Believe it or not, regulation isn't everything
Posted on October 11, 2011 by Louise Restell
Over the last few days I’ve been following a discussion on Twitter between a couple of lawyers and a professional lay legal adviser (if that isn’t a contradiction in terms). I resisted the temptation to get stuck in because I have mixed views about the need for those working in the law to be regulated and I thought it would be easier to explain why here.
Politicians and businessmen always assume consumer groups want to regulate everything, from financial services to energy suppliers via the post office. They lament that the red tape of regulation ties business in knots, preventing growth and hindering their ability to provide good products and services competitively. The truth is less straightforward. Consumer groups don’t want to regulate everything because the cost is always passed on, to the consumer.
But when an industry fails to clean itself up and stop giving consumers a poor deal, or even causing them serious detriment, then organisations like Which? have no choice but to call for regulation. They did it for estate agents because everyone has a dodgy estate agent story; and they did it for claims management companies because everyone was soon going to have a dodgy story about one of them.
Lawyers, of course, are regulated and have been for some time. Consumers know this and still rely on it as a guarantee of quality. What they mostly don’t know is that only six activities are ‘reserved’ exclusively for those regulated lawyers: the right of audience, the conduct of litigation, reserved instrument activities, some probate activities, notarial activities and the administration of oaths.
What this means, in theory, is that anyone can do any of the other legal activities you can think of – will writing for example – although some are regulated by statute (including immigration advice, claims management work and insolvency). If a regulated lawyer does one of these activities, it becomes regulated, even if it isn’t when done by someone else.
Confused? Understandable. Professor Stephen Mayson of the Legal Services Policy Institute has researched the origins of reserved activities and found them to be ‘remarkably obscure’ with ‘little basis for suggesting a common policy rationale that justifies their existence’. Unfortunately the Legal Services Act 2007, which was designed specifically to put consumers first, did little to clarify this particular aspect of the regulatory maze.
Most consumers would probably say they’d want to get their legal advice from a lawyer, but that’s probably because they don’t know all this, and why should they? In fact, I don’t think they care that much who is doing their legal work, so long as they are competent and there is somewhere to make a complaint if things go wrong. This doesn’t necessarily have to be full regulation: for example, there is no up-front regulator for estate agents, but compulsory membership of a redress scheme.
The interesting thing about the legal profession is that whereas business usually tries to shake off the yoke of regulation, lawyers seem keen to get more of it. The debate about regulating will writing has been raging for years, with the Law Society at the forefront of the campaign for it to become a reserved activity.
I can understand this. Lawyers spend quite a lot of time and money qualifying. It must be galling to have studied for years and struggled (possibly) to get a training contract only to see people who’ve just read a book about will writing come along and start undercutting you and stealing your customers, all perfectly legally.
However, this neglects two crucial facts: regulation is there to protect the consumer, not give the professional a living; and, believe it or not, there are examples of shoddy and even negligent advice given by solicitors who are and have always been regulated. The trick of good regulation is to get the balance right between protecting the consumer, but still enabling competition and choice in the market.
Earlier this year, following his research into the existing six areas of reserved legal activity, Stephen Mayson suggested that a number of other activities should become reserved, including immigration advice and will writing. The rationale being that reserving these activities is necessary for the public good or to protect the consumer and because other responses would be less effective. However, he said this work shouldn’t be restricted to lawyers but be subject to separate accreditation.
This could, I suppose, include lay advisers (or McKenzie friends). They support people who don’t want to use a solicitor, helping to prepare documents or getting people ready for court. This may well be because the individual has had a bad experience with a solicitor, or they may just want to do it themselves and require a bit of handholding for a fee that is, arguably, less than a solicitor.
Lay advisers do not provide reserved activities (they aren’t allowed to) but they have had their role recognised in guidance from the President of the Family Division of the High Court and the Master of the Rolls. The question is whether this sort of service should be regulated in the same way as other legal providers, bearing in mind the purpose is to protect consumers, not the profession. On the basis of one afternoon’s research my instincts suggest not, although certain activities lay advisers carry out, such as will writing, may well be regulated in future.
As to whether these services should be available at all for a fee is really up to consumers themselves. In the first instance they need clear and unbiased advice, from the government and legal regulators, as to their options when buying legal services. They need to know what they are getting and be encouraged to shop around to ensure they are paying a fair amount and getting a fair service.
I know, or at least I think I do, the solicitors engaged in this debate on Twitter are not from the Luddite tendency trying to preserve their old monopoly. But it does seem that many lawyers still don’t get it, still don’t understand the reason consumers flock to these alternative ways of doing things, whether it’s claims management companies or McKenzie friends, is because solicitors have let them down. This, if nothing else, demonstrates that regulation isn’t everything.