Turn of the screw
It's been a busy old year for regulation - but you ain't seen nothing yet, says Susanna Heley
It has been a funny old year. The word lawyers would probably choose to describe it would be 'transitional'. For me, January was marked by a City of Westminster & Holborn Law Society dinner hosting the newly installed Charles Plant as chairman of the SRA. Although he had only been in the role for about three weeks, he was keen to get across the message that this was a new dawn for the SRA.
Fast forward to December and we have firm proposals for a complete overhaul of our regulatory regime next year; the first consultation on the SRA's comprehensive review of the indemnity regime and a promise from the SRA that it is taking a long hard look at its staff as well as its processes to ensure that it is fit for purpose. Mr Plant and his team have obviously been busy...
The last year has also seen the largest intervention by the SRA ever, a marked increase in fake 'solicitors' and 'licensed conveyancers' firms, with an increasingly hard line from lenders and insurers alike. The demise of Quinn earlier this year was fairly catastrophic for many smaller firms and the general feeling in parts of the profession appears to be akin to that of Dad's Army's Fraser '“ 'We're all doomed!' And there is some justification for this attitude; it seems that high street firms are being squeezed in a number of ways.
Shop floor
There are some rays of sunshine though. The past year has brought us the promise of a new and more cooperative relationship with the SRA, successful judicial reviews against the Legal Services Commission's tendering process and confirmation from the Court of Appeal that privilege arises as a result of the inherent role of independent lawyers and is not based on the nature of the advice given.
I have heard that the practice of 'regulator shopping' has begun. I am told that entire firms have decamped to the Council for Licensed Conveyancers, abandoning or hiving off those parts of the business which are outside of its regulatory scope. Although this is strictly rumour at present, with the council indicating that it will seek authorisation to license ABSs from next year, this seems to be a phenomenon which we will be seeing more of. It is not without risk, however '“ the council is consulting on revisions to its own regulatory regime and the regulators of ABSs will have the power to impose unlimited fines on ABS firms and/or their employees.
Appeals from such fines will, if all goes according to the LSB's current plan, be to the General Regulatory Chamber of the First-tier Tribunal in what will be a brand new jurisdiction for that tribunal. Judges will be drawn from the Immigration Services Panel who currently oversee appeals and applications relating to licences issued by the Office of the Immigration Services Commissioner. But giving regulators the power to impose unlimited fines is rather like handing a noose to the prosecutor. Who needs a trial?
Face the music
Looking forward to 2011, we have to acknowledge that the profession is not looking its best. The recession has taken its toll, both on the business of firms and in the cost of regulation. The largest intervention ever in the midst of a period with a significant number of interventions and forced closures has kept the regulator extremely busy and led to significant calls on the compensation fund. This must have an impact on the costs the profession is expected to bear moving forward.
On the plus side, parts of the profession are fighting back. There are determined mutterings that ABS is an opportunity to demonstrate the true value of solicitors and regulated legal services providers; suggestions that the term 'solicitor' should be treated as a kind of quality assurance mark; branding and shared services initiatives. As the prospect of ABSs gets nearer, more and more such initiatives are likely.
The challenges facing the profession in 2011 are substantial. Fears of a double-dip recession must be heightened by the Eurozone crisis and the costs associated with regulation are likely to increase at the same time as our historic monopoly is to be abolished. Although I have faith that the profession will meet those challenges with intelligence and imagination and ultimately emerge stronger, there will inevitably be casualties and problems along what looks to be a fairly treacherous road ahead.
In regulatory terms, there is still uncertainty as to what is to happen and how it is to happen although we are told with absolute certainty that, whatever it is, it will happen on 6 October 2011. Ready or not'¦