Law Society launches the Hunt Review of the Regulation of Legal Services
Date Published: 05-10-2009
The Law Society has today published Lord Hunt of Wirral’s report into the regulation of legal services. Lord Hunt was commissioned by the Law Society in October 2008 to advise on what was needed to establish best modern practice in the regulation of solicitors.
The legal sector is undergoing a radical transformation. Alternative Business Structures will have to be assimilated into the legal regulatory system, the ever changing demands of clients will need to be satisfied, and English and Welsh law must maintain the high international reputation which provides so many business benefits for the UK. For these, and many other reasons, it is critically important that the regulatory system is constantly re-evaluated to ensure it is fit to meet both new challenges, and long standing regulatory needs.
Bob Heslett, President of the Law Society, welcomed Lord Hunt's report and said:
"We commissioned Lord Hunt to undertake this work because we were conscious that although there had been exhaustive consideration of the structure for regulation of legal services, much less attention has been paid to the vital question how effective modern regulation of the solicitors profession should actually operate - in the interests of both the public and the profession. Lord Hunt has set out an imaginative and thought provoking blueprint which I am confident will be invaluable to the SRA as it charts its way forward for the future. We look forward to working closely with the SRA as it develops its approach."
Lord Hunt of Wirral said:
"It has been a great pleasure and privilege to lead this review and write this report, on behalf of the Law Society of England and Wales. The legal profession and the SRA now have an unrivalled opportunity to work in partnership, setting the pace for other professions with cutting-edge, principles-based regulation. I hope the ideas I set out in this report will help to form the basis for a new gold standard in professional regulation, based upon robust internal governance, comprehensive regulatory compliance and the highest professional standards."
Ends
Notes to Editors
Journalists - for more information and to interview Lord Hunt please contact Melissa Davis on 020 73205811
The report can be read at http://www.legalregulationreview.com
The main themes in the report are as follows:
Authorised Internal Regulation (AIR)
Lord Hunt welcomes the report by Nick Smedley on regulation of corporate law firms, published earlier this year link. He argues that those individuals responsible for regulating any group of firms must have a good knowledge of the working methods of those whom they regulate. All firms must be regulated to the same standard, by a knowledgeable and credible regulator and in accordance with the well-established BRE principles of better regulation. But this does not mean that every firm should be treated in the same way.
Lord Hunt advocates a system which he describes as Authorised Internal Regulation (AIR) system. AIR will be available to all firms – not just those concentrating on corporate work - who demonstrate their willingness and ability to set up internal governance standards that are robust enough to secure compliance. While it is expected that larger corporate firms will be in the first wave of this new approach he envisages that eventually any firm which put in place the necessary internal compliance system will be able to aspire to be regulated under the AIR regime.
(pg 68 – 78)
Extending the Regulatory Net to include Will Writing, Claims Management Companies and all of Probate
At present only a few legal activities – principally advocacy, litigation and conveyancing – "reserved activities" which can only be carried out by lawyers.
Lord Hunt says that "those activities which ‘smell’ like a reserved legal activity should become one.
For example, will writing is a potentially complex matter with far reaching consequences. The Review received evidence of occasions where simple mistakes had led to unjust outcomes without any regulatory recourse. Those affected by poorly drafted wills are likely to be in a vulnerable state. Lord Hunt concluded that the balance should be moved towards increased consumer protection by bringing will-writing within the list of "reserved activities".
(pg 79 – 81)
Legal professionalism translated into regulatory principles
Lord Hunt says it is essential to base any regulatory system in a strong and transparent theoretical framework. This ensures that it has the necessary resilience and flexibility to adapt to the changing world in which it operates. Legal professionalism, rooted firmly in the concept of the rule of law, provides a sound base for the regulator to build on. For this reason solicitors must produce a concise, compelling and passionate argument about the benefits of professionalism within the legal sphere. The lessons learnt over the last year can help legal regulators to create a more robust and better balanced principles-based regulatory system.
(pg 25 – 46)
Getting the regulation of Alternative Business Structures (ABS) right
While Lord Hunt does not oppose the 2011 launch date, as proposed by the Legal Services Board, he believes that it is more important to get it "done right" rather than get it "done quickly". It is crucial that appropriate public and consumer safeguards are put in place; and that regulators are clear about the information they require, the scrutiny they intend to undertake, and how they will deal with regulatory breaches.
ABS should be subject to the same regulatory requirements that govern other law firms, Lord Hunt says: "Successful ABS will not be those firms that look and behave least like traditional law firms; they will be those that demonstrate the most admirable qualities of current practices."
