The representative body for 20,000 legal executives made their regulator sign a non-disclosure agreement before revealing plans to divorce, an investigation by the Legal Services Board has revealed.

The oversight regulator announced last October that it was intervening into the open civil war that had erupted between CILEX and CILEX Regulation three months earlier when CILEX revealed plans to switch oversight of members to the Solicitors Regulation Authority.

In a 60-page investigation report today, the LSB states that CILEX has the power, in principle, to explore the possibility of redelegating its regulatory functions. However, the manner in which CILEX first approached CILEX Regulation in January 2022 with its proposals ‘was not consistent with the regulatory objectives, in particular the protection and promotion of the public interest and the interests of consumers’.

The report reveals that at a meeting on 25 January 2022, the chair and interim chief executive of CILEX Regulation met their counterparts at CILEX at the representative body’s request.

At the meeting, CILEX asked CILEX Regulation representatives to sign a confidentiality non-disclosure agreement in relation to the information to be imparted, the LSB said. The CILEX Regulation representatives objected but believed they had no option other than to agree.

The report states that the January meeting was the first time that CILEX Regulation was informed that CILEX was considering proposals specific to redelegation to the SRA.

The LSB states later in its report that the NDA ‘made it impossible for CILEX Regulation to prepare the ground and communicate with its own staff (at least without seeking additional permission to do so). In practical terms, it made it difficult for CRL to work with CILEX’.

'It is hard to avoid the conclusion that the confidentiality agreement was a serious misstep that reverberated long and loud over subsequent events,' the LSB adds.

As for CILEX Regulation, the LSB says the regulator did not approach its dialogue, communications and relationship with CILEX ‘in a manner that was liable to protect and promote the public interest and interests of consumers’.

For instance, the wording of a public statement issued by CILEX Regulation on 12 July 2022 ‘did not provide a fair description of the steps that CILEX had taken’ and ‘cast CILEX’s conduct into an unfairly pejorative light’, the LSB says.

Making recommendations, the LSB said that should CILEX wish to continue exploring alternative delegation models, it should do so ‘collaboratively and in cooperation with’ CILEX Regulation. CILEX Regulation ‘should engage constructively and collaboratively’ with CILEX’s review of its delegation.

The LSB will consider potential guidance on issues to be taken into account when an approved regulator is considering changing the delegation of its regulatory arrangements.

As CILEX and CILEX Regulation have agreed to act in accordance with the LSB’s recommendations, the oversight regulator decided not to take enforcement action and let them resolve their issues informally. However, enforcement action could come down the line ‘if cooperation between the parties fails sufficiently to address the findings and recommendations in this report’, the LSB says.