Disciplinary Conference 2007
Le Meridien Hotel, Piccadilly, London
Speech by Parliamentary Under-Secretary of State for Constitutional Affairs
Bridget Prentice MP
Thank you. First of all, Philip [Philip Newman, conference co-chair], thank you very much for inviting me here today. I understand that the words 'legal', 'services' and 'Bill' have been mentioned here this morning - so you'll all be aware that the Bill exists! I hope you'll all agree that this is an exciting time to be involved with the legal profession. It's a time of much change - most of it, I hope, for the better: better for the consumer.
I think I was asked along today to focus on the Legal Services Bill and, in particular, to talk about the impact it will have on you. The Bill will mean significant change and I'm delighted to be able to speak to you about it.
The Bill is currently being debated in the House of Lords - and it'll be interesting watching it as it goes through the various stages of its parliamentary passage. But in reaching even this point, we've undertaken a huge amount of very constructive consultation - and rightly so given the groundbreaking nature of the task in hand. I've been discussing these matters with a number of you here today (and many other groups) ever since coming to the DCA back in 2005. And I see today as an opportunity to continue that dialogue.
I'd like to thank those members of the legal profession (and many, many others) who've been enthusiastically involved in the debate throughout its development. Without your input, your ideas, your eye for detail, we wouldn't have got as far as we have so far.
So why are we here and why are we doing this? I'm sure those of you that are involved in discipline, and in preserving the excellent reputation that our lawyers have, know the importance of clarity and transparency - and that is what I want to touch on now.
I hope you'll agree that consumers must have clear rights. That means, for example, clarity about where and to whom they can complain; and having the confidence that they, as consumers, will not be taken advantage of.
They have the right to high quality advice. They have the right to complain when any service falls below that standard. They have the right to receive redress quickly when their complaints are valid. And they have the right to value for money. So they have the right, it seems to me, to expect a legal services market that is consumer driven - and one that is suitable for the modern, dynamic world we all live in.
The question then is: how do we ensure that this is achieved and that a balance is struck for consumers and providers alike?
You'll all know the overview of the Bill but let me recap. Firstly, it will mean the creation of the Legal Services Board. The LSB will act as a strong and independent regulator overseeing the work of approved regulators. It won't replace current regulators like the Law Society, or the Bar Council, but will work with them in setting standards across the sector. And it will, I believe, increase consumer confidence. It will ensure that the regulation of the legal profession is manifestly independent.
It will have powers to set high standards for approved regulators, and powers to take tough action if those standards are breached. But those standards will be tied to statutory objectives, set out for everyone to see. The objectives will underpin the new regulatory framework and apply to all partners in the legal services sector.
The LSB will also require that the approved regulators must separate out their regulatory and representative functions, and the regulatory arm will be able to communicate separately with the Legal Services Board. But boundaries will not be blurred: the Board will be prohibited from interfering with the representative functions of the approved regulators. And that will provide protection for consumers from the very beginning of the new regime.
The Bill, I believe, avoids 'one size fits all' regulation. It doesn't set out the detail of the internal governance arrangements of approved regulators. Flexibility is important and so it's quite right that rules are the appropriate way to deal with this. Approved regulators must have the flexibility to determine which arrangements best suit their regulatory circumstances.
But regulation of course means not only independence from their representation role but also from Government. An independent regulator will therefore bring increased consumer confidence.
Then we have the Office for Legal Complaints. Independence shouldn't just stop at regulation. It's important that it extends to redress for when things go wrong, which, as we all know, they sometimes unfortunately do.
So the Bill will establish the OLC. It's vital that consumers have the confidence that, should they have a complaint to make, it will be handled independently, impartially and effectively.
Consumers need to know that there are no vested interests when dealing with the professions. I'm sure that you'll know only too well the importance of public confidence. A complaints system that has the public's trust is not only in the public's interest, it's in the professions' interest.
What does that actually mean for you when you're dealing with misconduct? The new complaints handling body will be able to consider a complaint regardless of whether it is about poor service or an allegation of misconduct - it makes no difference in terms of awarding redress to a consumer and we think it's important that ombudsmen will be able to take a broad view. The distinction we've made in the Bill is about who can provide redress and who can deal with disciplinary matters - and we've made that very clear.
While an ombudsman will deal with all consumer complaints and can award redress in any case, we've been absolutely clear that they cannot discipline a lawyer. Similarly, a regulator cannot award redress in any circumstances: that will now be the role of the independent complaints handling scheme run by the OLC. This approach stems from Sir David Clementi's 2004 independent report. He told us - and the Government agrees - that discipline should quite rightly rest with the approved regulators. That's one of the hallmarks of “a profession”. And it's clear that disciplinary arrangements have been working well.
However, we're seeking to address the failures of the current system. And I believe the Bill does address those failures.
Some have called for delegation of service complaints where the OLC is content no failure has occurred. But I have to tell you, I strongly believe that delegation of complaints handling to any particular body would erode the essential principles of consistency and clarity. Consumers would receive different levels of service dependent on whom they complained about. This would then mean that the problems in the current system would be replicated. It's my rock-solid view that the OLC addresses the shortcomings in the present system and will give consumers back the confidence they deserve.
The primary objective is that the OLC should provide a fast, efficient complaint-handling scheme through which redress can be awarded quickly and with the minimum of formality. It will foster that all important public trust in the system that is vital for the vast majority of lawyers who provide excellent levels of service.
If I may turn now to Alternative Business Structures - because it would be impossible to summarise the Bill without doing so. In a consumer driven world, people want high standards of service, but they also want value for money. That's why we want to give firms the freedom:
The proposals for ABSs will enable lawyers and non-lawyers to work together on an equal footing; and to access external investment. It will, I hope and believe, increase competition.
It will give the consumer choice in the marketplace. Choice to use the provider that best serves their need. Of course this must all be tempered by appropriate safeguards that protect providers and consumers alike.
But let's be absolutely clear: ABSs will complement, not replace, the existing working practices of provider firms. ABS will give legal providers greater flexibility on how they might supply their services, provided that the right safeguards are in place. And, yes, the Bill does go further than Sir David's recommendations in not precluding Multi Disciplinary Practices in the future. But these structures will not spring up overnight, indeed the robust and necessary licensing regime that is set out precludes that logistically. What ABSs will do is allow firms, in due course, to evolve and develop new working practices and partnerships as those safeguards are put in place - very much a step by step approach.
Independence, confidence, flexibility with safeguards. I believe those are fundamental requirements for a legal sector that is responsive and (as my good friend John Reid might say) “fit for purpose”.
There has, and will I'm sure continue to be, much debate over the detail of these proposals. And I look forward to that debate.
But in the midst of the debate, we must not lose sight of why we're doing this, or indeed who we're doing it for.
It's about bringing clarity and confidence to the consumer. It's about encouraging a legal services market where competition thrives. It's about ensuring legal service provision is of the highest quality.
It's about encouraging a legal services market that consumers can trust. And ensuring a true balance and proportionate approach to regulation where the professions are not only transparent but seen to be transparent.
Thank you very much.