Neil Rose talks to the top two at the new Law Society Regulation Board about its remit and asks whether ethnic minority solicitors are disproportionately affected.


What’s in an apostrophe? Quite a lot actually, at least when you are tackling the sensitive issue of separating the Law Society’s regulatory and representative functions.



Earlier this year, the Law Society Council voted to name its regulatory arm, on an interim basis, the Law Society’s Regulation Board. At its subsequent meeting, the board decided to drop the possessive while a completely fresh identity is created.



This is more than insignificant pedantry. The message is that while the Regulation Board may be of the Law Society, its 16 members – nine of whom are solicitors – do not see themselves as beholden to it.



The formal separation that took place on 1 January 2006 has its roots in the Law Society’s governance reforms of 2001. A review of those arrangements was always planned, and in 2003 an eight-strong governance review group was launched under the leadership of non-lawyer Baroness Prashar. It came to the conclusion that the two functions should be split, as did Sir David Clementi in plumping for model B+ in his review of legal services regulation in December 2004, which is now being made flesh in the Legal Services Bill.



Until it becomes an Act, there are some technical problems with the separation. Under current legislation, the council – though now in effect fulfilling a purely representative role – is alone vested with the power to change the practice rules and so has to approve any amendments the Regulation Board wants to make. The council also still sets the practising certificate fee.



Thus far this has not been controversial and the principle is that the council will give effect to the board’s decisions. But it is not beyond the realms of possibility that council members will rise up in sufficient numbers on a specific issue to overrule the board. There is nothing to stop them.



This is why the board has concerns over the way the Bill is currently drafted, because it contains little on the subject. ‘We need clarity on separation on the face of the Bill,’ says board chairman Peter Williamson. It is a view shared by Sir David himself. The board’s submission to the joint parliamentary committee scrutinising the draft Bill says the minimum criteria for ensuring effective separation and preventing undue influence among all the frontline regulators of legal services should be spelt out.



It said these should include:



Delegating all regulatory decisions and rule-making to a separate regulatory body and that any body with a representative function should have no concurrent powers;



Allowing the regulatory body to raise the funds it requires to regulate, with representative bodies having no right of veto. However, they could complain to the proposed oversight body, the legal services board (LSB), if they consider the expenditure excessive;


Provisions for members of the regulatory arm to be appointed independently, and a bar on members of the representative arm being appointed;



Allowing the regulatory body to deal directly with the LSB, the proposed office for legal complaints, and other approved regulators.




In essence, it is saying the Regulation Board should in future be able to operate without fetter from the Law Society Council, and should be accountable to the LSB alone.



Given this pressing need for complete and transparent separation, why bother having the two bodies under the same roof at all? ‘I have always been a believer in model B+ because it implies the continued involvement of the profession in regulation,’ says Mr Williamson, who was Law Society President in 2003/04 when Sir David began his review. ‘It’s a good model, but who knows what will happen in ten, 15 or 20 years?’



Antony Townsend, who last month became the first chief executive for regulation, says Sir David hit on a compromise that aims to have the best of both worlds. He explains: ‘On the one hand, he said regulation and representation need clear separation, but on the other he was stressing the importance of professional confidence in regulation.’



Mr Townsend – a non-lawyer and formerly chief executive of the General Dental Council (GDC) – concedes that had Sir David been starting with a completely clean sheet of paper, he may have ended up with total separation into two bodies. But retaining the best features of the present system was important to the former deputy governor of the Bank of England.



However robust the separation may be, and however clear it may be in the Bill, the fact remains that, to the public, it will still be the Law Society regulating solicitors. And the long-standing charge of the profession looking after its own might never be far away.



Both Mr Williamson and Mr Townsend recognise the problem and measures to tackle it will include establishing the board’s clear identity and a series of roadshows later this year where it will explain its role to solicitors, interested groups and the public. However, Mr Townsend says: ‘There is an inherent problem in any system of professional regulation. Even where you have complete separation, those people who are by their nature suspicious and cynical about professionals will be suspicious and cynical about the structure.’



It is not just about convincing the public either, he stresses. ‘The best way of regulating is that individuals buy into it – working in partnership with the profession and not simply imposing rules.’ Otherwise you might as well just have government regulation.



Therefore, there is a sense in which disagreements between the board and the council will be healthy in showing that they genuinely operate independently of each other. The first cause of obvious tension was the board’s decision in May to push ahead with reaccreditation for criminal law solicitors, regardless of whether the Legal Services Commission decides to maintain its support for the scheme amid the welter of reforms about to engulf the sector.



It was not difficult to read between the lines when the then Law Society President, Kevin Martin – Mr Williamson’s representation equivalent – said the reforms ‘point to the need, at the very least, for great care in the timing of the introduction of reaccreditation’. Groups representing criminal law solicitors were less restrained, accusing the board of being ‘silly’ and kicking practitioners in

the teeth.



Mr Williamson defends the decision, saying reaccreditation is necessary to preserve the credibility of the scheme – especially since most members were passported in when it was launched in 2001 – but the board has left open the timing.



There were also some grumblings that the board implemented its new guidelines for judging the character and suitability of those seeking admission to the roll – including the introduction of Criminal Record Bureau checks – before consulting with the council. For reasons not made public, the board adopted the position that it had to institute the guidelines at once and is now consulting with a view to amending them later if needed.



Referral fees could yet cause some controversy, as might the review of the future of the minimum salary for trainees, along with the possibility that the representation side of the Law Society may launch its own ethics and practice advice telephone helplines. Those in regulation currently offering these popular services are bound to be concerned about confusion and duplication.



But while Mr Williamson sees some benefit in ‘healthy disagreement’, he is ‘not by nature a confrontational sort of person’. He continues: ‘There will be areas of disagreement and it’s all about managing them.’



Few will be better at doing this than the one-time City litigator, who also sits as a recorder. He knows his way around Chancery Lane – he was on the council from 1992 until last year and had several roles, including chairman of the Solicitors Indemnity Fund. He even once chaired what is now the Trainee Solicitors Group.



Mr Williamson already holds liaison meetings with the chairmen of the Law Society’s representation and law reform boards, in addition to ensuring they are formally consulted, so as to maintain a ‘regular dialogue’. But he emphasises that while it is important that the two sides forge working relationships, that does not necessarily mean they have the same aims and objectives. And while he is hopeful the council will not refuse to endorse a Regulation Board decision – ‘there is no benefit to either side for that to happen’ – he acknowledges the potential for that happening.



Mr Williamson will also hope that the opposition to criminal reaccreditation does not extend to accreditation schemes more generally, because he sees increasing their number as the way forward, particularly in those areas of law involving vulnerable clients. ‘It goes hand in hand with the increased specialisation of the profession,’ he maintains.



Mr Townsend brings a new perspective to the regulation of solicitors. His background is mainly in healthcare – he joined the GDC from the General Medical Council where he held roles such as director of standards and education, and head of conduct. Before that he worked at the Home Office, mainly on criminal justice issues. His twin brother is a barrister. Mr Townsend says the powers exercised by the board are ‘much more complex and interventionist’ than those of his previous employers because of the extra risk inherent in holding client money.



However, there are certain common principles. Mr Townsend says the underlying ethos of all professional regulation should be that the individual practitioner is the primary regulator, and the job of the regulatory body is to provide the framework under which the vast majority self-regulate and provide the safety net for the few who do not.



‘My approach to regulation has been to focus on the public interest, talking more about promoting public confidence than protecting self-regulation,’ he continues. ‘Then you need clarity about what we’re doing and how we’re doing it, providing clear advice, and simplification of rules and processes.’



One example of the board’s public interest focus can be seen in plans to publicise formal regulatory sanctions against solicitors that fall short of references to the Solicitors Disciplinary Tribunal. Mr Williamson says one of the board’s main principles is transparency and that in the 21st century it is ‘not justifiable’ to keep such information from the public.



Mr Townsend is also keen to ‘move away from the obsession with conduct issues towards looking at issues of competence’; after all, inadequate professional service accounts for the vast majority of complaints against solicitors. ‘The focus on continuing professional competence is something all regulators ought to be involved in … in the healthcare field, the government is committed to introducing periodic competence tests for all healthcare professionals.’



He explains: ‘Across all professional groups, regulation was traditionally based upon an assumption that once a member was admitted to a profession, he or she would remain competent, and that the principal continuing role of the regulator was to weed out “rogues and villains”. Increasingly, the focus of consumer concern has been about continuing competence, not just character.’



While continuing professional development and accreditation schemes recognise the trend, Mr Townsend says pointedly that ‘simply undertaking CPD (continuing professional development) is not the same as assuring competence’. Looking to healthcare again, he says the debate on how it can be done has ranged from peer reviews or appraisals for all, to more simplistic checks with certain indicators that trigger a more detailed investigation into a practitioner’s competence.



‘There is more work to be done on how the Regulation Board can best ensure that poor practice is identified early, and remedied early – preferably without the need for formal regulatory sanctions,’ he says.



But that is for the future. Initially, his three priorities are to develop the Regulation Board’s workplan; to review the organisation and its processes, to see whether there are efficiency savings and also whether they should be doing things in different ways; and to establish the board’s identity.



There is a thorough audit being carried out of how the regulation directorate works, but staff have also been encouraged to identify ‘quick wins’, such as stopping the practice of asking students each year whether they need to re-enrol with the Law Society – this avoids sending out 15,000 largely needless letters annually.



This is all part of a move towards a phrase solicitors will be hearing a lot in future: risk-based regulation. According to Mr Williamson, this means ‘targeting your resources to the areas of greatest need. It may mean giving up things we do at the moment that do not provide a regulatory result’. Mr Townsend adds that this kind of regulation also depends on good data, and he plans to commission a new IT system for the regulation directorate that will improve data collection.



Such a move may well make the profession nervous, given the Law Society’s record when it comes to IT projects. Mr Townsend is ‘well aware that IT projects have a tendency to go wrong and organisations underestimate the undertaking’, but he says a lot of groundwork has been done and the lessons of past projects fed into the process. More reassuringly, he delivered an IT system within budget at the GDC. ‘The key is thorough preparation and absolute clarity in what you want from it,’ he adds.



There is no doubt that a lively and full agenda awaits the Regulation Board. One issue to look out for is the future of client account – put simply, says Mr Williamson, ‘it seems to me that in this day and age, with the modern banking techniques we have, it is worth looking at whether it is necessary to keep as much money in client accounts as is held now’. And within this is the tricky question of whether solicitors should retain interest on client accounts – in other countries, it is put to uses such as funding pro bono endeavours and even financing legal aid systems.



In addition, the government reforms will bring in alternative business structures and the Regulation Board will want to be approved by the LSB as a regulator of them.



Mr Williamson and his colleagues may not yet have made a huge impression on the profession, but there is little doubt that will change – and soon.