Legal regulation is not a uniform concept

Professor Laurel Terry, of Penn State Dickinson Law School in the US, and I have been arguing for a long time that legal regulators around the world should be talking to each other. They are about the only group of global professionals that haven’t done so. Last week the seed was sown as the Solicitors Regulation Authority organised the first international conference of legal regulators (27 and 28 September).

Representatives of different legal regulatory bodies came from around the world as far as California and Hong Kong with Germany, Italy, Zambia and South Africa in between. Professional associations such as the CCBE and BSB attended. And I was glad to see a sprinkling of academics.

The first session looked at what it meant to regulate the changing legal market and was perhaps the most futuristic of all, as panel members from Australia, Germany, Singapore, the UK and the EU speculated what the market would hold. I presented a vision of increasing consumerism, global-isation, technology and radically different regulation. Regulation could come from within, as it has in the UK, or it could be imposed from outside as the Troika is doing in Eurozone endebted countries.

Cops and lawyers

Conceiving present and future markets was relatively simple compared to identifying what a legal regulator is. There were dramatic differences, say, between the Californian and Washington DC approaches and those in Australia and the UK. The Americans saw themselves as cops targeting lawyers who have gone off the rails. This is quite a different concept to the Australians who see themselves working collaboratively with lawyers, not merely sanctioning them. Indeed regulatory sanctions were an indication of failure of not having inculcated best practices.

Moreover, not all regulators were separated from the representative sides of their professional bodies. This could be said to induce a form of professional schizophrenia in the modern day. The reason for this is who does the regulator serve? Is it the profession? Is it the consumer and public interests? The answers, as we know, aren’t straightforward.

The conference was not intended to be a one-way transmission of information. There were breakout sessions where delegates were set problems and tasked with coming up with solutions. For example, what should a proactive regulator’s toolbox contain? One clear answer was that regulators need to do research about the legal market and profession. Understanding is crucial to good regulation.

One of the key areas regulators are charged with is education and admissions. We have the Legal Education and Training Review attending to ours. But what was clear was that a form of arbitrage in this sector has opened up. Within the EU lawyers can cross borders and establish themselves. One interesting aspect to this comes about through the proximity of Eire to England. Irish regulators compel all law graduates to sit a professional exam that tests them on core subjects. If they fail, then many come to England and take the Legal Practice Course and return to practise in Eire.

The crucial test of this cross-border will occur when alternative business structures begin to establish themselves outside the UK. Both the US and Germany are opposed to them, and the CCBE argues that ABS with external investment could wreak havoc with the single market. The British representatives were sanguine about ABSs – after all, rules are what lawyers are good at avoiding.

Insular outlook

A problem with the professions is that they can become insular and inward looking. It was opportune that Andy Friedman, of the Professional Associations Research Network, talked about professionalism as a competence that was tested by American medical associations. This is something that typical character and fitness exams fail to capture.

When things go wrong brought about contrasting views. The English perspective is to analyse risk and identify trends, and if necessary take early action. The US approach is to wait for the crash

Of course it is good to talk shop over two days, but what about action? How do we take things forward? Laurel Terry proposed a portal for regulators so they could exchange information, ask questions, discuss solutions and find solid information. Regulators, for instance, are not called by the same names nor are they employed by the same groups. Some are independent and some allied to the state or the courts. A network or portal would help overcome these barriers to cross-border cooperation.