City lawyers call for 'sophisticated' regulation

City law firms have hit back at the Solicitors Regulation Authority saying the regulator's one-size-fits-all approach was not suited to the sector and that a more "sophisticated" approach was needed.

The City of London Law Society (CLLS) said in its response to the Ministry of Justice's consultation on the regulation of legal services that the current framework was "unnecessarily complex and expensive".

"Since the enactment of the Legal Services Act 2007, the cost of regulation has risen inexorably, year after year," said CLLS chief executive David Hobart.

"There is no logical link between the relatively high level of regulatory costs, and relatively low level of regulatory risk, associated with the large national and international law firms in the City of London," he added.

CLLS, which represents about 15,000 lawyers in the City, said the current system was "dysfunctional" and needed to be overhauled.

The response said that larger firms bore most of the cost of regulation despite representing a lower risk than smaller firms.

"The cross subsidy itself may be acceptable to larger firms as being in the general interest of the profession, but its existence and extent should be decided in consultation with the profession at a representative level rather than as a matter of regulation," it said.

Hobart said the legal sector encompassed a wide range of organisations, from sole practitioners and small high street firms, as well as alternative business structures and large international partnerships.

"It can be no surprise that the corresponding regulatory needs are so different," said the former aeronautical engineer. "But it is surprising that the regulator has, to date, tried to apply a 'one size of regulation fits all' approach."

The CLLS's response echoes some of the recommendations last week by the Law Society, including a more flexible regulatory framework taking account of the size and nature of the firms.

In a direct attack on the SRA, the society also said the regulator should be folded back into Chancery Lane as an arm's-length division.

Hobart was assistant chief of the Defence Staff in the Royal Air Force responsible for British defence policy from 2001 to 2004. He became chief executive of The Bar Council until 2011 before moving to the CLLS as chief executive in in May 2011.