Legal Business Blogs

Brexit saves Chancery Lane’s bacon as Government backs off proposals to split SRA from Law Society

The hopes of the UK’s largest legal watchdog of being separated from the Law Society appear to have been dashed, according to a Government paper that backs away from a full split of lawyers’ trade union and regulatory bodies.

The Ministry of Justice review, published today (19 July), indicates that the government is backing off earlier proposals to fully separate the Solicitors Regulation Authority (SRA), the profession’s primary front-line regulator, from the Law Society.

The paper focuses on the regulatory framework of the legal market, concentrating on the oversight body the Legal Services Board (LSB) and the Office for Legal Complaints (OLC) but also strongly suggests that the Government is sticking with the post-Legal Services Act status quo.

Although the Ministry of Justice paper says that it encourages the LSB ‘to continue to provide visible assurance on the adequate separation between professional representative bodies and the frontline regulators’, it adds that ‘any changes should be made within the existing legislative framework’.

The Treasury had in 2015 backed proposals for legal regulators to be completely split from their representative sister bodies, going further than the operational divide they now have.

A split would have had a dramatic impact on the Law Society’s ability to fund its activities through the practising certificate fee and was unsurprisingly opposed by Chancery Lane. The SRA appealed to the government to execute the plans in October 2016, with the Law Society recommending the project to give the SRA and other regulators full independence should be shelved.

Today’s announcement also appears to confirm suspicions that the 2016 Brexit referendum vote effectively saved the Law Society’s fundraising powers, pushing legal regulation well down the Government agenda. The drive to overhaul legal regulation also came under the chancellorship of George Osborne, who was swiftly fired by current Prime Minister Theresa May last year.

The SRA’s hopes of achieving further independence now appear to rest on the LSB itself calling for a further shake-up. The oversight body announced earlier this year that it would conduct a formal investigation into the relationship between the SRA and Law Society.

The Ministry of Justice review concludes that the LSB is ‘generally effective both in promoting the regulatory objectives and in delivering its functions’.

Law Society president Joe Egan commented in a statement: ‘The LSB has a pivotal role to play in maintaining stability and certainty in the UK legal services market, holding frontline regulators to account and demanding sound evidence for any proposed regulatory changes.

‘We support the LSB’s aim of ensuring the system as a whole is working for clients, the wider public and the profession, and agree with the Ministry of Justice that this can be achieved within the current legislative framework.’

An SRA spokesperson said: ‘We welcome the emphasis in the government’s tailored review report on the need for proper separation of regulation and representation. The LSB has a key role in robustly assuring that separation and recommendation seven makes that clear.

‘As the government says, the LSB’s current investigation into the relationship between us and the Law Society is an opportunity to make sure that we can operate independently.’