We began our first Board meeting of the new year by reflecting on the webinar we hosted last week to share our State of Legal Services 2020 report’s findings. Over 120 people attended to discuss the challenges and opportunities facing the legal service sector. Everyone agreed unmet legal need is a significant problem and that the market needs to work better for consumers. We heard a range of views on what needs to be done to address the issues and discussed the importance of collaboration.
Our aim to reshape legal services to better meet society’s needs underpinned discussions at the Board meeting. We reviewed the updated Practicing Certificate Fee (PCF) Rules and supporting statutory guidance, which we will publish at the end of this month.
Each year individual lawyers and legal firms pay a PCF to their approved regulator to practise. In July 2020 we consulted on plans to increase transparency over how the PCF is set to help empower fee payers to hold regulators to account and to make their own determination of whether the fee offers value for money.
At our last Board meeting, in December 2020, we reviewed the initial responses from our consultation. We are grateful to everyone who responded, and we have considered all the feedback carefully.
The Board discussed how these responses impacted our thinking, in view of our core policy objectives. The changes that we have made following consultation include, further clarification of the distinction between regulatory and representative functions, and the inclusion of a rule to allow for the collection of a limited interim fee in the event that the initial PCF application is refused, and pending approval of a resubmitted application. In our final Rules and Guidance, we have sought to reduce regulatory burdens where we can, while increasing transparency and driving greater accountability.
The changes will ensure our PCF approval process supports the regulatory objectives and to that end regulatory performance. For example, when setting their PCF, we now expect regulators to consider issues raised through regulatory performance and be transparent about how the fee will be used to address concerns. Our consultation response and the Rules and Guidance will be published next week.
In December 2020, the Competition and Markets Authority (CMA) published the findings of its review undertaken to assess the extent to which the recommendations in its 2016 legal services market study have been taken forward and the impact that these changes have had to date.
The CMA made new recommendations, including that the LSB take the lead in coordinating action by the regulatory bodies to improve market transparency, including on quality indicators. We reviewed the CMA’s findings and recommendations, as well as the executive’s recent work on quality indicators, following the Board’s last update on the work, which was considered at the September 2020 meeting. We considered issues including digital comparison tools, increasing transparency for consumers and digital exclusion, and also the latest research we have conducted with our Public Panel on quality indicators.
We agreed to have a further deep-dive into the recommendations of the CMA review and finalise our response at our March 2021 Board meeting, after this initial discussion on the emerging themes. We agreed to publish a discussion paper on quality indicators and undertake further stakeholder engagement in this area. This will inform our work in preparing a statutory policy statement on consumer engagement.
We then moved on to discuss legal technology and innovation and how they have the potential to enhance access to legal services. Our work so far has focused on establishing an evidence base that regulators can draw upon as they develop their approaches to regulating the use of technology. To do this, we commissioned six papers from a range of experts in technology, regulation, and legal services. . The papers are accompanied by our ‘Talking Tech’ podcast series.
In April 2020, we published an additional collection of 11 articles titled ‘Perspectives on LawTech and Regulation’ with contributions from legal professionals, regulators, and technology developers.
Technology has the potential to enhance, or conversely, be detrimental to the achievement of our regulatory objectives. The Board considered an overarching paper that distils the key learnings from this phase of work and outlines future areas of LSB work. We also look forward to continuing to work with stakeholders on this crucial area of work.
We closed our meeting with a discussion of the work we have conducted to date as part of our review of the approval process for alterations to regulatory arrangements. The Board reiterated that now is a good time to review the process of assessing applications, as it has remained largely unchanged since it was first introduced over a decade ago. We want to make sure that the purpose is clear and consistent with the exercise of our wider powers and, specifically, to ensure that the process is focused on alterations that promote the Regulatory Objectives.
We had a good discussion of the reflections from the first round of engagement on this topic; in late 2020 we had a series of bilateral meetings with each of the Regulatory Bodies and captured their views on the current rules, guidance, and approval process in general. In our initial assessment, we consider there to be three overarching objectives of the review: promotion of the regulatory objectives, focused applications and assessments, and clarity of expectations. We look forward to seeing how these conversations will continue to develop our proposals. Our plan is to consult in Spring 2021 on a set of new rules and guidance.
Our consultation on our draft strategy for the legal services sector and our draft business plan 2021-22 closes on 5 February 2021. I look forward to hearing your views and suggestions for how we can work together to deliver fairer outcomes, stronger confidence, and better services.
Our next routine Board meeting is Thursday 18 March 2021.