Another country?

While the politicians are heralding in a new era in politics; indeed a new politics, novelty is also affecting the legal world. Little attention has been paid to the seismic events of 1 January 2010. While some were nursing hangovers, a group of Scottish accountants became able to license their members to carry out probate legal services in England and Wales.
For all the talk of alternative business structures and legal disciplinary practices, this is an immediate impact of the Legal Services Act 2007. It is the first example of the new regime taking hold. Every member of the legal profession should sit up and take notice of it, particularly those in the high street.

The Institute of Chartered Accountants in Scotland (along with the Association of Chartered Certified Accountants) became the 9th and 10th approved regulator’s within the meaning of s 20 of the Act. They are the first approved regulators to be appointed under Sch 4, Pt 2. They join the Law Society and the General Council of the Bar (among others) as being able to license members to carry out reserved legal activities.

What are “reserved legal activities”? These are:
 

1. the exercise of a right of audience;
2. the conduct of litigation;
3. reserved instrument activities;
4. probate activities;
5. notarial activities; and
6. the administration of oaths.

This is significant for two reasons:
 

• First, the list of the activities is not fixed. It can be expanded or contracted. Therefore, it is possible that not all activities traditionally carried on by lawyers will need to be carried on by them in the future. Conversely new activities, not solely carried on by lawyers at present may become regulated as reserved legal activities.
• Second, there is nothing to prohibit an approved regulator for applying to extend the list of reserved activities for which it is approved. In other words, the accountancy organisations could apply for the right to license their members to carry out litigation activities.

These arrangements raise some interesting questions for lawyers about “regulator shopping”. Does a firm need to be regulated by their existing professional body? This issue has already been recognised by the Legal Services Board (LSB) which, in a consultation paper identified that some approved regulators could be “competing for firms and individual affiliation by lowering their practice fees and intervening less. Such moves could obviously be detrimental to consumer protection”. However, provided the lord chancellor (on the recommendation of the LSB) approves the proposed regulator then another regulator could join the “market” with less stringent rules and lower fees.

Could a group such as in-house lawyers, who now form about one quarter of the profession, seek to establish their own regulator? That is entirely possible, provided that the proposed approved regulator complied with the terms of the Act.

In this last example, we arrive at the nub of the matter for the future of regulation of legal services in the UK (Scotland is going through a similar process). The new regime is about the regulation of legal services not the legal professions. That is why the legislation is so radical. Your route to qualification does not determine how you provide legal services; it is merely the passport by which you are able to do so. The next logical step is to ask whether or not it is relevant to regulate by a professional body.

Potentially an increased number of regulators with different regulations will create more complexity and conflict between rules. Currently, as an example, take the rules on confidentiality, a cornerstone of the lawyer/client relationship. In a practice in which a solicitor and an employed barrister sit side by side, their rules are similar and yet different. A solicitor may not act if holding confidential information if:
 

1. that information might reasonably be expected to be material; and
2. that client has an interest adverse to the first-mentioned client or former client.

Rule 4.03 of the Solicitors’ Code of Conduct

Whereas the employed barrister has an obligation of confidentiality that “they should not act in any circumstances where there is a danger that information confidential to their former employer could be used for the benefit of their new employer unless they have received the consent of the former employer”.

There is no concept of materiality in the latter and yet faced by the same situation, because of the route to qualification, different standards apply.
All of this may seem to be stretching a point. However, pronouncements from the LSB indicate that it is prepared to stretch the point. The attitude of the new lord chancellor will determine how far the LSB pushes the envelope. The surprise appointment of Ken Clarke QC gives no indication of where the line will be drawn.

Ian Jones, lawyer & writer. Ian is currently writing The In-House Lawyers’ Handbook for publication by Butterworths in October 2010

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