Add or take away?

The SRA's latest consultation paper arrived in late October and contained a surprise '“ a call to the Legal Services Board (LSB) to extend the definition of reserved legal activities to include all 'solicitor services'. As far as most solicitors are concerned, this sort of debate has value only as an aid in the fight against insomnia, but some deeper issues for consumers and solicitors alike lie behind the arcane headline.

The immediate issue for the SRA is that bodies which provide legal services will only be able to be regulated by the SRA as ABSs under the Legal Services Act if they undertake at least one reserved activity, such as conveyancing, probate or conduct of litigation. Those bodies which provide unreserved legal activities, such as will writing, legal advice and mediation services, can carry on in an unregulated way, as they do at present.

The Act defines the reserved legal activities and contains provisions which enable the LSB to add or take away reserved legal activities. It has been under pressure, since a Panorama special programme earlier this year on the effects of unregulated will writing, to add will writing to the list.

The problem for the LSB is that 'solicitor services' isn't defined properly anywhere and is usually taken to mean 'all those things that solicitors normally do as part of their practice'. Perhaps you would expect a piece of legislation called 'the Legal Services Act' to include a definition of such services, but it doesn't. When the Act was being put together the concept fell neatly into everyone's 'too difficult' pile. The recently passed Legal Services (Scotland) Bill has an attempt at a definition, but this is so broadly written that it is of no great assistance.

Widespread ignorance

The publication of the SRA consultation paper was preceded by news of qualitative research commissioned by the SRA, and conducted by GFK NOP, which concluded that there was widespread ignorance by consumers as to which legal services were regulated, and that consumers were 'shocked' to discover that many are not necessarily subject to regulation.

These findings are unsurprising and the SRA has a point when it says the current system is not easy to understand. The SRA's request has put the LSB on the spot. Given its brief of increasing competition, it has no great appetite to add to the list of reserved activities and has referred the question on will writing to its own consumer panel, which, conveniently or otherwise, is currently under threat of abolition.

The practising fee problem

The Law Society has, for the most part, said very little about the debate. However, both it and the SRA have a vested interest in the outcome. Since the late 1990s, when the society ran a national advertising campaign against the government on legal aid, the subject of what the practising certificate fees paid by solicitors are actually used for has been under scrutiny. At present there is an uneasy agreement on use of the money, which represents the lion's share of the society's income. It is meant to be spent on regulation (via the SRA) and various quasi-regulatory activities undertaken by the representative Law Society. However, the day-to-day work of solicitors has changed over the last 40 years, tending to move further and further away from the traditional reserved activities. Some observers think that as many as 80 per cent of all solicitors in City firms never do anything which falls within the definition.

City firms are well aware of this anomalous situation and have held discussions with the society about the consequences. If the City firms were to refuse, en masse, to pay for PCs for those solicitors who, technically, did not need them, the financial effect on the society would be catastrophic. The major firms, who pay millions in practising certificate fees on behalf of their solicitors each year, are therefore in a strong position to influence Law Society policy. At the end of 2009, Charles Plant (ex-Herbert Smith) became the SRA's new chairman '“ in effect appointed by the society, rather than by the SRA '“ and the City contingent has now been further augmented by the addition of an ex-Linklaters partner.

There is a strong case to be made for the proposition that the SRA's demand for the extension of reserved activities aligns with the interests of the consumer and with those of the Law Society. I wouldn't bet that it will actually happen though.