Edward Nally and Janet Paraskeva welcome Sir David Clementi’s report, which, they argue, offers the profession some compelling opportunities

Over the past 18 months, there have been a number of headlines in the press sounding the death knell of the Law Society, blaming its poor complaints-handling record and heralding the end of self-regulation.


But that is not what Sir David Clementi concludes. Far from sounding any death knell, he emphasises that professional bodies can continue to be front-line regulators, accountable to a new legal services board (LSB), rather than establishing a Financial Services Authority-style body, which might have been remote from the profession and jeopardised its independence.


Furthermore, Sir David acknowledges the action already taken by the Law Society in relation to its governance arrangements and its readiness to face the changes that will be needed to regulate the new business model he has proposed – the legal disciplinary practice (LDP). In the vision mapped out by Sir David, the Law Society will have a key role to play in the development and regulation of an even wider range of legal services and business models than currently exist.


But it is not a blank cheque. The Law Society will need to continue to prove that it can be a lead regulator not only for the profession but also, in due course, for LDPs. It will have to demonstrate its competence and commitment to implement governance changes, properly to insulate regulation from representation, and to establish a smaller regulatory body, with substantial lay membership, appointed on merit.


Sir David is clear: ‘The regulatory and representative functions of front-line regulatory bodies should be clearly split.’ If the governance arrangements do not follow these recommen-dations the review concludes that the new LSB would have the right to ‘insist upon institutional separation’. If anyone doubted the importance of ensuring that professional regulation is not over-dominated by representative interests, they have only to look at Dame Janet Smith’s damning conclusions on the regulation of the medical profession in the Shipman inquiry.


So what has Sir David said? He recommends the establishment of a legal services board, and we will need to look at the precise detail of the statutory powers such a body would have, and at the powers of delegation that follow. It would liberate the Law Society from a strait-jacket if we no longer had to seek new primary legislation every time a change in our regulatory powers were needed. Primary legislation will be needed to establish the framework – and the existing Solicitors Act provisions will need to be revised. We will need to take great care over how that is done, but it does need to be done as a matter of some urgency.


Sir David has, of course, also tackled the thorny issue of consumer redress and has handled that in a way that was widely anticipated, with the proposal to establish an office for legal complaints (likely to be based on our Leamington consumer complaints service and incorporating the work of the Legal Services Ombudsman and the Legal Services Complaints Commissioner). This seems to be a sensible rationalisation, bringing together the myriad of regulators into the oversight of the LSB itself.


And finally, on the contentious issue of LDPs, Sir David has covered the whole spectrum of possibilities. Partnerships between lawyers, partnerships between lawyers and non-lawyers and external ownership – his recommen-dations provide a ringing endorsement of the far-sighted policy the Law Society has already adopted to increase choice for the public and provide additional career avenues for the profession. He acknowledges, too, that for external ownership proper consumer protections will need to be in place, and that the regulator will need to be assured that those safeguards achieve regulatory objectives. That is exactly what the Law Society Council proposed some time ago.


This is a positive report for the public, for the profession and for the Law Society. In the foreword to the report, Sir David says reform will not be easy. But he expresses the hope that ministers and Parliament will conclude it is necessary.


The Department for Constitutional Affairs has said it will act quickly, with a White Paper as soon as possible next year – and that could mean draft legislation as soon as the autumn of 2005. What we have to do now is to move forward at the pace that is necessary to implement the Law Society Council’s policies of modernising the Society, establishing shadow structures for new governance arrangements and developing ideas for a new professional services body to serve the profession.


The idea that the Law Society or any other professional body has up until now operated in a regulatory vacuum, unfettered by external scrutiny, is an illusion. But certainly the regulatory maze is in need of modernisation and the Clementi Report provides a compelling vision of how that could be achieved. That vision promises great opportunities for the profession and, most importantly, the possibility of greater choice and quicker, easier access to lawyers for consumers. We should embrace the opportunities it provides.


Edward Nally is the Law Society President and Janet Paraskeva is the Society’s chief executive