Interview: David Edmonds

Should we be reading anything into the Legal Services Board's (LSB's) imminent move into the Competition Commission's building?

LSB chairman David Edmonds gives an ironic smile, saying there will no doubt be some interesting exchanges with members of the competition watchdog. The official story however is that as the Ministry of Justice is vacating Selborne House, where the LSB had been given temporary accommodation, the board has been offered to take up unused floor space at the Commission's Bloomsbury headquarters on Kingsway. This is standard policy in government circles but quite an apposite coincidence at a time when the legal services market is about to open up to competition from providers other than the traditional suppliers.

Opportunities for consumers

Edmonds does not hide his faith in competition as a tool to sharpen the delivery of services to users, bringing more opportunities to consumers of legal services.

'I have a belief that on the whole competition for services enhances the quality provided by the supplier,' he says. 'Can you think of any example where competition has seriously degraded the quality of the service offered?' he continues.

But with commoditisation, the imminent arrival of legal disciplinary partnerships (LDP) and alternative business structures (ABSs) on the horizon, quality of service and a lowering of professional standards is precisely what many solicitors have been concerned about.

And as if these worries were not enough, the current economic downturn has exacerbated fears that the legal profession is about to go through cataclysmic changes, only to wake up in a new consumer-led, competition-based, cost-driven world where being a solicitor no longer has the meaning we know now.

While acknowledging that these issues are causing serious concerns within the profession, Edmonds thinks that ABSs are still a good idea. 'LDPs may be a staging post or could develop into a separate type of organisation, only time will tell', he says. 'ABSs on the other hand are a way of getting more legal help into the market and are definitely a good idea.'

'I didn't come to this job simply to run an organisation that regulates the professions' trade unions,' he continues.

'The real thrust of the legislation [the Legal Services Act] is that we can intervene in the legal services market and find different ways of doing things.'

Edmonds' objective in his role at the LSB can almost be seen as the continuation of his former position as a board member of the Legal Services Commission.

This time, his concern is access to justice for the huge tranche of individuals who are not sufficiently affluent to purchase high value-added legal services and not sufficiently poor to meet the legal aid means test.

'My aspiration is to work with the board to see if we can produce intelligent market interventions, alternative ways of doing things, where existing law firms might work in different ways, and with different people coming to the legal market,' he says.

Of course competition is already present in the legal profession, but the idea of a free market for legal services is one that lawyers are still sceptical about. Edmonds believes that these concerns will be properly addressed through careful intervention, and he insists that he is not an interventionist for the sake of it.

'The whole ethos of the regulator is the protection of the consumer and the enhancement of opportunities for consumers, not the protection of existing suppliers.'

But too much intervention, he says, could have negative effects and 'muck up the market very quickly', so he and his board will have to be very careful in not intervening in ways that are inimical to the interests of consumers and the system.

A consumer-citizen approach

Perhaps the most innovative concept underpinning Edmonds' approach is that of the 'consumer-citizen', a term borrowed from his time at Ofcom as a founding member of the telecoms regulator's board.

'If I, as a consumer-citizen, want to take legal action against someone who I believe has treated me unfairly, I want to know it's within a process where these citizenship issues are firmly embedded '“ honesty and integrity of the supplier '“ and his responsibility to the court is a key part of my relationship with him, just as much as my ability to hire somebody I can afford,' says Edmonds. 'If I can't hire anybody to give me access to justice, then I'm lost.'

Quite how access to justice is improved through the use of such a concept is not instantly obvious, nor is the solution to the lack of access to justice in a wholly liberalised legal services market.

Would the consumer-citizen approve of some of the relationships struck by some solicitors under the miners' compensation scheme? After all, a lot of the miners may not have heard of the scheme without the chain of intermediaries set up by some firms and may not have secured compensation; would they have been deprived of access to justice in that sense?

Likewise, claims farmers may come across as positively, ethically helpful under this light. But what would happen for instance if a large high-street retailer, say a bank or an insurance company, provided legal services to thousands of individuals and went bust '“ what would that say about access to justice and legal services?

Edmonds says we are still some way to a truly open market but that effective regulation should be the answer.

'If we are ever in a position where a supplier had thousands and thousands of cases which would lead to greater access to justice or the cheaper delivery of legal services, than I would hope that this would be in an environment where the regulatory framework would be tough enough to de-risk to a significant degree. But when you operate in the private sector, you can never take out the risk of failure, you can never totally de-risk'.

How the LSB ensures that the regulatory framework is strong enough will be top of the agenda, and the main, driving principle will be independence.

'The regulatory regimes must be independent,' says Edmonds. 'We need proper independence, proper separation, and a proper appointment process'.

'It is apparent to anyone observing the scene that there are issues surrounding the question of independence', he continues with a knowing look. 'The Legal Services Act is quite clear but the debate over the past few weeks highlights the existence of real issues.'

Only last month, as revealed in Solicitors Journal, Edmonds appeared to back the SRA in its bid to control senior appointments to its board (see solicitorsjournal.com, 21 October 2008), though he says the decision is ultimately for the frontline regulators to take '“ and at this stage, the legislation clearly recognises the Law Society as the approved regulator for solicitors.

The LSB did not comment on the ructions that followed the Law Society's announcement that it had appointed Lord Hunt to carry out a review of the regulatory framework.

Regulation is a legitimate interest for the Society, but to outside observers the Hunt review appeared as yet another skirmish in its underground war with the SRA over who ultimately holds regulatory powers.

An estimated £150,000 is to be expended on the Hunt review, raising the question of possible duplication with work which the LSB will start undertaking early in the new year, but Edmonds is cautious not to take position for either party.

'It's an issue for the Law Society and we'll look with interest at what comes out of it', he says. 'I don't know whether they should necessarily have waited. It's not a bad thing that the Law Society and the Bar Council reflect on what change has to happen for their processes and organisations to be consistent with the objective of independence in the legislation. It's pre-activity, which can be construed as helpful, but that's down to them '“ hopefully what's done now will be useful input for us.'

While the LSB will not disclose any final thinking until after it started operating in early 2009, Edmonds says they are turning their minds to the question of SRA appointments. One difficulty could be that the Law Society produces recommendations which the SRA '“ or even observers '“ say do not comply with the requirement of independence. For instance, what if the Society suggested that it should continue to appoint, say, 50 per cent of the SRA board members?

'The Act only seeks to establish independent regulation without suggesting any detailed arrangements '“ that's down to the regulators themselves. So that scenario would certainly give rise to an interesting discussion about what the Act means,' says Edmonds. But how the LSB would intervene to achieve what it sees as independence is yet to be determined.

Perfect market?

In the end the question that remains is, if the greater aim of the legislation is it to provide access to justice to everyone, how realistic is this without an integrated market similar to the NHS? Commercial suppliers, even more than solicitors, will not take cases that are not profitable. Whether it is on a 'no win, no fee' or on a fixed cost basis, they will have strict, cost-driven screening processes and clients without a strong enough case will fall through the net.

'Whether you can ever produce a market place where some of the recourse that you would hope to have are available to the consumer-citizen generally, I don't know. But this is an issue,' says Edmonds.

The LSB is finalising its business plan which will set out its priorities. Edmonds anticipates it will be ready to present to the whole board in December this year, ready for publication and consultation in early 2009.