8 May 2024

It is a well-established axiom that to govern is to choose.  Less well-recognised is the reality that choice usually involves compromise.

Most organisations – and certainly governments – have a range of competing priorities.   Compromises are needed between those priorities. 

The need for compromise extends to constitutional and governance arrangements which typically seek to balance the effective exercise of power with appropriate checks on the misuse of power.  You might, for example, see the US Constitution as a supreme example of just such compromise in action, checking concentrations of power by balancing the functions of the executive, legislative and judicial branches and balancing the responsibilities of the Federal and State governments.

The Legal Services Act 2007, which established the current regulatory arrangements for legal services is often described as just such a compromise.   The Act designated the professional/representative  bodies, such as the Bar Council, as the approved regulators, but required them to delegate their regulatory functions to independent arms overseen by a central Legal Services Board.   

So what was the nature of compromise involved and why was it made? 

One school of thought is that, in enacting the 2007 legislation, Parliament’s primary objective was to retain a role for the professional bodies which had a long and honourable tradition of self-regulation.  On this reading what was being compromised was the full independence of the front-line regulators which remained dependent on, and overseen by, the Approved Regulators in the shape of the professional bodies.

Proponents of this version of the compromise tend also to have a narrow view of the competence of the front-line regulators which they regard as largely confined to professional gatekeeping and to discipline.

My view, however, is that the compromise involved in the 2007 Act was rather different, with important consequences for the independence and scope of the front-line regulators, like the Bar Standards Board.

Why do I think that and what do I see as the compromise?

Look back, first of all, at Sir David Clementi’s 2004 review of the regulation of legal services which was the forerunner of the 2007 Act. 

Clementi thought that reform of the established self-regulatory model was needed to achieve six important objectives.  Two of those objectives, for sure, homed in on the traditional preoccupations of the representative bodies: on the maintenance of the rule of law and on the strength and effectiveness of the professions themselves.  The others, however, were broader public interest objectives focused on the operation of the market: access to justice, the promotion of consumer interests, the promotion of competition and public understanding of legal rights. 

In other words, Clementi saw the need for market regulation as well as professional regulation.    And the then Government and Parliament agreed.  Indeed, the Government of the day entitled the White Paper responding to the review simply: Putting consumers first.

Now, this objective is not easily compatible with a continuing regulatory role for the representative bodies which, whatever their merits, are not consumer-focused.  This, however, is where the compromise comes in because the obvious response would have been to establish a single independent legal services regulator, on the model of the then Financial Services Authority, accountable to Parliament and with board appointments made by Ministers.  And, indeed, David Clementi did consider just such a model of regulation for legal services.

Clementi rejected it, however, because such a model would have involved an unacceptable derogation from the independence of the legal professions themselves by subjecting them to potential regulatory interference by Ministers or by Parliament.  So the compromise was that the regulatory authority of the front-line regulators should descend, not from Parliament, but from the professional bodies themselves, designated as the Approved Regulators.  The Legal Services Board was established to ensure the independence of the frontline regulators and to promote the full range of regulatory objectives consistently across all regulated professions.

I think this was the right call – the independence of the legal professions is of crucial importance – but it means that the role accorded the representative bodies by the 2007 Act as Approved Regulators was expedient rather than a matter of positive choice or principle. 

A number of things follow from the nature of the compromise reached back in 2007.

One is that the first responsibility of the Bar Standards Board, as regulator, is to the public interest, not to the profession.  That is regardless of the fact that our responsibilities are delegated to us by the General Council of the Bar.  See here Clementi’s reasons for reforming regulation in the first place.

A second is that, as the designated regulator, we do, in exercising our regulatory functions, need to have regard to the market, as well as to the profession.  We should, and must, ask how well the barrister profession is serving consumers.  That is not just a question of professional competence – important though that is - but also of competition, choice and access.

A third is that the Internal Governance Rules, which set out the terms of the relationship between the front-line regulators and the professional bodies, are important.  Those rules, whose operation and effectiveness the Legal Services Board is reviewing this year, protect the independence of our decision-making.  I hope the review will also consider how best to sustain the operational independence of the regulators which is a necessary condition for robust decisions.

So, yes, the Legal Services Act 2007 embodied a necessary compromise.  The public interest required independent regulation of the legal professions, but those regulators cannot, and should not, be dependent on government.  Nor, however, should the regulators defer to the professional bodies from whom their regulatory powers descend.

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