Legal Business Blogs

Regulators look to cut ABS red tape in Legal Services Act reform push

The Legal Services Board, along with the other legal sector regulators, has published suggestions to reform the Legal Services Act 2007 to make enforcement action easier to undertake and to cut red tape for alternative business structures (ABS).

Further deregulation of ABSs is the focus of the reform package agreed among the regulators, including the Bar Standards Board and the Solicitors Regulation Authority, and presented to Justice minister Shailesh Vara MP.

Proposals include changes to Schedule 11, which details procedural, structural and practice requirement for ABSs, that would shift to a principle-based approach to cut costs as the current regime ‘without evidence’ assumes ABSs are more risky legal service providers.

The regulators also question the current method by which a non-lawyer can join an ABS with 21 pages of requirements they deem ‘extremely prescriptive’ needed and which they find difficult to use. Instead the regulators would like more discretion over appointments and another shift to a principle-based approach. Other suggestions include removing the requirement to demonstrate how new ABSs improve access to justice and changes to reporting standards.

The Legal Services Board is also seeking to relax the rules around its use of enforcement powers saying that ‘while appearing to have strong enforcement powers, the requirements around the exercise of these powers as set out in these schedules are convoluted and time-consuming.’

Legal Services Board chief executive, Sir Michael Pitt, said: ‘Ministers tasked us with a challenging assignment, namely to identify opportunities for deregulation and to free up practitioners and the market to do what they do best. This work has pinpointed specific proposals which, while modest in scale, would materially reduce burdens and help the regulatory system run more efficiently.’

Justice Secretary Michael Gove confirmed the government would review the Legal Services Act this parliament in a Select Committee hearing last week. He said that there was currently ‘a danger of regulators falling over each other’s feet.’