The Brexit situation has done us one good favour – it has knocked most of us out of our comfort zone and caused us to reflect on what we are doing with our careers, our workplace and with the direction of our business.
Most of us involved with business development and marketing are reviewing our strategy and are allowing for some lean years ahead. We can’t sit back in the armchair of the European Union any longer: Plentiful labour, international clients keen to invest in the UK , steady economic growth – none of these can be relied upon over the coming years, possibly for a decade, while Britain re-aligns its economy and works out a new trade agreement.
So – what can we do to effect an EU-out ready legal services business? One option is to look at regulation.
Legal Services Board’s report on unregulated legal service providers is not well received by regulators
The report from the Legal Services Board Unregulated Legal Service Providers: Understanding supply side characteristics (published 28 June) is good timing, and the angle taken on its findings as reported in the legal media has been interesting.
The Law Society Gazette has reported that the LSB are “cheering on” unregulated service providers – see “Unregulated online legal services providers: A solution?” (4 July 2016), “Unregulated legal services providers cheaper and more innovative, says LSB” (28 June 2016) and “Throw consumers to the wolves. It’s cheaper” (1 July 2016).
The Bar Council were also quick to respond to the report by warning of the risks to consumers- see Bar Council: Unregulated legal service providers a risk to consumers (29 June 2016).
The response from lawyers
Reader comments to the Law Society Gazette’s articles are extremely insightful and are well worth a read – one (see “Throw consumers to the wolves”) offers the opinion that regulation is irrelevant to the quality of legal advice we provide, and plenty of readers agree – 11 thumbs up.
Are the LSB favouring unregulated providers?
Is it true that the LSB’s report disregards the risk to consumers of unregulated legal service providers in favour of trumpeting their prices? I don’t believe so. The report reveals that the LSB (a) did not test the technical aspect of their services, but they found mixed evidence as to the quality of the client service provided (b) yes they found evidence of cheaper prices, but only for wills and divorce (c) consumers should be aware of the potential risks of using unregulated advisers, including the potential lack of recourse to remedies such as professional indemnity insurance.
Why are we providing regulated legal services that are unregulated?
So what has this got to do with us and our business? The point is that reserved legal activities are limited to six very specific legal duties under section 12 of the Legal Services Act 2007. These are in summary; the right to appear before a court, the conduct of litigation, acts performed relating to land under the Land Registration Act 2002, the preparation of probate papers which oppose a grant of probate or a grant of letters of administration, notarial activities, and the administration of oaths.
The above activities require conduct by lawyers who are subject to approved regulators in the legal services sector – section 18 of the LSA 2007. The approved regulators are listed in Part 1 of Schedule 4 and include the Bar Council, the Law Society, the Institute of Legal Executives and other service-specific regulators including the Council for Licensed Conveyancers.
Any legal service falling outside of section 12 is not subject to the “approved regulator” requirement, although they may be subject to other legal regulatory requirements found outside of this Act – for example non-solicitor/barrister UK immigration advisers must be accredited and regulated by the Office for Immigration Services Commissioner (OISC). For a good overview of unregulated legal services, see the main part of the LSB’s report.
Could an unregulated service be more efficient?
Where does this leave law firms? If we are expecting a lean period ahead, we could be looking at new cost-effective means of providing safeguarded quality legal services to our clients, and one way that we can look at doing this is by examining carefully what areas of our work are unreserved legal activities, and whether we could improve the way these services are provided by switching from a regulated to an unregulated service.
Doesn’t that mean the clients are worse off?
Does providing an unregulated service mean abandoning safeguards for our clients, including professional indemnity insurance? No – indemnity insurance is not just available to SRA regulated law firms, it is also available to other legal service providers including OISC regulated businesses.
Nor does it require any changes to our thorough internal legal service quality audits and supervision procedures, or any compromise or change to the professional qualifications and abilities of our staff – some solicitors, as shown by the comments in reply to the Law Society Gazette’s articles above, have very much welcomed the opportunity to provide unregulated legal services.
Could we provide a separate unregulated services business?
Changing to an unregulated regime doesn’t mean changing or reducing the scale of our existing business or staff – it could also be achieved by setting up an entirely separate business outside of your SRA regulated law firm which targets a different sector of the market – potentially online, and international.
Worth some thought? Definitely in my view – if the LSB say that unregulated advisers are getting good reviews from clients who are on the whole happy with the service provided to them, we should not be horrified at the idea of providing unregulated legal services. However, if regulation and the EU are essential to your business, see Is moving your law firm to Ireland for a light look at an alternative.
Ideas and input would be welcome, please use the comments facility below. Please do not be deterred from commenting if you wholly disagree with this post.