more transparent. We also agreed to look at how we might commend good and excellent regulatory practice and ensure the regulators can learn from each other.
The Board also had a rich discussion about the merits of incorporating third party views and feedback into the assessments, for example, from consumers and regulated professionals. This could help us understand organisational culture and leadership and the impact on people who need legal services.
The Board also discussed and approved new rules and guidance for approving regulators changes to their regulatory arrangement. The new rules reflect our targeted and proportionate approach to regulation and provide a greater focus on the regulatory objectives.
The rules were developed in collaboration with stakeholders and will ensure regulators consider the impact of regulatory changes on legal services professionals, consumers, and stakeholders.
Improving redress for consumers and the sector
The Board considered the Office for Legal Complaints’ (OLC) draft budget and business plan for 2022/2023. The OLC was consulting on two budget options for increases of either 3.8% or 5.1%. This was an early discussion ahead of asking us formally to approve its budget in March next year. It followed a recent ‘challenge panel’ session that two of our Board members held with OLC as part of our work to scrutinise their work and focus on improving performance for consumers and law firms.
We were joined by the OLC’s Chair, Elisabeth Davies and colleagues from the OLC Board and Legal Ombudsman. Once again, we had a frank conversation about the Legal Ombudsman’s underperformance.
We noted the new senior team’s efforts to stabilise the organisation and welcomed the recognition that radical changes were needed. However, we noted that those actions had still not been implemented. The minimum progress promised when the LSB approved a budget increase last year had also not been achieved and we were concerned that the OLC was forecast to underspend by £659,000 this year.
We reminded the OLC that for the LSB to approve a further budget increase, we will need much more clarity than was provided on the specific actions planned to improve performance.
We restated our commitment to supporting the OLC and providing it with the resources it needed. However, there needs to be a robust and fully scoped plan that clarifies for us and the legal professionals who fund the OLC how it will make the urgent improvements in performance that are needed.
We will maintain ongoing communication with the OLC, and a Board-to-Board meeting is planned for January 2022.
As part of the meeting, we also reviewed and agreed our board effectiveness action plan to ensure we continue to work effectively to make focused decisions that deliver our statutory duties and progress our strategy. This will be underpinned by a revised Corporate Governance Manual setting out our corporate standards, policies and procedures.
I want to end my final blog for 2021 by thanking everyone who has collaborated and worked with us over the last 12 months. We look forward to continuing to work with you next year on our mission to deliver fairer outcomes, stronger confidence and better services.