Profession's conservatism has hindered innovation, LSB says

Single independent regulator proposed as "the optimal way forward" for legal services

Deep-seated conservatism among lawyers and their regulators has prevented the development of new legal services models, the Legal Services Board has said as it called for a radical shake-up of the regulatory framework including complete independence of regulatory functions.

Responding to the government's review of legal services regulation, LSB chair David Edmonds regretted that it had been "difficult for new provider types to enter the market, especially those with truly innovative models."

The LSB's response comes a week after the Solicitors Regulation Authority, in which the regulator has asked for full operational independence from the Law Society, placing it at loggerheads with Chancery Lane, which has moved to regain control of regulation.

The liberalisation initiated in the Legal Services Act was incomplete, Edmonds said in his response, and new laws should be introduced to "secure a liberalised market offering greater innovation, choice and value to support growth, improve access to advice and ease dispute resolution."

Other recommendations include more targeted regulation focusing on identified risks, a simpler legislative framework, and increased rights for consumers.

At the heart of the new system, a new, single legal services regulator, "unrelated to any existing regulator, including the LSB, should be the core model to be tested" - a concept first aired by Edmonds before the justice committee in March and taken up by the consumer panel in its response to the consultation earlier this month.

Edmonds described this as "the optimal way forward". "'What' is regulated and 'how' it is regulated are more important questions than 'by whom'," he said, pointing out that current fragmentation added costs borne unevenly by legal professionals and depressed innovation "to the detriment of consumers and providers alike".

He said law firms and legal professionals faced a regulatory cost base "unrelated to the risk they present", suggesting that a new system should be put in place where the financial burden of regulation is allocated in a more proportionate, risk-based way.

In the meantime, Edmonds said "a hands-on approach by the LSB is essential to the delivery of effective changes to regulatory culture and a rapid reduction in cost and complexity of regulation."