A proposed radical overhaul of the way solicitors are regulated would put high street firms under threat, the Law Society has warned.
The representative body said this week that proposals to regulate lawyers in different ways – depending on the legal service they provide – would create a complex system detrimental to everyone involved.
Responding to University College London’s independent review of legal services, the Society said wholescale changes at this time were ‘likely to put significant and potentially harmful strain on public and business confidence in our legal system’.
It suggested that firms in the proposed system would need multiple layers of different regulation for individual members, which would need to be regularly re-assessed, with different terms of engagement and levels of insurance.
‘Unintended consequences could well be many small firms leaving the market, the legal sector contracting, and the cost of legal services increasing, leading to further unmet demand, said the Society.
‘[The proposals] would lead to a less coherent alternative to the existing regime, creating a costly and complex system.’
The independent review, led by Professor Stephen Mayson, made its interim report last year, calling for all lawyers to be subject to after-the-event regulation – most likely through a reformed Legal Ombudsman service – but applying different levels of regulation before and during the service based on its level of risk.
All legal services would be regarded as low risk unless they are separately defined and identified as either ‘intermediate risk’ or ‘high risk’ requiring more targeted regulation. These higher risk activities would be subject to certain practice conditions such as the assurance of continuing competence, obligations around handling of client money, and contributions to a compensation fund. This approach would be supported by a public register of individuals and entities subject to regulation.
The Law Society said the current regulatory system already allows more stringent regulatory intervention for high-risk activities. If there are concerns about additional risk to the public, it suggested extending the list of reserved activities (ie those services that must be provided by lawyers) to include wills, estate administration, lasting powers of attorney and trusts.
The final report of the independent review is expected to be published in March.