Split personality

The question of whether the Law Society Council should continue both to regulate and represent the profession is under scrutiny by Sir David Clementi and a separate governance review. Neil Rose reports


The Institute of Chartered Accountants does it, as does the Royal Pharmaceutical Society of Great Britain. However, the General Teaching Council does not; nor do the Nursing and Midwifery Council and the Royal College of Veterinary Surgeons. But the Law Society still does it, albeit with an eye to changing how it is done. 'It' is acting as both regulator and representative of a profession.


As the Law Society year comes to an end this week, with the annual general meeting and handing over of the presidential badge of office, Sir David Clementi is presumably hard at work analysing the responses to his consultation on the reform of legal services regulation. At its heart, and the heart of much of the debate surrounding the Society in recent years, is the question of whether it should continue those dual roles.


Although it may not be the ultimate arbiter of its own fate, the Society remains committed to the dual function. The signs have been that, despite criticism from some quarters, solicitors generally prefer the current system - from a postal ballot of the profession in 1996 to a survey this year carried out to inform the Society's response to Clementi.


Sir David has said in the past that the status quo is not an option. The three models he has put forward are a legal services authority that would take on regulation in place of the professional bodies (model A); an umbrella legal services board that would oversee the professional bodies in the exercise of their current functions (model B); and a variant on model B that would see separation of regulation and representation (model B+). However, it was not clear whether this separation could be effected without forming two bodies.


It seems likely that whatever he decides, change is coming to Chancery Lane. As it happens, however, the process is already under way in the shape of a governance review that was always planned following the reforms introduced in 2001. But it has certainly been made more timely by the Clementi spotlight.


As a result, the structure and composition of the ruling council is under scrutiny. In a debate on Clementi in May, the council recognised 'the desirability' of creating a greater separation of its two functions, but pulled back from recommending model B+ because of the uncertainty as to what it actually entails.


However, in a later debate on corporate governance, it delayed plans that would have implemented separation quite radically.


The council was considering an interim report by the governance review group (GRG), an eight-strong body set up in summer 2003. It is chaired by non-lawyer Baroness Prashar, whose extensive public service background includes a short period as a member of the old Solicitors' Complaints Bureau and six years in the 1990s on the former Lord Chancellor's advisory committee on legal education and conduct.


She is joined by four Law Society Council members - including the incoming Deputy Vice-President, Fiona Woolf, and lay member Sally Irvine - a member of the Society's senior management team, and independent representatives Stephen Bennett, former president of the Institute of Chartered Secretaries and Administrators, and Ruth Evans, one-time director of the National Consumer Council.


Their report recommended establishing as soon as possible a regulatory board with delegated responsibility for the Society's regulatory functions. Half of its 15-20 members, all of whom would be appointed by the Master of the Rolls, would be lay people. Five of the Society's present 105-strong council are non-lawyers; a survey of other professional bodies by the GRG found that healthcare regulators have much higher proportions of lay members on their councils.



In February, another of the lay council members, Steven Burkeman, called for separate councils, with a lay majority on the regulatory side (see [2004] Gazette, 5 February, 4).



Baroness Prashar opened the debate by saying that if the Law Society is to retain its regulatory role, it needs to treat regulation as its primary function.


The GRG report said: 'As a matter of principle, in the interests of accountability, integrity and transparency, the governance of the two functions must be separate and be seen to be separate. This functional unbundling could, but does not necessarily, lead to institutional separation. That is for a longer-term debate. Our view is that, in the short term, the council should take what steps it can within its existing powers towards greater separation of functions within the Law Society as soon as possible.'


It also proposed cutting the size of the main council, which would have a pure representative role in the new structure, to between 30 and 50 members, and rationalising the board structure that sits beneath it.


Under the existing legislative framework, the council would still have to approve regulatory decisions, but it was not clear to what extent the council should be able to interfere with them.


However, council members expressed concern that the report contained insufficient reasoning to make such a decision, and - approving an amendment put by lay member Huw Thomas - again endorsed the principle of greater separation of functions, and asked the GRG to produce a final set of detailed recommendations for the December council meeting.


For GRG member Richard Henchley, the group now has a mandate to go back to the council with a plan for how its system will work.


Mr Henchley, who represents the City of Westminster on the council, maintains that it is possible to have regulation and representation separate but under the same roof. In fact, he suggests, by embedding the public interest test in the Law Society's decision-making process, the representative side of its work could also be enhanced.


The representative council would be concerned with 'professional excellence', he explains, and may well be encouraged to raise standards beyond what is demanded by the law or the public interest as the minimum. 'That is the difference, after all, between a profession and a trade,' he says.


Often those supporting institutional separation point to the General Medical Council and British Medical Association as an example. But the medical profession has certainly had its regulatory problems and it is often argued, however tritely, that the current structure did nothing to stop Harold Shipman.


But it may boil down to public perception - would a separate body with strong lay involvement within the Law Society structure be sufficient to convince the public it is regulating in their interests? Mr Henchley says it would help to have 'a substantial person' chairing the regulatory board, who could speak out on its behalf.

Williamson: efficiency Outgoing Law Society President Peter Williamson supports the direction of reform. 'The Society must ensure that its governance structures are effective, efficient and in the public interest,' he says. On the back of the May decision, 'we must establish transparent arrangements which demonstrate that our regulatory activities cannot be improperly influenced by representative considerations. We believe this is essential if the Society is to sustain the public's and the profession's confidence'. Ed Nally, who takes over from Mr Williamson this week, is likely to be the man who will have to oversee any reforms. He does not accept there are any 'irreconcilable objectives' in having regulation and representation within the Society, basing that 'on a mixture of instinct and experience'. But he says: 'I do recognise that the current arrangements are not sustainable in the medium term.' Backing the need for a 'more prominent split in functions' and a regulatory board, he adds: 'It's expected of us externally and there's an acknowledgement in the broader council that it's the right way to go... I think the basic work undertaken by the GRG chimes with what the council wants to see and with what I've heard out there in the profession.' However, he stresses that the process has not been driven by Clementi. 'I think it would have happened anyway.' Mr Nally hopes the council will initially concentrate on agreeing the principles, rather than worrying from the start about the exact details of how the reformed governance structure would look. It has to be done stage by stage, he insists. The 2001 reforms added 30 new council members representing practice areas and specific demographic sectors of the profession. It has brought with it a noticeable increase in women on the council. There are 29 now, and though there should be 42 if the make-up of the profession were to be accurately translated across the council, gone are the not-too-distant days where a male practitioner from Merseyside was the official representative for women solicitors. Ethnic minority solicitors are also under-represented on the council, however, while there is one member with the brief for disabled solicitors. Michael Napier, senior partner of national firm Irwin Mitchell, was the Law Society President who steered through the 2001 reforms. He contends that the three-fold objectives have been achieved: making the council more representative by having more specialist seats; introducing lay members; and establishing the council as an electoral college for office-holders. This latter reform has effectively brought an end to national elections, subject to 500 solicitors objecting to the candidate the council puts forward for deputy vice-president. 'They have all achieved the aim of stabilising the Law Society and making it more representative,' Mr Napier says. He notes that under the GRG reforms - to which Mr Napier says he is 'favourably disposed' - the lay element will be built on, and the electoral college will remain. Even if the council is smaller, he remains a committed supporter of using it as an electoral college. 'I would resist very strongly any argument that leaves us open to national elections, which history shows did not serve us very well.' While the new seats are thought to have added important voices to the council over the past three years, the body's sheer size has been seen as a stumbling block to decision making. Mr Napier acknowledges that problems have emerged in managing the larger council as a debating chamber. If nothing else, the expansion had an impact on the physical dynamics. Too large to fit into the specially fitted-out and more intimate council chamber, it meets in the Society's large main common room, with members sitting spread out at tables of three and coming to terms - not always successfully - with the microphones necessary for even the finest advocate to be heard in the far reaches of the hall. Mr Napier says this is an 'unfortunate downside' - as is what some members see as a loss of collegiate spirit in the council - but overall a price worth paying for the more representative body. Conversely, it has also made the council less intimidating for new members, he argues. Sara Chandler, a senior supervising solicitor at the College of Law's legal advice centre, is one of the new breed of council members, joining in 2002 in a new seat representing the voluntary sector. Gaining a seat gave recognition to a part of the profession that she says had been marginalised in the past. She once saw the 'old' council in action in the previous chamber, and found the atmosphere 'quite tense and hostile'. 'The difference now I've become a council member is that I find the level of contribution is far higher,' she says, with members better briefed. Ms Chandler says she always senses a tension between the council's dual role, as what the public interest demands and the profession demands are not always the same thing. 'The profession deserves and expects a professional body that articulates its needs,' she says, pointing to the controversial debate and vote on referral fees as an example of where this tension was evident. So she too backs separation, but is convinced the two bodies can work within Chancery Lane. David Foster, a partner at leading south London legal aid firm Fisher Meredith, who joined the council in 2002 to represent housing solicitors, felt the same tension during the referral fees debate. 'My understanding was that in making regulations, the Law Society had to have regard to the public interest. But the feeling I got during the debate was that the driving force was [the interests of] particular sections of solicitors.' Another supporter of splitting the functions, Mr Foster questions whether the current model of the council as a debating chamber is out of date. 'I just wonder whether the best way to operate is people going in with totally open minds, listening to a debate and coming to a decision. It's not the real world nowadays.' While Mr Nally says many of the 2001 reforms have worked, especially the structure under the council, he concedes that 'there continue to be anxieties as to whether the full council is as effective a place as it might be'. To this end, at his first council meeting in the chair in September, he intends to experiment during some debates with breaking members into smaller discussion groups, which would then report back. This may help more people have their say, he hopes. Reducing the size of the council, if it comes to that, will be a difficult job. Mr Napier says it will mean 'turkeys voting for Christmas', and expresses a personal preference for cutting back on the geographical, rather than specialist, seats, especially those constituencies that have multiple representatives - a suggestion unlikely to go down well with local law societies. Ms Chandler sees the value of both geographical and specialist seats - losing geographical seats would sever the link with the grassroots profession, she fears. While she too questions multiple constituencies, she would not be in favour of a big reduction. It is true, however, that relative to other professional bodies, the council is large. The 105 members represent a profession of 93,000; the General Teaching Council, which regulates 511,000 teachers, has a council of 64 members; the General Medical Council, regulating 203,000 doctors, has 35 members; the British Medical Association, representing 100,000 doctors, has 70 members; while the Nursing and Midwifery Council, regulating 644,000 members, has just 23 people on its council. But it will be a comfort to know that the bar's figures are even more skewed. While there are only 11,000 barristers, the Bar Council has 115 council members. Whether size matters is just one of the difficult issues to be decided. The council's work is not necessarily recognised widely in the profession, but as its decisions affect every solicitor - from the basic level of setting the practising certificate fee upwards - the reforms are vital, unless Sir David Clementi decides to make the whole thing irrelevant, of course.

Mr Nally says that while the governance review is necessary, it is of secondary importance. The public at large is less interested in how the government and Houses of Parliament are organised, and more with the public face and end result. The same is true of the council, he maintains. 'It is the product rather than the process which is more important.'