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UK needs a new Legal Services Act, says LSB chair

'In my view, the 2007 Act is a job half done'

4 September 2014

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The current system of regulation of the UK legal sector is too complex and needs to be simplified for the benefit of both law firms and their clients, Sir Michael Pitt has said.

Speaking at the Westminster Legal Policy Forum this morning, the chair of the Legal Services Board suggested that the current situation encourages observers (including himself) to “consider the possibility of a new Legal Services Act and a structural ‘quick fix’”.

"In my view, the 2007 Act is a job half done," he said.

Sir Pitt acknowledged that the Legal Services Act 2007 "successfully shook up the legal sector" and that "real progress has been made". But, he argued that "there is much more that can be done within the existing legal framework".

Exploring the weaknesses in the Act, Sir Pitt said that it is "exceptionally complex".

"I doubt whether we still need 400 pages, 214 sections and 24 schedules to govern the legal system."

Sir Pitt argued that the legal sector is "highly confusing and illogical", and that the differences and implications of the division between regulated and unregulated services would be unclear even to a well-informed purchaser of legal services.

"It is impossible to defend the illogical split between reserved and unreserved legal activities," he said, highlighting the debate over will-writing as an example.

"Similarly, it is impossible to defend the fact that customers who wish to complain may (or may not) have a right of redress depending on this split and who provides the service. There is a case for reviewing the jurisdiction of the Legal Ombudsman and breaking the link between regulation and redress."

Continued Pitt: "We should challenge the way regulation is organised, learn from other sectors and test a range of possibilities, including the case for replacing the LSB and eight frontline regulators with a single body."

Simplifying regulation

Sir Pitt suggested that the legal sector should consider simplifying regulation to the same level as that covering his own profession, engineering.

"Engineers have simplified regulation to just about everyone's satisfaction, without direct governmental involvement or any special Acts of parliament," he argued.

"In this respect, engineers subscribe to the words of former US president Ronald Reagan, who said: 'There's no problem on earth that's so bad that it can't be made worse by government involvement!'"

Sir Pitt acknowledged, however, that the structures and arrangements for the engineering sector "may not be wholly transferable" to the legal sector.

"The sector is cautious and there are powerful forces at work. When it comes to new legislation, we should be careful what we wish for," he warned.

He said one of the LSB's priorities this year will be to research the direct and indirect costs of legal regulation, as "the structure of regulating bodies is surprisingly complex and expensive".

A survey of practitioners will be launched soon, the findings of which will be used by the LSB to "contribute towards the development of proposals for deregulation," he said.

"The ultimate objective is to reduce the burden of regulation by ensuring that what remains is more tightly targeted".

Sir Pitt said the LSB is tackling deregulation and making further improvements, but that there is a "marked reluctance for regulators to address jointly the more fundamental weaknesses in the legal system".

"Gridlock and fear of change are holding us back. The best ideas will come from the regulators, not government - and a simple defence of the status quo won't do. We cannot move at the speed of the slowest!"

Continued Sir Pitt: "The time is now right for taking a long hard look at legal services and adopting a 'whole system' approach from the consumer's perspective."

This article was first published by sister publication Managing Partner.