LEGAL SERVICES BILL: DCA will review powers, but appointment regime and ABS speed remain

The government this week vowed to push ahead with its blueprint for reforming legal services after rejecting the key recommendations of the joint parliamentary committee that scrutinised its draft legislation.


The response to the committee's report on the draft Legal Services Bill offered little to critics of the regime for appointing members of the proposed oversight regulator, the legal services board (LSB), or the speed with which alternative business structures (ABSs) will come in.


The Department for Constitutional Affairs (DCA) rebuffed calls for the secretary of state only to appoint the chairman and members of the LSB in consultation with the Lord Chief Justice so as not to damage the LSB's independence.


The DCA said all appointments would be in accordance with Nolan principles - 'any further requirements would not be appropriate because responsibility and accountability to Parliament for the appointment lies with the secretary of state'.


A similar argument was used over concerns that the Bill grants too many powers to the minister, although the DCA did agree to reconsider whether each is necessary.


It also agreed to ensure frontline regulators have day-to-day responsibility for regulation and that the LSB can only exercise its powers 'where approved regulators are clearly failing'.


While accepting the committee's principle that there should be 'less haste and more care' in introducing ABSs, the DCA snubbed its proposed four-step phased implementation. ABSs would only go ahead once the LSB was happy that the regulatory framework was in place, it stressed.


However, the Bill will be amended to allow law firms to form legal disciplinary partnerships without requiring an ABS licence.


Lord Hunt of Wirral, the solicitor who chaired the joint committee, said the 'big positive aspect of the response is to see the secretary of state engaging with our concerns about the need to enshrine and assert the independence of the profession'. But he was disappointed with the reaction on issues such as appointments and ABSs. 'I remain concerned that this headstrong rush into the unknown of ABSs may lead to a dilution of standards,' he said.


Law Society President Fiona Woolf accused the government of just paying lip service to light-touch regulation. She added that the proposed appointments process risked damaging the perceived independence of the LSB. 'The government must also take a fairer approach to allocating the costs of the new regulatory system, rather than passing the whole bill to the profession,' she said.


The DCA rejected recommendations that it share the estimated £27 million cost of introducing the reforms, rather than expecting the profession to pay it all. It also refused a right of appeal to the courts against LSB decisions and to regulate will writing.


However, the DCA's commitment to provide greater clarity on the separation of professional bodies' regulatory and representative functions was welcomed by the Law Society Regulation Board.


Neil Rose