A solicitor is among the first 13 entities to be named as regulated by the Bar Standards Board. We wish Mark Johnson well with his new venture, combining commercial services with consultancy advice.
This development does, however, give rise to a niggling question. Should decisions about a business model be influenced by perceptions of which regulatory regime is preferable, when there is a choice of more than one?
This is what is known as regulatory arbitrage – a phenomenon considered by many to be contrary to the public interest. Indeed, it has been described by the Solicitors Regulation Authority as ‘highly undesirable’, though in a different context.
But the Legal Services Board is sanguine. The super-regulator told the Gazette that the question does not arise of whether it is comfortable with which regulator lawyers choose – the Legal Services Act permits a range and firms can opt for the one that serves their ‘best interests’. In licensing regulators, the board insists there are strict tests to make sure that there can be no ‘race to the bottom’.
Perhaps so. But would a liberal market in regulation have been contemplated had the act been delayed a couple of years in its gestation? Can bankers pick and choose between regulators, on the basis of which is perceived to be most accommodating? No, and for good reason. So why can lawyers?
Has that question ever been answered satisfactorily?