The aim of the Law Society’s regulation review is to protect the public while also supporting the profession.

Regulation sets the standards by which all solicitors are judged. At its best it offers clients a sense of security by assuring them that a professional is looking after their interests. It also has a considerable impact on solicitors’ business.

It is crucial that regulation is carried out in the public interest. This means providing an effective assurance to clients and the wider public that they can trust a solicitor. It also means ensuring that the costs imposed on firms are kept to a minimum, because ultimately the cost of regulation is passed on to clients. It is not in the public interest for the cost of regulation to make the cost of solicitors’ services such that the public are driven into the arms of unregulated providers – and there is a real danger this could happen. This is why I announced last week that the Law Society is to commission a review to advise on what is needed to achieve good, modern regulation of those who practise law. I am pleased to announce that Lord Hunt of Wirral will conduct this important review.

Sir David Clementi’s proposals, as implemented in the Legal Services Act (LSA), addressed the governance of regulation. They led to reform of the structure for dealing with regulatory decision-making, most significantly creating the Legal Services Board to oversee how all aspects of the legal profession are regulated. But there has been no similar examination of the substance of regulation.

The Better Regulation Task Force defined the principles of good regulation as being transparency, accountability, proportionality, consistency and targeting. Those principles are now enshrined in the LSA, but what should they mean in practice in the context of regulating legal services? What do they tell us about the approach to rule-making, or about the appropriate balance between helping firms to comply with their obligations and taking disciplinary action for misconduct? Should the same rules and approach to compliance apply to all firms, irrespective of the nature of their clients, or is a one-size-fits-all approach outmoded?

The current financial crisis has raised many questions about how to define effective regulation and how best to achieve a system which protects consumers from risk without stifling providers. The legal profession is in a very different position from the financial system. As professionals, solicitors are subject to regulation to ensure they are complying with the duties of upholding the rule of law, acting with integrity and independence, acting in the best interest of the client, providing a good standard of service and maintaining public confidence in the profession. We have all been subject to high-level regulation for our entire professional lives and we understand the need for it. These principles give our profession a solid base from which to ensure that an effective regulatory structure will exist.

We wanted to commission a distinguished individual who can advise on what effective modern regulation means in the context of the legal profession. Lord Hunt has broad experience of both the legal profession and of regulation in other sectors. We expect him to seek the views of all significant stakeholder groups to come up with conclusions that gain wide support. I am pleased that the Solicitors Regulation Authority has agreed to participate in the project. Being able to draw extensively on its experiences will undoubtedly enrich the final report.

It is also important for the profession to have the opportunity of contributing to the review. We expect Lord Hunt to hold regional roadshows early next year. These will provide an ideal forum for engagement.

There is a sub-strand of the main project looking at the particular situation of corporate law firms. This will include examination of the appropriate structures for regulating these firms. The regulatory issues and risks associated with such firms may be different from those in respect of firms with significant private client work. The work will lead into Lord Hunt’s overall review.

This review is important. I hope it will it set the agenda for all those responsible for regulating lawyers. Working together I am convinced that we can establish an approach to regulation which fully meets the public need while also ensuring the support of the profession for both the principle and practice of regulation.

Paul Marsh is President of the Law Society.