LSB eases pressure off Law Society over IGRs

The Legal Services Board (LSB) has accepted undertakings by the Law Society that its revised oversight rules of the Solicitors Regulation Authority (SRA) will safeguard the regulator’s effectiveness. The decision brings to a close an investigation prompted by SRA claims in February 2017 that Chancery Lane’s rules and practice impaired its regulatory autonomy. It resulted in a censure decision by the LSB against the Law Society in May 2018, which committed in a subsequent undertakings note to provide assurances in relation to a number of areas.

The processes for the appointment of SRA board members and the lack of an independent chair on the Business and Oversight Board (BOB) came under particular scrutiny by both the LSB and the SRA. The SRA had also singled out possible abuses of provisions in the General Regulations – the rules governing the relationship between the SRA and the Law Society – that require the SRA to provide information to the BOB and other Law Society committees. In her letter concluding the investigation, the oversight regulator’s chair Dr Helen Phillips said the Law Society had fulfilled its undertakings for the time being but she stressed “the importance of embedding the behaviour change prompted by the LSB investigation”.

The undertakings were drawn up by the Law Society’s new board, set up in December 2017 and chaired by former president Robert Bourns. They are detailed in a letter dated 30 November 2018 and include; a new protocol for the BOB, revised rules for the audit and remuneration committees, evidence that the general regulations have not impaired the SRA’s effectiveness, and the introduction of a new ‘culture code’ aimed at ensuring positive behaviours throughout the organisation.

“We welcome the steps taken as set out in your report and note that the new governance arrangements and emerging culture change remain a work in progress”, the LSB’s letter to the Law Society said. The letter also pointed out that the super-regulator was “more concerned with The Law Society’s culture of compliance with the internal governance rules”. The LSB also specifically addressed the issue of information requests from the SRA, insisting that they should not extend beyond the remit of the agreed protocol. “The chairs of the relevant boards and others at The Law Society who request information from the SRA must ensure that these are justifiable in regards to your assurance responsibilities”, it said. “We expect The Law Society to ensure that this practice is monitored on a regular basis.”