It Legal Services


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It Legal Services

  1. 1. Legal Services Reform Update September 2008 The Government is reforming the regulatory framework for legal services in England and Wales in order to put the consumer first. We want a framework that promotes competition, innovation and protects the consumer. To this effect, the Legal Services Act was given Royal Assent on the 30 October 2007. In this Fact Sheet you will find information on the following areas: The Legal Services Act 2007 1 Transforming Legal Services 1 Background to the Reform 2 Implementation Progress 2 Timetable for Reform 3 Delivery of Provisions in the Act 3 Consultation and Engagement with Stakeholders 4 Further Information 4 The Legal Services Act 2007 The Legal Services Act, which received Royal Assent on 30th October 2007, reforms the way in which legal services are regulated in England & Wales. The Act establishes an oversight regulator, the Legal Services Board (LSB) and an independent complaints handling body, the Office for Legal Complaints (OLC). It will also allow for Alternative Business Structures (ABS), which will enable firms to explore new ways of organising their businesses to be more cost-effective, including permitting different kinds of lawyers and non-lawyers to work together, and to allow for external investment. Transforming Legal Services The new system will: 1) Establish a more effective regulatory framework The current regulatory framework is complex and fragmented, with regulatory anomalies and gaps, which make it confusing for consumers. The new system will put an end to this confusion and will establish a clear, flexible and transparent system, which is responsive to consumer needs, with a single set of regulatory objectives. 2) Ensure proportionate supervision of approved regulators, including licensing authorities Current regulators of reserved legal activities will become approved regulators under the supervision of the LSB. In addition, any organisation wishing to regulate reserved legal activities in the future will have to be designated as an approved regulator by order of the Lord Chancellor, upon the recommendation of the LSB. Approved regulators seeking to be licensing authorities - i.e. regulators of Alternative Business Structures - will also have to be designated by an order of the Lord Chancellor made upon the recommendation of the LSB, and will be subject to the LSB's oversight.
  2. 2. Legal Services Reform Update Regulators will have clear objectives to guide them in exercising their functions. The objectives include: • supporting the rule of law; • improving access to justice; • protecting and promoting the interests of consumers and the public interest; • promoting competition; • encouraging a strong, diverse and effective legal profession; and • increasing public understanding of their legal rights and maintaining the professional principles of those providing legal services. The LSB will have a number of powers and sanctions available to it to ensure approved regulators are fulfilling these objectives. 3) Establish a new approach to complaints handling The LSB will appoint a new and independent OLC, which will administer an ombudsman scheme that will deal with all consumer complaints about legal services. The OLC will be a single body, completely independent from approved regulators (ARs). Legal service providers would be required to maintain ‘in-house’ complaints handling procedures, which will have to satisfy any requirements set by the LSB, to deal with complaints made by consumers in the first instance. The OLC will then handle all complaints made against providers that cannot be resolved at the local level. This will remove the current uncertainty amongst consumers as to where, or to whom, they should address their complaint. The LSB has several powers in relation to the OLC. It has the power to set the OLC's budget and, where appropriate, set the OLC targets. 4) Deliver new ways of meeting consumer needs Consumers have a right to expect services to be delivered in a way that suits them, not providers. The Act will provide opportunities for more efficient and consumer friendly ways of delivering legal services, through Alternative Business Structures (ABS). Different types of lawyers, and non- lawyers will be able to work together in innovative practices, including 'one-stop shops', which can deliver packages of legal and other services in more consumer focussed and convenient ways. The LSB will supervise all licensing authorities (i.e. those bodies that regulate ABS) and will make rules governing how it carries out this supervision. It will also have powers to decide which bodies may become licensing authorities and it can in certain circumstances become one itself. Background to the Reform The proposals initially set out in the Legal Services Act have been subject to rigorous scrutiny. This included Sir David Clementi’s 2003-04 independent ‘Review of the Regulatory Framework for Legal Services in England and Wales’, and the Government’s 2005 White Paper which built upon Sir David’s recommendations. The draft Legal Services Bill was also subject to pre-legislative scrutiny by a Parliamentary Joint Committee in summer 2006. The full Bill was introduced to Parliament in November 2006 and Royal Assent was received on 30 October 2007. Implementation Progress Implementation of the LSB and the OLC is expected to take close to three years from Royal Assent. This will see the LSB fully established by early 2010 and the OLC fully established by late 2010. However, the LSB Chair and ordinary members and the OLC Chair and other ordinary members are being appointed earlier than this to ensure that they have the opportunity to input into the implementation process and set the strategic direction of their respective organisations. 2
  3. 3. Legal Services Reform Update On the 1 May 2008, David Edmonds took up his post as the inaugural Chair of the Legal Services Board. The term of appointment is until May 2011. The first nine members of the Legal Services Board took up post on the 1 September 2008 for a three-year period. They are: • Terence Connor; Stephen Green; William Moyes; Barbara Saunders and Nicole Smith as the lay members; and • Rosemary Martin; Michael Napier; Andrew Whittaker; and David Wolfe as the non-lay members. The appointment of the OLC Chair will take longer because the LSB appoints the OLC. The expectation is that the OLC Chair will be appointed by October 2008. This timetable will still ensure that the OLC Chair is involved in setting the strategic direction of the OLC as early as possible. Once the new Boards have been established responsibility for managing the implementation process will be handed over to them. This supports the fact that both organisations are being set up to be independent from the professions and Government. A written ministerial statement was made on 18th of June announcing the timetable for closure of the Office of Legal Services Ombudsman (OLSO) and the Office of the Legal Services Complaints Commissioner (OLSCC). It has been decided that the OLSCC will close in March 2010 and the OLSO will not close before December 2010. Timetable for Reform Key Milestones October 2007 Legal Services Act gains Royal Assent May 2008 LSB Chair appointed September 2008 LSB ordinary members appointed October 2008 LSB Chief Executive selected / identified October 2008 OLC Chair appointed December 2008 LSB fully constituted – Chief Executive in post February 2009 OLC ordinary members appointed May 2009 OLC Chief Ombudsman appointed Early 2010 LSB becomes fully operational Late 2010 OLC becomes fully operational It is important to remember that these milestones may need to be adjusted as new information comes to light and circumstances change. Delivery of Provisions in the Act Going forward, the Ministry of Justice needs to make a number of Commencement Orders, and other Statutory Instruments, to give effect to the legislation. Many of the reforms delivered by the 3
  4. 4. Legal Services Reform Update Act require the LSB and OLC to deliver them. However, there are some provisions, which can be commenced in advance of the establishment of the two new bodies. A full commencement plan for the Act is now in place, and you can view the orders that are in force on the department’s website at Consultation and Engagement with Stakeholders The Act came about as a result of extensive consultation with a range of stakeholders including consumer bodies, the legal profession, informed individuals, other regulatory bodies, academics and complaints handling bodies. It was also subject to pre-legislative scrutiny and extensive debate in Parliament. The Legal Services Reform Programme continues to work closely with stakeholders to keep them updated on progress in relation to implementation and to ensure that the Programme benefits from their experience and insight. Further Information To keep up to date with the latest on the reforms, please visit the Ministry of Justice website at Alternatively, should you have any questions, you can email us at 4