The Chartered Institute of Legal Executives has responded belligerently to a critical report from umbrella watchdog the Legal Services Board on the leadup to the Mazur debacle.
Chief executive Jennifer Coupland accused the LSB of overlooking its own failings, claiming that the board missed ‘multiple opportunities’ to provide clarity on the regulation of litigation before the disaster unfolded.
Last year’s High Court ruling in Mazur sent shock waves through the profession and prompted law firms to reassign work. Some people lost their jobs, retired early or faced demotion.
CILEX appealed. In March, order was restored when the Court of Appeal held that unauthorised staff do not ‘carry on the conduct of litigation’ merely by performing tasks that fall within the statutory definition, provided they act under the supervision of an authorised person.
The LSB yesterday published its final report on the role of frontline regulators in issuing guidance and ensuring compliance in relation to litigation conduct. It found that regulators responded constructively and updated their guidance following the Mazur judgments. However, it said previous advice to the profession 'had varied in clarity and consistency'.
In 2022, when regulators ‘developed differing interpretations’ of the [2007] act, there was ‘insufficient cross-regulator engagement to resolve that inconsistency’.
Several regulators assessed levels of non-compliance with the act to be low or insignificant. However, the LSB’s review found these assessments may have been ‘undermined by limited knowledge of how supervision of unauthorised individuals was operating in practice’.
The LSB report orders frontline regulators to: provide clear guidance on what adequate supervision looks like in routine and higher-risk cases; share draft guidance on reserved legal activities with other watchdogs before publication, to support consistency; collect better data on reserved activities; and improve risk assessment.
The board itself will undertake a review of guidance across other reserved legal activities, to ‘identify and address any similar inconsistencies’.
Coupland said CILEX accepts the findings of the report, but added: ‘The fallout from the Mazur judgment exposed longstanding regulatory confusion. Arguments relating to the conduct of litigation, aired for the first time during the appeal process, demonstrated that while organisations across the sector were acting in good faith, they were working with a framework that lacked clarity and was not fit for purpose.
‘We [CILEX] know that we have not always got it right. As the master of the rolls observed during our appeal, regulators appeared to be operating “in their trenches” and that needs to change.
’CILEX is, however, disappointed with some aspects of the LSB report: Firstly, there is insufficient acknowledgement of the LSB’s own failings. There were multiple opportunities for the LSB to intervene or take action to provide the clarity that the sector clearly needed. Secondly, it is insensitive to the reality of the position following the High Court judgment in concluding that there was no evidence of detrimental impact, without properly acknowledging the human impact on the many lawyers and firms who experienced real negative consequences and significant stress.
’Finally, it is disappointing that this first substantive LSB output since the publication of Richard Lloyd’s ‘Independent Public Bodies Review of the LSB’ report shows no substantially changed approach to the oversight of regulation going forward.’
The Solicitors Regulation Authority said in a statement on the LSB report that it recognises the 'concern and confusion' among practitioners and firms that followed Mazur. The SRA published updated guidance in June.
'We are pleased to see the LSB stating that this guidance provides "detailed advice for the profession, including case studies to help professionals exercise their judgement as to what is appropriate in their circumstances", said the regulator. 'We do though accept that more can still be done to provide even greater clarity to the profession, in particular in relation to legal service regulators reaching unified positions and consensus on the advice being given ahead of any publication.'
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