Legal Business Blogs

Dysfunctional, inefficient and expensive: City Law Society responds to MoJ consultation on regulation

The City of London Law Society (CLLS) has responded to the Ministry of Justice’s (MoJ) call for evidence over concerns around the complexity of the legal services regulatory landscape with claims that it is dysfunctional and will need to be overhauled. The MoJ led by justice minister Helen Grant kick-started the wholesale review in June this year, in a bid to reduce the regulatory burden on the profession.

In its response yesterday (9 September), the CLLS, which represents approximately 15,000 City lawyers, claimed that the current regulatory framework is ‘not ideal’, fails to regulate all sectors of the solicitors’ profession in an appropriate manner, is unnecessarily complex and expensive and that ‘the total cost of regulation is close to getting out of control.’

CLLS chief executive David Hobart said: ‘Since the enactment of the Legal Services Act 2007, the cost of regulation has risen inexorably, year after year. There is no logical link between the relatively high level of regulatory costs, and relatively low level of regulatory risk, associated with the large national and international law firms in the City of London.

‘The legal sector encompasses the full range of professional organisations, from sole practitioners and small high street firms, to new Alternative Business Structures and large international partnerships. It can be no surprise that the corresponding regulatory needs are so different. But it is surprising that the regulator has, to date, tried to apply a ‘one size of regulation fits all’ approach.’

CLLS’ response follows the Legal Services Consumer Panel’s reaction on 2 September, which also called for an overhaul, claiming that the existing regulatory framework fails to provide a sustainable long-term model that offers consumer protection.

Demanding a new blueprint, panel chair Elisabeth Davies said: ‘The current system isn’t delivering the outcomes consumers need, offering instead a confusing maze where consumers can find themselves at a dead end due to gaps in redress and regulation. The patchwork of regulators is an expensive duplication of effort that no-one can afford to persevere with.

‘The Legal Services Act introduced welcome competition reforms but passported in the old regulatory structures – as the market and consumer behaviour has changed, these structures now look increasingly out-of-date. They need to be replaced by a new system, delivering the required consumer outcomes and reflecting how modern consumers use legal services.’

However, in a sign that the MoJ will have its work cut out to build consensus among the various lobbyists, Davies added: ‘A single regulator, entirely independent of the profession, is most likely to give consumers confidence that regulation is protecting them, not lawyers. It could produce the simplest system to navigate for consumers, making it easier for them to know their rights and make informed choices.’

For more on the proposed regulatory changes, see our recent guest post