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Trevor Hellawell of ExL Practice Development

New opportunities for the legal profession – time to wake up?

Trevor Hellawell of ExL Practice Development

6
Jul

TC legislation 160617

The SRA have finalised their suggestions regarding the possible – less regulated – future of the legal profession.  In this article, Trevor Hellawell considers what this will mean for both individuals and firms.

First let me say that there is a lot of history behind the proposals and I, for one, predict many slips and trips before things settle down.

There are currently 9 different regulators governing our profession, and the banking model we set out upon in 2007 has itself undergone much revision in the intervening years. The morass of regulatory options is bewildering and even the LSB has proposed much simplification.

I believe that the SRA model offers intriguing possibilities which should go some way to meet the ‘unmet legal need’ that they talk about in their papers.

The Law Society is opposed to any watering down of the brand of solicitor, preferring instead to talk up the various protections offered to consumers by the current arrangements. What they fail to address is the harsh statistic that 90% of individuals and 73% of SME clients who have a legal problem do not consult a solicitor – because of the cost.

The Law Society’s protections are valuable – from education and training, through the PC fees, to PII and Compensation Fund recourse – but they are expensive and, for the most part, perceived to be unaffordable by clients.

I qualified in the early 1980s and have watched (with increasing levels of stress) the development of client care, increasing PC fees, the demolition of legal aid, the revolutions in conveyancing, the advent of Clementi and OFR, AML procedures, the onset of social media and the increasing cost and complexity of the provision of services to the public over the years.

To my mind, the source of the unmet legal need is the removal of Legal Aid (I recall ‘green form legal advice’ almost fondly) and the increasing disparity between the increasing cost of the law, and its increasing unaffordability by the general public.

With all that in mind, I wonder whether the SRA’s suggestion offers some welcome opportunities for existing legal practices to reconfigure themselves in order to offer certain functions at a cheaper, no frills price. This would also meet, to some extent, the increasing pressure on the profession to be transparent over price.

The freedoms for firms to consider who should regulate them, and the freedom for qualified solicitors to choose where they work, do remove many of the regulatory impediments that I have been subject to all my career.

There are several possibilities:

1              No change

An SRA-regulated firm offering the full-range of legal services with PII, compensation Fund recourse, legal professional privilege and using the name ‘Solicitors’. This would, as now, serve the existing client-base, appealing in increasing ways to the e-market but offering the full service to those who can (and want) to afford it.

2              Change of regulator

Increasingly, law firms are opting to change the body which regulates them. This is possible only up to a point, of course, but many conveyancing practices are opting to be regulated by the Council for Licensed Conveyancers instead, as the lure of the solicitors’ title is not perceived to be that attractive, and a cheaper, leaner service is seen to be every bit as good in the majority of cases.

The LSB are monitoring such moves to establish the motivation behind them (lest the intention be to limit the clients’ protections) but the idea of competition between regulators so beloved of Clementi would seem to recognise that such ‘regulator-shopping’ is inevitable.

One wonders whether the choice of regulator need be as wide or as confusing as it currently is. There may be some scope for simplification as part of the review of the Legal Services Act.

3              Law firm, with subsidiaries

This is where, I feel, there is much to be considered. Let’s say that a law firm (with an already established name in the market-place) wanted to offer a cheap and cheerful legal service to the general public. It could do so through a suitably badged subsidiary – TH Solicitors LLP, and TH Legal Limited.

Anything other than litigation, advocacy and certain instrument-drafting (LSA-reserved business) can be done by this subsidiary, TH Legal Limited, which itself would not need all the regulatory machinery of the parent firm.

It could offer the services of solicitors for the giving of advice, consultation over document drafting, letter-writing, even services up to and including commercial transactions, without requiring anything other than adherence by the solicitors to their own individual Code of Conduct. Commercial reality would require some form of insurance, and lines of redress should also be furnished.

In any instance that required litigation or advocacy services, privileged advice or the drafting of certain instruments, a client can be referred ‘upstairs’ to the parent law firm (TH Solicitors LLP) for any such LSA-reserved services.

As with a separate business now, it must be made clear to the client what the regulatory regime that applies to the subsidiary actually is.

4              Law firm with links to independent consultants

This option is effectively similar to 3 above, save that the independent consultant offering the services of a solicitor to the market-place would not have any direct links to any one firm, but would independently advise and assist, referring clients on to third party law firms with relevant specialities as required. Arrangements between the firm(s) and the consultant would need to be agreed and declared to the clients.

The consultancy could not give privileged advice, and nor could it perform any of the LSA-reserved activities. Likewise, insurance would not be professionally required, but it would be commercially expected.

5              Independent legal consultancies

These are, of course, possible already and increasingly solicitors are finding roles within the unregulated consultancy market. However, they must renounce their qualification to do so, and this means that the protections that might be available to their clients are less detailed.

There is also a certain toxicity that comes with the ‘consultant’ brand, and I have found in the past that what I say to clients is somehow listened to more when they know of my professional background than might otherwise have been the case.

Under the new provisions, qualified solicitors can be employed by such consultancies and offer themselves as ‘Solicitors’, subject to SRA-regulation, the individual Code of Conduct and offering the protections of a Practising Certificate and some form of redress. The requirement for insurance however, is not compulsory. Importantly, too, such bodies could not offer the protections of legal professional privilege as part of the bag of goodies.

Nonetheless, the appeal of the opportunity to talk to a lawyer about their problems for an hour (for £90 + VAT) may be of attraction to many.

Insurance – though not the SRA-style PII – would also be available.  Such bodies could further avail themselves of artificial intelligence engines to research bits of the law with which they are unfamiliar.

6              Non-law firm teams/subsidiaries

These also exist currently, but the new rules will now make it possible for such bodies to publish the fact that they employ solicitors who will be subject to their own ethical code and able to offer advice (though not privileged advice) to the general public as part of their market offering.

Fears about the lawless, unregulated legal market are probably not unfounded, but there are many sensible professionals who would like to be able to offer a cheaper, leaner and no less trustworthy product to the modern market, in place of the old green form scheme, at an affordable price. This would be of attraction to those who don’t want to be enmeshed in the full-on, high-level, gold-plated service expected of the honourable profession. You pays your money and you takes your chance, I guess and with these less-regulated offerings comes the expectation that your protections are less. With protection comes cost, sadly.

I personally believe that there is much in Options 3 and 4 above for the existing legal profession to contemplate, as ways of waking up to the new e-savvy generation of clients and seizing back our lunch-money from the slicker and cheaper providers.

 

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