Innovation, Technology and Regulation: a view from London

A conference in London this morning dealt with the relationship between regulation and innovation – particularly the increasing deployment of technology – in the market for legal services. It was held by the Westminster Legal Policy Forum and was essentially in two parts: consideration of proposals for more regulation and the state of innovation allowed by the current regulatory regime. This – certainly compared with, for example, the United States or Canada – has moved pretty far from the original model of self regulation and, in consequence, innovation is rife.

You have to understand the bare bones of the regulatory regime in England and Wales to make much sense of the debate. The Legal Services Act 2007 ended the centuries-old self-regulation of the Bar (for barristers) and the statutorily protected self-regulation of the Law Society (for solicitors). A government-appointed Legal Services Board was established to oversee regulation by reference to eight ‘regulatory objectives’ which were, confusingly given equal priority ( the public interest, supporting the rule of law, improving access to justice, protecting and promoting consumers, promoting competition, encouraging a strong independent legal profession, increasing public understanding of citizens’ rights and duties and maintaining a set of professional principles). In vain did critics of the legislation argue that these objectives might be, at least in part, contradictory but the new regulators accentuated the interests, as they saw them, of consumers and access to justice over those of the profession. It should be noted that regulation bites not on any notion of the unauthorised practice of law, as in North America, but on certain ‘reserved legal activities’  such as obtaining probate or exercising rights of audience. In England and Wales, anyone can give legal advice. It is only when they undertake a reserved activity that regulation bites.

The consequence of this regulatory reform is that England and Wales has a plethora of legal regulating bodies. The Bar and the Law Society split their functions to create separate regulatory operations in the vain hope of seeing off external regulation. Nevertheless, we are left with the Bar Standards Board and the Solicitors Regulatory Authority. Their work is supervised and surpassed by the Legal Services Board. The result is predictable: constant three way bickering and jostling –  in particular between the Law Society, the Solicitors Regulation Authority and the Legal Services Board. The  Bar tries to stay away from the fray as much as it can. Adding to the noise is a national Competition and Markets Authority (CMA), a non-ministerial government department seeking to encourage an opening up of previously restricted markets. Last December, the authority published a Legal Services Market Study. This made a number of recommendations that provided the backdrop to the conference including:

  • providers should display information ‘on price, service, redress and regulatory status to potential customers’ – including publishing pricing information for online services; and
  • consideration should be given to extending existing redress schemes to providers who are currently unauthorised (e.g. requiring non-practicising lawyers in will writing operations to meet the same requirements as would apply if they were fully regulated e.g. as to insurance).

Somewhat predictably, the regulators are enthusiastically promoting  the CMA recommendations; the professional bodies object to too much disclosure of price; and many of the actual practitioners in the thick of the action think that the market will take care  of itself. Thus, Sally Azarmi, chair of the Small Firms Division of the Law Society said that disclosure of fees on the internet was ‘not viable’ and  was incompatible with practice in other jurisdictions.   Karl Chapman of high tech leader Riverview Law thought that the real driver of fee transparency would be the consumer not the regulator. Slightly bizarrely, the result of all this was that Mr Chapman and Ms Azarmi agreed that regulation was not required but for completely contradictory reasons. Leicester University’s Professor Cosmo Graham, the token academic, considered requirements on fee specification to be heavy handed and suggested that consumers suffered from ‘choice overload’ more than lack of information. Crispin Passmore of the Solicitors Regulation Authority reported that it was considering introduction of fee specification in an initial limited number of types of case even when services were offered online. It sounds like that will be what happens.

Many of the other contributors made it clear that innovation was proceeding at speed in any event. Keith Austin of DHL talked of the revolution in the way in which in-house lawyers were working as they reversed out housing; brought matters inside the organisation and under their control; and then applied technology to reduce cost. Jimmy Vestbirk of Legal Geek talked of its work to make London a global hub for LegalTech work and Miranda Grell from Hackney Law Centre of its project to bring technology to the law centre. Matt Meyer of Taylor Vinters talked about his practice’s linking of the provision of legal services and assistance in the incubation of startups.

Pretty well everyone agreed that the legal profession was in for a pretty major shake up in any event simply from the impact of technological change, let alone regulatory requirements (and Brexit).

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