In the Media

LSB chair brushes aside critics in robust defence of liberalisation

PUBLISHED May 11, 2012

Friday 11 May 2012 by Paul Rogerson

The chair of the Legal Services Board yesterday rebutted allegations that the quango is overreaching itself by seeking to 'micro-manage' professional regulation.

'People and glasshouses spring to mind,' David Edmonds told a seminar on regulation at the Royal Festival Hall organised by Russell-Cooke and chaired by master of the rolls Lord Neuberger. 'I am told that the new Bar handbook is likely to reach 300 pages. The Solicitors Regulation Authority Handbook, edition 3, is 516 pages. The original Law Society code of conduct was just five pages long.'

The Law Society and Bar Council have both called for the LSB's role to be reined back, but the super-regulator has shown no inclination to change course.

Edmonds went on to insist that outcomes-focused regulation is the 'only form of regulation that is compatible with professional ethics'. The more detailed rules and guidance are defined, said Edmonds, the 'greater the temptation professionals have to comply with the letter of them while constantly seeking to subvert their actual intent'.

He added: 'If professionals say they cannot cope with the uncertainty of outcomes-focused regulation then frankly they should not be giving legal advice to anyone about anything.'

Edmonds also reasserted the board's commitment to full-blooded liberalisation. He dismissed the anxieties of some - including Lord Neuberger - who fear the consequences for standards and the rule of law of what the master of the rolls has in the past described as the 'tyranny of the consumer'. Neuberger has accused the board itself of 'unreflective consumer fundamentalism'.

But Edmonds retorted: 'The term "fundamentalism", in relation to markets, often implies a strong belief in the ability of laissez-faire or free market economy views or policies to solve economic and social problems.

'I do have a profound belief that in many markets, competition is by far the best route for delivering social and economic benefits. And regulators can play a vital part in enduring that fair competition emerges in markets where some players have significant power, and others may have none.'

Edmonds went on to describe as 'demeaning' to the debate the implication that non-lawyers are inclined to be less ethical than any other group running a business.

Responding to the speech, Law Society president John Wotton alluded to the difficulties inherent in the 'non-prescriptive element of regulation', which solicitors are finding 'hard to stomach'.

He also pointed to the danger that the lack of prescription of OFR will prompt overseas bars to resist the alternative business structure model, damaging the business interests of the profession abroad.

'OFR at this point is more attractive in theory than in practice,' Wotton argued, suggesting that it may have actually increased the complexity of regulation. 'Most firms do not welcome [OFR] and [many] are incurring large one-off compliance costs,' he said. Ongoing compliance costs are also likely to be 'considerably higher', he added.