The Legal Services Act 2007 Explained


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A talk about the Legal Services Act 2007; its main provisions and potential issues for solicitors facing the challenges posed by new entrants to the legal market

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  • “The business structures through which legal services are delivered to the public have changed little over a considerable period. The most easily recognisable structure is the high street solicitor, practising either on his own or in partnership with other solicitors. But business practices have changed. In particular the skills necessary to run a modern legal practice have developed; but whilst those with finance or IT skills may sit on the management committee of a legal firm, they are not permitted to be principals in the business. There is concern also about whether the restrictive practices of the main legal professional bodies can still be justified, in particular those which prevent different types of lawyers working together on an equal footing. There is pressure for change from those who represent consumer interests, but also from many in the legal profession, particularly the Law Society who have made a strong case for liberalisation of law practices.”“I have learnt that certain lawyers dislike being described as part of an industry. They see a conflict between lawyers as professionals and lawyers as business people. The idea that there is a major conflict is in my view misplaced. Access to justice requires not only that the legal advice given is sound, but also the presence of the business skills necessary to provide a cost-effective service in a consumer-friendly wayReview of the Regulatory Framework for Legal Services in England and Wales – Final Report; Sir David Clementi December 2004, Foreword
  • LDPs and ABSsLegal Complaints Commissioner and Legal Services Ombudsman abolished. The OLC created and that sets up the Legal Ombudsman, operational from the second half of this year.Non-lawyers can finally own law firms
  • LSB – answerable to the Consumer Panel and the Lord Chancellor, thence Parliament
  • s. 1(1) The regulatory objectives  (1) In this Act a reference to “the regulatory objectives” is a reference to the objectives of— (a) protecting and promoting the public interest; (b) supporting the constitutional principle of the rule of law; (c) improving access to justice; (d) protecting and promoting the interests of consumers; (e) promoting competition in the provision of services within subsection (2);(f) encouraging an independent, strong, diverse and effective legal profession; (g) increasing public understanding of the citizen’s legal rights and duties; (h) promoting and maintaining adherence to the professional principles.  And  s. 1 (3) The Professional Principles(a) that authorised persons should act with independence and integrity, (b) that authorised persons should maintain proper standards of work, (c) that authorised persons should act in the best interests of their clients, (d) that persons who exercise before any court a right of audience, or conduct litigation in relation to proceedings in any court, by virtue of being authorised persons should comply with their duty to the court to act with independence in the interests of justice, and (e) that the affairs of clients should be kept confidential. (4) In this section “authorised persons” means authorised persons in relation to activities which are reserved legal activities.s
  • The governing rules between regulators and the regulated and between regulators to avoid conflict still to be finalised
  • Independent Complaints process seen as being necessary after the failures of the SCB and Legal Complaints Service and LS Ombudsman
  • Only about 70 firms have opted for LDP status so far. They will convert to ABSs automatically when ABSs come in to force in October 2011Applications for ABS status to be allowed from next summer
  • Is “Tesco law” the main threat – or is it IT?Mayson – predicts carnage in the professionSusskind – IT will fundamentally change how lawyers do business – The End of Lawyers?
  • 15 Models – Nick Jarrett-KerrTraditional Law FirmMarketing Umbrella e.g Quality SolicitorsLaw Firm Franchise – Specsavers modelConsolidated Law Firm Roll UpVirtual Law Firm – e.g KeystoneLegal Multi-Disciplinary PartnershipIntegrated MDPExternally Financed Growth – e.g private equityBranded Conglomerate – e.g Tesco LawLaw Firm PLCIntegrated Legal NetworkExternal Consolidation Roll-upOnline Firms – Tessa SheppersonNot for profit firmsIn-house teams
  • In House Counsel?
  • $6 HaircutsThe four “A”sToo much lawSecretaries – why? Outsourcing/email/IT solutions/Online document creation – PJH Solicitors/Disruptive TechnologiesWhich is the bigger threat? LSA or IT?Knowledge vs Judgement
  • The Legal Services Act 2007 Explained

    1. 1. Combating Tesco Law: The Legal Services Act 2007<br />Michael Scutt <br />Dale Langley & Co<br />60 Lombard Street<br />London EC3V 9EA<br />
    2. 2. Agenda<br />The Legal Services Act 2007<br />Why ? <br />What?<br />Tesco Law<br />10/2/10<br />(c) Michael Scutt 2010<br />2<br />
    3. 3. WHY?<br />Brief History – OFT, Clementi Report<br />Legal Profession – the last cottage industry?<br />Need for reform<br />10/2/10<br />(c) Michael Scutt 2010<br />3<br />
    4. 4. What?<br />Simplify Regulation<br />new regulatory structure<br />Reform Complaints Procedures<br /> - Office for Legal Complaints to be created<br />Increase Competition <br /> - “Tesco Law” <br />10/2/10<br />(c) Michael Scutt 2010<br />4<br />
    5. 5. Pre- LSA Regulatory Structure<br />10/2/10<br />(c) Michael Scutt 2010<br />5<br />DTI<br />Department for Constitutional Affairs<br />Master of the Rolls<br />CIPA<br />The Law Society<br />Bar Council<br />ILEX<br />CLC<br />Higher Judiciary<br />Legal Services Ombudsman<br />Legal Services Complaints Commissioner<br />Archbishop of Canterbury<br />Faculty Office<br />
    6. 6. Regulatory Structure<br />10/2/10<br />(c) Michael Scutt 2010<br />6<br />Legal Services Board<br />SRA<br />BSB<br />ILEX<br />CLC<br />CIPA<br />Faculty Office<br />
    7. 7. Regulatory Structure<br />Eight Regulatory Objectives LSA 2007 s.1(1)<br />Five Professional Principles – s.1(3)<br />Six Reserved Legal Activities – Part 3 s.12<br />Only authorised persons or exempt persons may carry on reserved legal activities<br />10/2/10<br />(c) Michael Scutt 2010<br />7<br />
    8. 8. Regulatory Structure cont’d<br />A person who holds a practising certificate from one regulator will be governed as well by regulator of his employer<br />Non-lawyers managing or working in a regulated entity will be governed by the relevant regulator<br />10/2/10<br />(c) Michael Scutt 2010<br />8<br />
    9. 9. Reform of Complaints Procedures<br />10/2/10<br />(c) Michael Scutt 2010<br />9<br />
    10. 10. Reform of Complaints Procedures<br />Legal Services Complaints Commissioner – abolished<br />Legal Services Ombudsman – abolished<br />Office for Legal Complaints created – in force by late 2010 – single body for all legal complaints<br />OLC – creates the Legal Ombudsman to deal with complaints NOT misconduct<br />10/2/10<br />(c) Michael Scutt 2010<br />10<br />
    11. 11. Increase Competition<br />10/2/10<br />(c) Michael Scutt 2010<br />11<br />
    12. 12. New Ways to do Legal Business<br />Legal Disciplinary Partnerships (LDPs)<br />Allows mixed lawyers and non-lawyers to own and manage a law firm<br />But, up to 75% of owners/managers must be qualified lawyers and hold at least 75% of shares and voting rights<br />10/2/10<br />(c) Michael Scutt 2010<br />12<br />
    13. 13. More on LDPs<br />SRA has to approve non-lawyer members<br />In existence since 30th March 2009<br />Will become ABSs from 2011 <br />10/2/10<br />(c) Michael Scutt 2010<br />13<br />
    14. 14. Alternative Business Structures<br />Allowed from 2011<br />A “Licensable Body” is one that carries on reserved legal activities and a non-authorised person is a manager of the body or has an interest in it<br />At least one manager must be an authorised person (member, director, partner)<br />Every Body will need a Head of Legal Practice and Head of Finance<br />10/2/10<br />(c) Michael Scutt 2010<br />14<br />
    15. 15. Alternative Business Structures (cont’d)<br />The ABS must carry on a licensed activity through a person authorised to carry on those services<br />10/2/10<br />(c) Michael Scutt 2010<br />15<br />
    16. 16. Tesco Law<br />10/2/10<br />(c) Michael Scutt 2010<br />16<br />
    17. 17. Tesco Law (2)<br />Opportunity or threat? <br />Threat? High Street wipe-out in face of powerful brands that people “know” – faster service, efficiency, response - but see later<br />Opportunity? External investment may be a good thing<br />10/2/10<br />(c) Michael Scutt 2010<br />17<br />
    18. 18. Tesco Law (3)<br />Commoditised Services at risk – Wills/Conveyancing/Personal injury/Compromise Agreements in employment law/ET proceedings? Co-Op Legal Services<br />Will Tesco law appeal to client SMEs? cf Peninsula in ET proceedings <br /> <br />Will Tesco be interested in potentially costly and lengthy court proceedings, e.g. family proceedings/care/social welfare – where no cost orders likely at the end of the day? <br />The LAG is worried that this area might be completely neglected – suggests partnerships between law firms and CABx.<br /> <br />10/2/10<br />(c) Michael Scutt 2010<br />18<br />
    19. 19. But ...<br />See the ComRes poll commissioned by the SRA – 1014 respondents, May 2009 <br />69% of people said they would be concerned about the quality of service offered by banks/supermarkets<br />83% of people had a positive experience of solicitors, up from 65% the previous year.<br />10/2/10<br />(c) Michael Scutt 2010<br />19<br />
    20. 20. Perhaps ...<br />Clients buy people - especially where there is any emotional involvement for them – e.g. litigation/family proceedings/employment. <br />Traditional solicitors may struggle where they rely on conveyancing and wills.<br />10/2/10<br />(c) Michael Scutt 2010<br />20<br />
    21. 21. How to avoid meltdown<br />Build relationships w. clients and other suppliers<br />Marketing – social media/word of mouth – raising profile – demonstrate excellence<br />Cross selling of services; wills to conveyancing/newly divorced clients<br />10/2/10<br />(c) Michael Scutt 2010<br />21<br />
    22. 22. How to avoid meltdown (2)<br />Quality not Quantity<br />How do you demonstrate value?<br />The end of GPs?<br />Do you need a secretary?<br />Effective use of social media<br />10/2/10<br />(c) Michael Scutt 2010<br />22<br />
    23. 23. Social Media<br />Web 2.0 – what is it?<br />Not just websites<br />Blogs –<br />Online Communities – <br />Social Media Strategy<br />Ideal way to get “out there”<br />29/10/2009<br />(c) Michael Scutt 2009<br />23<br />
    24. 24. Don’t Panic! <br />10/2/10<br />(c) Michael Scutt 2010<br />24<br />
    25. 25. Combating Tesco Law<br />Michael Scutt<br />Dale Langley & Co<br />60 Lombard Street, London EC3V 9EA<br /><br />Blog =<br />@michaelscutt<br />10/2/10<br />(c) Michael Scutt 2010<br />25<br />