Work arising following the July 2014 Ministerial summit of legal services regulators

Many of the responses to the Ministry of Justice (MoJ)’s 2013 call for evidence on the regulation of legal services argued for reform of the Legal Services Act 2007. While the Act has led to an improved legal services market for consumers and providers, respondents argued that its complexity was now acting as a barrier to further progress while adding unnecessary regulatory burdens. Ministers chose not to propose any work to fundamentally change the Act at that point in time due to the lack of consensus among respondents on the longer term vision for regulation. Ministers did however communicate that they saw the benefit of the regulators exploring where there may be consensus.

Following the subsequent ministerial summit regulators determined that, with LSB facilitation, they would work together on four strands of work:

  1. Legislative options beyond the Legal Services ActThis work explored different options available for a new framework beyond the current Act. Meetings were chaired independently by Professor Stephen Mayson, and attended by representatives from each of the front line regulators and the LSB. The product of these discussions is a paper outlining options for the future development of legal services regulation, which can be found here. The views in the paper do not represent the views of any individual regulator, nor the simple sum of collective views. Instead the paper, which has been shared with Ministers, describes some of the choices ahead and the regulatory tools that are available, to inform further debate and discussion.The LSB has since developed its own vision for legislative reform of the regulatory framework, which can be found here. The document addresses each of the six questions identified in the paper above and argues that legislative reform is vital if the legal services sector is to address current challenges and make the step change needed to better meet the needs of consumers, citizens and practitioners.
  2. Status report on reducing regulatory burdens This work communicates how the work of legal services regulators has already contributed to reducing regulatory burdens since the commencement of the Legal Services Act. The output of this work is a report on ‘Progress on deregulation and market liberalisation in legal services’ which was submitted to Ministers in June 2015. The report is available here.
  3. Clausal changes to the Legal Services Act 2007 This work explored areas of consensus between regulators about legislative changes that could be made within the current regulatory framework to reduce the burden of regulation and improve the efficiency of the regulatory process. The output of this work is a set of proposals for minor changes to the Legal Services Act 2007 which was submitted to Ministers in June 2015. This document is available here.The letter sent by the regulators to Ministers to accompany the report on progress on deregulation and the proposals for minor changes to the Legal Services Act is available here.
  4. Alternatives to handling client money This work identified alternatives to legal services providers holding and distributing as necessary client money in carrying out a transaction. Protecting client money is a priority for regulators and is tightly regulated. Meeting stringent regulatory obligations in this area can be costly for providers. Therefore, there are potential benefits for consumers, providers and regulators in exploring alternatives. The output of this work is a briefing paper on alternatives to handling client money that can be used as a resource by regulators and providers seeking to understand the alternatives that may be available. This briefing paper is available here