“At a judicial review directions hearing this morning, the High Court granted our application for an expedited hearing of our challenge to the Legal Services Commission’s conduct of the tendering process for family legal aid contracts. The hearing will be heard on Tuesday 21 September with judgment expected to be delivered on Friday 24 September.

The court also ordered that the new contracts should not be issued pending the hearing of the case, though the LSC’s work on appeals and verification will continue. The LSC has agreed that existing civil legal aid contracts will be extended by one month.

We are to meet with the LSC on Monday 6 September to sort out the practical details around this short contract extension, following which we plan to issue more information to the profession and make details of our case available to affected firms.”

 Some may wonder what use the LSB is.  Some have called for it to kill itself off once ABS’s are introduced next year.  All must want it to prove its value as well as its value for money.  It risks adding little of value, for either the consumer or the profession. 

The LSB replaced a rather convoluted, probably out of date, certainly out of fashion, regulatory regime, the cost of which was hard to calculate.  We now know the cost of the LSB – last year solicitors paid £13.9 million, a sum raised as part of the PC fee levied on the profession.  What did we get for that? And was it gained through light touch activity?

Sir David Clementi thought a ‘light touch’ necessary and desirable.   Johnathan Djanogly, Parliamentary Under-Secretary of State at the Ministry of Justice, speaking during the passage of the Legal Services Bill (now Act) through the House of Commons expressed the hope that the Board would not ‘micro-managing the approved regulators’. He supported the views of Lord Hunt of Wirral:

“There is nothing in the Bill to indicate that the Legal Services Board is intended to act as a supervisory regulator, which would leave day-to-day responsibility with the approved regulators and exercising its powers only when they are clearly failing.”-[ Official Report, House of Lords, 23 January 2007; Vol. 688,c. 1040.]

Last week the LSB wrote to all seven Approved Regulators including the Bar Council and the Law Society, pointing out that each ‘shared responsibility’ with the Board for ensuring robust and rigorous regulation of core regulatory functions.  These responsibilities need to be transparent so that members of the regulated community as well as the public at large can rest easy in their beds knowing that someone, somewhere has everything under control and is delivering better regulation in the public interest as well as value for money.

What is keeping the LSB awake if risk management.  They want to understand how each Approved Regulator satisfies itself that there are mechanisms in place for early identification and resolution of issues that have the potential to damage the legal services sector and/or cause consumer detriment.   There are plenty such issues around at the present.  There is the current melt down of public funded family work, a new way of levying the solicitors profession, the looming horrors of the PII renewal and ABS’s lurking in the wings ready to soak up anything commoditisable thereby killing off the marginal high street practices there cannot be a more appropriate time to focus on risk.  The Bar is about to start experimenting with new business structures of their own. 

The LSB writes –

We … would like you to provide the following information about your approach to the collection and use of information and how it is used to inform your regulatory decisions:

1. What management information is used to inform regulatory decision making (both policy and compliance/enforcement) and assess organisational performance? Please differentiate between data that is regularly collected, that from ad hoc sources and that arising from targeted research.

2. Please describe how that data is used and, in particular, identify that which is reviewed at senior executive and/or Board level and that which is put into the public domain.

3. If you have regular internal, Board reports, or more widely available performance reports please provide examples – there is no need at this stage for a more detailed explanation.

These may appear to be sterile questions but their answers will be revealing.  Either the Approved Regulators have their finger on the pulse or they do not.  But how intrusive can the Approved Regulator be before the regulatory arm, the SRA for example, starts to bleat about intrusive levels of reporting?

Some hailed the Legal Services Act as an excellent outcome given the hostility of the last government to the legal profession.  Month by month as the Approved Regulators have to get used to having responsibility but no power, the Act begins to creak.  When the creaks become first moans and then groans, where will the new government be?  Will it believe that the LSB is adding value or will it, given that it is the profession which is paying, simply turn its attention to other apparently more pressing causes?

The LSC chief executive Carolyn Downs, in an interview with the Law Society Gazette this week, admitted that the dramatic cull in family law suppliers was not the intended outcome of the tendering round.

The fall-out from the tender process, which leaves families, children and domestic violence victims without genuine access to legal services, has prompted the Law Society to call for its immediate suspension while a public review of the process, its outcome and the impact of access to justice is assessed.

Law Society President Linda Lee says:

“This is sadly the latest and perhaps most alarming of the LSC’s apparently haphazard attempts to reshape legal aid notwithstanding the clear intent of the previous and present Governments to return policy on legal aid to the Ministry of Justice.

“The LSC has, we fear, lost control of the processes. The fall-out from these tenders will see almost 50% of firms previously doing legal aid week removed in a matter of a few weeks and this will impact on families and vulnerable people, preventing them access to vital legal services.

“The Society is fully supportive of the need for quality standards in tendering. The implications of the LSC’s own surprise at the outcome is that skilled and talented lawyers who weeks ago delivered a quality service will now be prevented from helping those in need.

The Society has written to the LSC and the Government calling for the suspension of the implementation of the tendering outcome and an urgent review of the adequacy of the geographical and specialist distribution of the tendering round.

Compensation

The Society says that if the Government is prepared to stand-by and watch this overnight plunge in legal services the businesses they are putting at risk should be fairly compensated.

Linda Lee says: “When even the LSC itself is saying the outcome was not intended, and when clients are deprived of legal advice and services and firms are seeing important contracts vanish, the Government has to take a closer look at this and make a decision.

“If these systemic changes were being imposed on farmers or fishermen then compensation would be paid. All businesses, not just law firms, trading in Government controlled markets will be watching very closely how the Government handles this situation.

“In this era of the Big Society, the rule of law and genuine access to justice for all citizens must be an underpinning element of that concept.”

Details here

http://www.thelawyer.com/trouble-indemnity/1005184.article

‘If firms come to consider the Handbook as requiring little more than mild adjustment, rather than a shift in mindset, any change in behaviour will represent an adaptive step rather than a cultural leap.’

Hmmm …

http://www.legalservicesconsumerpanel.org.uk/publications/consultation_responses/documents/2010-7-30_SRA_OFR_Handbook_Response.pdf

Professional Indemnity Insurance

The Times reports that thousands of solicitors could see a steep rise in PII premiums as insurers pass on the cost of increased negligence claims.

Download free advice from the Law Society on renewal of PII  at: www.lawsociety.org.uk/professionalindemnity

QCs

The Ministry of Justice is planning to publish details of how much QCs charge in taxpayer funded cases under new proposals.

Legal Aid

Further details emerge of planned legal aid cuts in the Sunday Times. The paper reports that patients and their relatives will no longer get legal aid to sue the NHS under cuts put forward by the coalition.

Freshfields introduces mentor scheme to increase women partners

Six female senior associates from departments across the firm will take part in the pilot, as part of the snappily titled “Strategic Excellence Leadership Programme”. It should be rolled out more widely if the scheme proves a success.

Billed as focussing on career development and how to be a role model and influencer – presumably not in the Kate Moss mould – the pilot will include two one day workshops and regular sessions with a senior partner mentor. Senior associates will also take part in monthly hour long coaching sessions with consultancy firm Aspire, which specialises in women’s development, according to the Lawyer.

Currently only 12.5% of Freshfields’ global partnership is made up of women. To be fair, the firm is not alone in this – a Legal Week survey earlier this year revealed that the women make up an average of only 15% across the Magic Circle.  And it’s an issue the firms are taking seriously.  Allen & Overy are allowing all lawyers to work part time: partners can apply to take up to 52 extra days off a year. And Linklaters also introduced a coaching scheme for all staff members last year.

Will twelve hours of coaching a year will really help Freshfields address the gender imbalance?  It must be expensive to coach the 87.5% of Freshfields partners in the meaning of equality and diversity as applied in the work place.

Survey says a quarter of associates to quit law this year

According to a survey by recruitment consultancy Badenoch & Clark, the legal profession is set to lose 24% of its young talent in the coming year.

The survey claims that a third of those looking to escape the clutches of the law wanted a career break – otherwise known as a nice long holiday – whilst the rest “aimed to leave the law completely.”

Reasons suggested for this high rate of associate attrition include personality and management issues which apparently demonstrate “a clear deterioration in the relationship between partners and associates”. Other problems are a poor work/life balance and  the introduction of merit based pay without consultation. The report reaches the startling conlusion that “with 16 per cent of professionals wanting to permanently leave legal practice, this has a clear implication on employee retention…”.

The Equality Act and harassment by third parties

The Equality Act 2010 will extend the circumstances in which employers are liable for harassment in the workplace.

Employers should be looking at what provisions they have in place to train employees on diversity in the workplace, what training they provide to managers and, not least, what their equal opportunities and harassment policies cover.

Petra Venton, Cripps

http://www.crippslink.com/index.php?option=com_content&view=article&id=967&Itemid=480

Increasing choice for consumer

Joshua Rozenberg writes in the Guardian about the introduction of ABSs and Outcomes Focused Regulation and the possible effects on the profession and consumers.

He talks to Legal Services Board chair David Edmonds who says the changes were about “driving new and improved services for consumers and providing them with more access and choice.”

Edmonds says. “I don’t accept for a moment that this (October 6th 2011) is a rushed time-period.”

http://www.guardian.co.uk/law/2010/jul/22/high-street-solicitors-reform

The Long Term Effects of the New Qualified Lawyers Transfer Scheme

The QLTT closes at the end of August to be replaced by a more stringent test of competence.  For a review of the arrangements see-

http://www.articlemonkeys.com/The-Long-Term-Effects-of-the-New-Qualified-Lawyers-Transfer-Scheme-86218.html

Tribunal Service reports highest number of claims

Frances Gibb reports that the financial squeeze on workplaces has brought an increase in claims, including unfair dismissal, discrimination and redundancy. The Tribunal Service reported an increase of 56 percent in the number of claims in the year up to March against employers in England, Scotland and Wales.

A poll by the Employment Lawyers Association (ELA) reveals lawyers are, “very concerned about the system and the consistency of approach, efficiency and quality” of the Tribunal Service.

SRA equality research

Coverage of the publication of research commissioned by the SRA into the over-representation of black and minority ethnic (BME) solicitors in regulatory decisions and outcomes. The research has found experience, not race, is a greater predictor of whether solicitors will face regulatory action.

SRA chief executive Antony Townsend said: “The SRA is firmly committed to acting fairly and valuing equality and diversity. For the first time, we have a detailed picture of where the disproportionately high involvement of BME solicitors in our work is arising, identifying the external and internal factors. This has enabled us to draw up and publish our action plan, which we shall pursue in co-operation with equality groups in the profession.”

http://www.solicitorsjournal.com/story.asp?sectioncode=2&storycode=16658&c=1&eclipse_action=getsession

http://www.ilex.org.uk/about_ilex/news/legal_news/sra_disproportionality_report.aspx

http://sra.org.uk/sra/news/press/SRA-publishes-research-into-disproportionality.page

Zurich warns of cuts

Zurich will ‘significantly’ cut the number of new law firms it takes on this year

http://www.lawgazette.co.uk/news/zurich-cut-new-pii-business-significantly

http://www.insurancetimes.co.uk/story.asp?sectioncode=1&storycode=385669&c=2

LSB report published
The Legal Services Board has published its annual report today. The report, which was also presented to Parliament, covers the LSB’s first full year of operation.

http://www.legalservicesboard.org.uk/news_publications/publications/index.htm

SRA relaxes Confidentiality Rules

The SRA has relaxed the confidentiality rule to allow law firms to make wider use of Chinese walls.

The changes to rule 4 mean firms will now be able to accept new instructions, even when it is apparent that there are risks concerning confidentiality, provided the firm in question has the infrastructure in place to set up legally compliant information barriers.  The SRA has warned most law firms will not have the capabilities and that Chinese walls should continue to be used with “extreme caution”.

An SRA spokesperson is quoted saying: “It really only will be of significance to the largest City firms, mainly because you need to have the size and infrastructure in place to comply with common law on information barriers.”

http://www.legalweek.com/legal-week/news/1724910/sra-relaxes-conflicts-rules-review-chinese-walls

Professional Indemnity Insurance

Nick Starling, Director of General Insurance & Health at the Association of British Insurers, has a letter in The Times today welcoming the SRA’s review of the professional indemnity arrangements. Starling says:

‘The solicitors’ professional indemnity insurance market is struggling (“Solicitors pay heavy price for surge in negligence claims”, July 26). The economic turmoil of recent years, the restrictive terms of mandatory cover and weaknesses in the regulation of the legal profession have together led to an increase in negligence claims against solicitors, a growing assigned risks pool and rising premiums. The case for reform is overwhelming.

“The insurance industry cannot deliver changes alone, but rather close collaboration with the legal profession is required. We therefore welcome the Solicitors’ Regulation Authority’s “root and branch” review of the professional indemnity arrangements.”

In an indepth feature for CityAM Jeremy Hazelhurst argues that the turbulence expected in this renewal year should act as a spur to liberalize the Indemnity market.

Hazelhurst argues that entering the ARP needs to become “more punitive”-

“if a firm can’t find an insurer on the open market, does it deserve to survive? The ARP is expensive, doesn’t work, and creates moral hazard the existence of a safety net encourages risk taking. But it would be unjust that small firms that have been around for 40 years without a claim go out of business through insurers’ risk-aversion. And as Des Hudson, chief executive of the Law Society, points out, the ARP protects consumers from reckless firms. Plus, losing small firms would reduce consumer choice.”

http://www.cityam.com/city-focus/indemnity-market-must-be-liberalised

• • a scheme consisting of four levels – broadly following the levels used by the CPS and which map against complexity of work
  • judicial evaluation as a method of assessing competence
  • alternate method of assessment at levels one and two for those not appearing with sufficient frequency to participate in the judicial evaluation method
  • advocates at all levels will be periodically (every five years) reaccredited
  • advocates who are able to demonstrate that they meet the standards required at a certain level will be able to practice at that level and not above
  • the Scheme will apply to barristers, FILEX and solicitors.
  • cost and bureaucracy to be minimised
  • governance provided by a body with delegated authority from the regulators, accountable to the regulators and responsible for standard setting and administration of the QAA scheme.  It is likely to be proposed that the body should have a strong Chair, probably a Judge in the first phase.

This framework is interesting.  It marks an attempt to regulate standards across the entire range of legal service providers.  How long will it be until similar quality assurance is in place for other services, particularly publically funded services, which are delivered by individuals who belong to different professions?

The proposal that the regulators should delegate responsibility away from themselves to a separate body with a strong Chair is also notable.  This model has already been used by the regulatory bodies and the results have been unimpressive.  The Joint Academic Stage Board (JASB) is a delegated body of the SRA and BSB responsible for quality assurance of the qualifying law degree (QLD).  The regulators have failed to ensure that the body had adequate resources to effectively quality assure the qualifying law degree.  They have also allowed the JASB to operate under the wire.  Despite an obligation to publish Minutes of their meetings until earlier this year these were not available save on request.  JASB has now commenced a consultation with the universities to consider a modest proposal to increase the institutions contribution towards the cost of quality assurance.  In the meantime the lamentable level of quality assurance continues.  There are getting on for 200 institutions offering a QLD many of which are delivered in part by institutions based overseas.  Thus far in the JASB has not found a single one to be wanting.  A long needed syllabus review is still on some distant horizon.

If the regulatory bodies decide to follow this model for advocacy quality assurance then it is to be hoped that they will establish a method of delegation which does not amount to complete abdication of responsibility amounting to almost complete indifference.  Being regulated is an onerous burden but it is a pointless if it delivers nothing of benefit to either the professionals themselves or the public they serve.