The now retired chief executive reflects on an eventful eight years at the Law Society.
Desmond Hudson became chief executive of the Law Society eight years ago, which seems like another age. And not only because the landscape in which solicitors operate has been so dramatically transformed in the interim.
In 2006, Gordon Brown was still proud to have abolished ‘boom and bust’, while George Osborne was busy lauding soon-to-be-bankrupt Ireland as a ‘shining example of long-term economic policymaking’.
There is a point to recalling these political indiscretions. Had Lehman Brothers collapsed a couple of years earlier than it did, New Labour’s Legal Services Act of 2007 may well have been stillborn. The legislation was, after all, predicated on a view of professional regulation that was very much of its time, and has since been subject to seemingly continuous reappraisal.
Market fundamentalism was at its zenith. That view posited that the role of watchdogs was to help dispose of impediments to doing business in as open a market as possible, through the medium of that now tarnished concept ‘light-touch regulation’.
John Tiner, chief executive of discredited and defunct City regulator the Financial Services Authority, had this to say in 2006: ‘Firms’ managements – not their regulator – are responsible for identifying and controlling risks. A more principles-based approach allows them increased scope to choose how they go about this. In short, the use of principles is a more grown-up approach to regulation than one that relies on rules.’
‘Outcomes-focused regulation’ encapsulated, in short.
Tiner’s rubric became the nascent Solicitors Regulation Authority’s modus operandi, but it never quite worked out that way. It couldn’t. The goalposts were about to move even while the LSA was still navigating its way through parliament. Post-LSA, many solicitors perceive that legal services regulation has proved far more crabbed and prescriptive than anticipated.
Hudson had barely settled at his desk before he was lobbying government over the legal services bill alongside the then president, and now lord mayor of London, Fiona Woolf. His plea then was that regulation should be ‘proportionate and effective’, an entreaty which bears repetition. The balance is still not right.
The split between representation and regulation predated Hudson, and he clearly regrets that relations between the Law Society and Solicitors Regulation Authority turned sour. ‘We have not enjoyed the harmonious relationship that other professional bodies and their regulators have had,’ he admits. ‘It is perhaps understandable that regulators in the new structure were over-exercised in demonstrating their independence and freedom from their parent Law Society, or Bar Council, above all else. That became their biggest issue, ahead of actually being a highly efficient regulator.’
Cast in the role of ‘official opposition’, Chancery Lane has not been slow to speak up for members, Hudson stresses. ‘For example, we told the SRA that imposing the COLP and COFA regime, from top to bottom of the profession and at the same time, was both injudicious and unlikely to work. I am pleased that, in more recent times, the SRA is beginning to look at moving away from a “one size fits all” model.’
As for the Legal Services Board, it was always difficult to find common ground while the radical and combative David Edmonds occupied the chair. Edmonds departed in April with an intemperate attack on what he called the legal ‘trade unions’, alleging that the Society and Bar Council have ‘never accepted the legitimacy of the LSB and the Legal Services Act which created it’.
Representatives of the profession were equally robust in their response, urging the government not to accede to Edmonds’ wish for a single overarching regulator which would sit ‘in the pocket of government’. Chancery Lane retorted by observing that although the LSB existed supposedly to assist frontline regulators, that role could be easily achieved by being chaired by a judge appointed by the lord chief justice. ‘It would create space for all [solicitors] to innovate, compete and operate in international markets,’ said Hudson.
‘The Edmonds-led regime was looking to change the current settlement, which establishes the role of the Society,’ Hudson tells the Gazette. ‘Is anyone surprised that we disagreed with them about that? Is the Pope Catholic?’
He adds: ‘I’m very disappointed and dismayed that David Edmonds characterised, in his last day of service, the position of professional bodies like ours as opposing all changes – that is just factually incorrect. We disagreed on some fundamental things.’
The prospect of a single regulator and the further upheaval that would engender has receded for now. The government ruled out immediate further changes to the framework for legal services regulation following the wide-ranging review launched by the Ministry of Justice in June 2013.
Chancery Lane had lobbied for internal governance arrangements to be modified so the Society could assume direct responsibility for training and authorisation to practise. It further argued that investigation and prosecution of offences should be undertaken at arm’s length by an operational arm of the Society with independent decision-making powers – but reporting directly to the Society.
Those wishes remain unfulfilled, but there was a gratifying consolation prize. The government left alone section 51 of the 2007 act, which defines how approved regulators (including the Law Society) are allowed to deploy practising fees, incorporating such ‘permitted purposes’ as raising professional standards and participating in the law reform and legislative process.
Reform of regulation may have been parked for now, but the free market is here, with non-lawyer ownership a reality. In 2010, the then justice secretary Kenneth Clarke spoke animatedly of alternative business structures heralding a legal sector ‘Big Bang’, akin to the deregulation of the financial markets by the Thatcher government in 1986.
‘I don’t think the market has changed as much or as quickly as people thought,’ Hudson observes, ‘though there is certainly a very significant and important cluster around motor insurance companies creating ABSs.’
He adds: ‘I also think there is a rich irony here. Long before I arrived, the Law Society took the view that it would not oppose the legislation creating ABSs, yet we are characterised by seemingly everybody as against them, or not doing enough to support them.
‘Certainly, now they are the law of the land, the Society’s position is that if any of our members choose to run their practice through the ABS vehicle, that is absolutely fine. Choice of trading vehicle is almost a secondary issue. We have more important things to think about. It’s really important that the Society does not allow itself to be painted into a corner: we are for ABSs, we are against ABSs. They are members, we need to represent them as we represent all others.’
BORN Halifax, West Yorkshire
EDUCATION University of Leeds, law degree
CAREER 1980, qualified as a solicitor with Foysters; 1980-87, assistant solicitor, Linder Myers Solicitors, Goldberg Blackburn & Howards; 1987-92, in-house legal team, Yorkshire Building Society; 1992-95, head of lending, Britannia Building Society; 1995, operations director, Britannia Life; 1996-98, managing director, Britannia Life; 1998-99, chief executive, Scottish Media Group (SMG) publishing division; 1999-2004, appointed director of SMG; 2004-06, chief executive, Institute of Chartered Accountants of Scotland
This observation touches upon what one might term the ‘split personality’ of the representative arm. Is it a ‘trade union’ or professional body? Should it be both?
Certainly, there is a constituency of Law Society members that is unequivocal in criticising Chancery Lane for not fighting liberalisation (among other things) tooth and nail. They would prefer unabashed advocacy and defence of members’ material interests, at the expense of noble missions such as defending the rule of law.
‘Informed self-interest tells me that the best way in which we will discharge trade union duties is the way we do so now, by not being a formal trade union,’ says Hudson.
‘The best example, I’m sad to say, is criminal legal aid. Solicitors, as the owners of businesses, cannot withdraw their labour, period. The bar, which is comprised of independent contractors, can – or they can, at the same time, reach the same decision not to work at certain rates of pay. You don’t need to be Einstein to recognise that. So the idea that we can act as a trade union per se is flawed.’
He adds: ‘The professional role to which we aspire, as officers of the court and so on, sits uneasily with the idea of our being a trade union. I also think we are more effective for our members if we act as a professional body that has an eye to the public good, focusing on the civic role our members play in maintaining the rule of law, in our judicial system, and in making the wheels of commerce turn.’
This faultline was laid bare last year when Chancery Lane’s policy on criminal legal aid reform prompted a successful ‘no confidence’ motion against the chief executive and president. Hudson and Nicholas Fluck rode out the storm, with the chief executive stressing that his subsequent decision to retire was entirely unconnected with the vote.
He remains unrepentant: ‘I am very pleased with all that we have done over the last eight years to defend legal aid, and to seek to defend access to justice, notwithstanding the events of the last year. Clearly I wouldn’t be human if I wasn’t sometimes irritated by how fickle some people can be. Everything is viewed in the here and now.’
Hudson admits however that he did not quite appreciate the degree to which TLS management decisions would play out in public.
But he adds: ‘Nobody chooses to be a chief executive, whether of the Law Society or Acme plc, because they want to be universally popular.’
In the end, the chief executive – and the office-holders, for that matter – can only do what Council will sanction. They are not in the happy position of the CEO of a FTSE 100 company, whose word is generally law, least of all that of the owner of a family business. The Chancery Lane family is a big one and there are many competing voices.
One potentially transformative policy proposal that came in the early days of Hudson’s tenure went all the way to a postal vote of members, but failed. That was the admission of non-solicitors to the Law Society as affiliates, reflecting the fact that, with many more solicitors working in new corporate entities, the leaders of those new types of practice may require the Society’s services.
‘You always return to that reality,’ Hudson notes. ‘Sometimes I’ve come back into the office and kicked the cat and slammed the door because of what X, Y or Z board or Council did on a particular occasion.
‘This is a membership body. Council is peopled by representatives of the members and it makes the decisions. We didn’t reach a consensus on that particular issue. You move on.
‘But everybody I’ve worked with here at the Law Society has been struggling and striving to do the best by the profession, though we might not always agree on the right tactics.’
So what does Hudson regard as his main achievements? He cites several, including Chancery Lane’s increased focus on promoting the profession in England and Wales in foreign markets. ‘I also look at what we’ve done to help members through a difficult recession, and to deal with the implementation of LSA, Jackson and, of course, legal aid.
‘That was a very difficult set of challenges and I am really pleased about the way the Law Society machine has developed and grown to understand and confront them.’
Hudson also mentions the launch of Chancery Pii, the joint venture to provide professional indemnity insurance to small firms, and the Conveyancing Quality Scheme, the quality standard designed to give solicitor conveyancers a competitive edge.
He reserves special mention for Chancery Lane’s fruitful efforts to prevent conveyancer firms being thrown off lender panels. Most notably, in 2012 HSBC agreed to expand its conveyancing panel to include all firms with the CQS mark, following a four-month campaign by the Society against the bank’s announcement of a panel of just 39 solicitor firms and four licensed conveyancing companies.
So what does Hudson leave behind? Certainly, his rigorous financial stewardship has left Chancery Lane in a stable position, recording a £7.7m surplus in the last accounts. Measures such as closing the organisation’s final salary pension scheme and a tight control on staff numbers, which presently stand at 300, have made a difference to the bottom line.
One regret is not making radical changes to Chancery Lane’s top management earlier than he did: the present executive leadership board was a relatively late innovation. ‘My sense is, looking back, that if you’re going to change, do it early and do it once,’ he says. ‘And do it quickly.’
I conclude by asking him what the Law Society will look like in 15 years’ time, if it still exists in a recognisably comparable form.
Smiling ruefully, Hudson replies: ‘Over the last eight years I’ve had people queueing up to tell me that the Law Society is doomed and it is only a matter of time before we’re carried off to the knacker’s yard. And we are still here.
‘What will decide whether the Law Society continues is whether the members want it to continue. But without a national Society of our scale and resources, you would not – to give just two examples – have seen our intervention in the Mitchell case, or the £250,000 guarantee we’ve given to Public Law Partnership to help them bring judicial review cases all about access to justice and the rule of law.
‘I think the public and the profession would be much poorer for that.’
Paul Rogerson is Gazette editor-in-chief