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The clock is ticking towards the inception of Outcomes-Focused Regulation (OFR) and, at the same time, the pendulum is swinging between the interests of the consumer and the protection of the traditional legal practice. On the one hand, there are significant developments such as the licensing of Alternative Business Structures (ABS) and OFR itself which will – or so we are led to believe – intensify competition, induce innovation and, ultimately, revolutionise the way legal services are delivered. On the other hand, recent calls to reclassify certain legal activities as ‘reserved’ have gained momentum and may have also – at least temporarily – reassured lawyers that their professional skills are still valued and persuaded them not to close their doors.
However, members of the profession may feel disgruntled that while one hand gives, the other (invisible) hand throws the pendulum back, loaded with the inherent burdens of the creeping regulatory framework. It would be naive to think that the contribution of smaller firms is recognised by the same regulator and representative who accord priority to new entrants to the market and, in doing so, neglect the individuals who created that very market. If the external investors being encouraged to inject capital into City firms and other sizeable institutions are not lawyers, they will not be absolved of positions of responsibility such as ‘Compliance Officer for Legal Practice’ (COLP). Consequently, the sole practitioners and specialist lawyers obliged to assume the responsibility will be left with a choice: be absorbed by an ABS or be engulfed by waves of new obligations and positions of responsibility imposed by OFR and the indecisive legal landscape.
Finally, if the Legal Services Board allows entity regulation to shape the future of the profession, what incentive will there be for solicitors to invest time in developing specialties when another firm will always find a more cost-effective way to deliver the same service? Even in the financial services industry, the knowledge and expertise of independent financial advisers and those regulated by the CFA and the CISI is being reassessed as part of the Retail Distribution Review to minimise the risk of negligent advice being given. This may have the ultimate objective of protecting consumers but also provides the professionals with an opportunity to prove their competencies in anticipation of a legislative and ethical overhaul. Lawyers, especially those as vulnerable as the specialist or the sole practitioner, are being given no such opportunity. The legacy of the legal practitioner is at stake and if the Legal Services Board fails to identify a solution other than the ‘reserved activity’, the ensuing convergence could signal the end of the specialist lawyer.
Adam Entwistle MSc. LL.B (Hons.)
Regulatory Compliance Assistant at LBS Legal.
Client Relationship Manager
T: 0113 385 4483
M: 07432 695 289
The Law Society has issued a practice note about the risks to solicitors posed by this new legislation, which came into force on 30 September.
The SRA has urged all practices to check HM Treasury’s consolidated list of asset freeze targets, which lists designated persons subject to financial sanction under EU or UK legislation.
The practising certificate renewal period opened on Monday 2 October.
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