Sir David Clementi signalled a wholesale shake-up of regulation in the legal services sector this week with the publication of his long-awaited consultation paper.

Making it clear that the existing framework was unacceptable, Sir David set out two 'polarised approaches' to future regulation.

The most radical proposal - model A - would see all regulatory functions taken from professional bodies such as the Law Society and the Bar Council and handed to a single regulator called the Legal Services Authority.

The consultation paper said this model would demonstrate the clear independence of the regulator, but added that it might also create an overly bureaucratic organisation.

At the other end of the scale - model B - the various professional bodies would retain their regulatory roles, but be subject to oversight by a new regulator called the Legal Services Board.

The consultation paper suggested that this option might be cheaper, but added that there could be 'a perceived lack of independence and an inability to involve the consumer consistently in regulatory decisions'.

One 'possible solution', dubbed model B+, is that the professional bodies would be allowed to retain their regulatory roles, but be required to separate that function from representation.

On the issue of complaints handling and discipline, Sir David put forward three alternatives: creating a 'single point of entry' consumer complaints body; allowing professional bodies to remain responsible for their own complaints, subject to oversight; and adopting the New South Wales model where a commissioner acts as the single point of entry for all complaints, and can deal with cases himself or pass them to the appropriate professional body.

Sir David also rejected the immediate introduction of multi-disciplinary partnerships (MDPs) in favour of legal disciplinary practices (LDPs), which bring lawyers from different professions together to offer services, on the basis that he was: 'pretty keen on learning to walk first'.

Law Society chief executive Janet Paraskeva warned that model A was the most expensive regulatory option.

'In many ways model B represents a tidying up of the system we have at the moment, as the Society has to go to either the Master of the Rolls, the Lord Chancellor or both for approval if it proposes changes to the rules,' she said.

The Society is already looking at the issue of how it represents the profession as part of the governance review headed by Baroness Prashar, she added.

Bar Council chairman Stephen Irwin QC welcomed the decision not to promote MDPs.

He said: 'We have argued against the 'Enronisation' of multi-disciplinary partnerships.' Diane Burleigh, secretary-general of the Institute of Legal Executives was pleased at the prospect of LDPs.

'There are solicitors' firms who would like to have legal executives as partners rather than having to create special positions to work around the current rules,' she said.

The deadline for responses to the consultation paper is 4 June, with Sir David set to publish his recommendations by the end of the year.

See [2004] Gazette, 11 March, page 12

By Philip Hoult