Consumers treated as 'collateral damage' in Mazur washup

The implications for consumers are largely being overlooked in the fallout from the Mazur judgment, the head of the legal watchdog said today. 

Tom Hayhoe, chair of the Legal Services Consumer Panel, said clients whose cases were handled by unauthorised staff have been treated as ‘collateral damage’ in wider debates about regulation and the impact on the legal sector. ‘The Mazur judgment is not just a professional embarrassment for regulators and firms,’ he said. ‘It is potentially another consumer scandal. Ordinary clients who engaged law firms in good faith may be left exposed.’

In Mazur, Mr Justice Sheldon emphasised that the Legal Service Act prevented any unauthorised staff from conducting litigation, even under supervision within a law firm.

Writing in a blog today, Hayhoe suggested that consumers were at risk where their matter was handled by unauthorised people over the past decade.

‘Clients believed their litigation was being conducted by authorised, insured professionals,’ he said. ‘In reality, key steps may have been taken by individuals who, however competent, had no legal right to act. Consumers are not collateral damage in a professional turf war. They are the ones who paid for services under the assumption of lawful practice [and] relied on regulators to ensure compliance.’

Hayhoe said the consumer panel was particularly concerned that past judgments could be reopened or challenged, leaving clients who thought their disputes were resolved facing renewed uncertainty. There is also the possibility that insurers could call into question whether claims were validly handled.

He was highly critical of professional bodies and regulators for failing to represent the interests of consumers. The Chartered Institute of Legal Executives had given members a ‘false sense of security’ from assurances before Mazur that they could conduct litigation. The Solicitors Regulation Authority, which intervened in the case, had also been forced to concede its advice that employees could lawfully conduct reserved activities was incorrect.

The panel chair questioned the role the Legal Services Board, the oversight regulator, pointing out that it was either unaware of a significant crack in the regulatory system or had been aware and chose not to act.

Hayhoe claimed that Mazur had exposed a ‘deeper malaise’ which demands that legislators carried out a full-scale review of the regulatory framework. ‘The regulators and representative bodies concerned have sowed confusion, issued contradictory views, and arguably failed to protect consumers,’ he added. ‘Mazur is a consequence of a regulatory framework that has lost its way.’