On the 30th October 2017 the Legal Services Act 2007 (LSA) reaches its 10th anniversary. That seems an appropriate moment to pause and reflect on what has happened over the last 10 years and how the LSA has shaped the legal market in England and Wales and beyond. Over the next week we will be publishing 6 blogs, one each day looking at different aspects of the impact of the LSA written by the regulatory team at Kingsley Napley and also guest experts. We will also be looking forward to the next 10 years.
Forged just before the banking crisis, the LSA was seen at the time has highly revolutionary. Its most eye catching provisions allowed law firms to be owned by those outside the legal profession. These new types of firms are known as Alternative Business Structures (ABSs). It also transferred the complaints handling function from professional bodies to an independent Legal Ombudsman. Finally, the LSA re-cast the regulatory framework with an oversight regulator, the Legal Services Board, which could drive change within regulators, ensure that the representative functions of professional bodies was separate from their regulatory functions, and approve new regulators and new rules put forward by those regulators.
It is difficult to understate how radical these regulatory structures are compared to the rest of the world. The dominant regulatory model in both the United States and Europe is for the regulation to be carried out by a body that is also the representative body of lawyers in that jurisdiction. These bodies do not permit external ownership of law firms and generally are resistant to change. There are exceptions. New South Wales in Australia was a template for the LSA. Singapore has opened up its legal market as part of its push to be a regional and world legal hub. A number of Canadian Law Societies are exploring more liberal regulatory regimes including forms of ABS and entity regulation.
The question remains has the LSA delivered on its promise of radical change. Below is a timeline of events over the last 10 years. Many of these are momentous but we have not yet seen an Uber or Dyson moment when a new type of legal provider disrupts the market. However, this may be the calm before the storm. The rise of legal tech, such as artificial intelligence and blockchain, suggests that the moment of true disruption is coming. When it happens, the England and Wales regulatory model fashioned by the LSA is better placed to welcome these new providers within the regulatory tent. In other markets this disruption may well put the regulatory framework under strain.
- May 2007 – In Australia, Slater & Gordon become the first law firm in the world to go public
- 30 October 2007 – Legal Services Act (LSA 2007) receives Royal Assent. Sections 114 and 115 of the LSA 2007 establish the Office for Legal Complaints (OLC) and stipulate that the OLC must operate an ombudsman scheme
- 15 September 2008 – Lehman Brothers file for bankruptcy
- 1 January 2009 - Legal Services Board (LSB) comes into being: ‘Its overriding mandate is to ensure that regulation in the legal services sector is carried out in the public interest; and that the interests of consumers are placed at the heart of the system’.
- 17 July 2009 – Dianne Hayter appointed to Chair new Consumer Panel
- 11 December 2009 – LSB finalises Internal Governance Rules
- 1 January 2010 – LSB fully operational and takes on legal powers
- 6 October 2010 – the Legal Ombudsman commences accepting complaints
- 12 May 2011 - LSB makes a recommendation to the Lord Chancellor to make an order approving the Council for Licensed Conveyancers (CLC) as a Licensing Authority for its existing reserved legal activities thereby enabling it to license ABSs.
- 20 June 2011 – LSB makes a recommendation to the Lord Chancellor to make an order approving the application of the Law Society of England and Wales, to make the Solicitors Regulation Authority (SRA) a Licensing Authority.
- 6 October 2011 - CLC licenses Premier Property Lawyers as first ABS.
- 28 March 2012 - Cooperative Legal Service becomes one of the first ABS’ approved by the SRA.
- 27 April 2012 - Slater and Gordon awarded ABS licence
- July 2012 - LSB and OLC Triennial Review published with 5 recommendations
- 14 May 2013 - Lord Chancellor rejects the LSB’s recommendation to make will writing a reserved legal activity. A reserved legal activity is defined by section 12(1) and (3) of the LSA 2007.
- June 2013 - LSB announces investigation into the Bar Council’s failure to comply with the Internal Governance Rules in its dealings with its regulatory arm the Bar Standards Board.
- 25 November 2013 - LSB announces its findings: the Bar Council accepts all of the findings of the investigation and the outcomes. Matter to be resolved informally.
- 31 January 2014 – PwC gains ABS licence
- 6 March 2014 – LSB makes recommendation for the Institute of Chartered Accountants of England and Wales (ICAEW) to become the first non-legal Licensing Authority for probate services
- 29 April 2014 - Riverview Law granted ABS licence
- 8 August 2014 - Buckinghamshire Law Plus, made up of solicitors from Buckinghamshire County Council and Buckinghamshire and Milton Keynes Fire Authority becomes first local authority to receive ABS licence
- 1 October 2014 - KPMG granted an ABS licence
- 1 December 2014 - EY announces ABS licence.
- 1 January 2015 - Intellectual Property Regulation Board (IPReg) becomes a Licensing Authority
- 12 May 2015 – Gateley becomes first UK law firm to be publically listed
- 24 June 2015 - the Supreme Court upholds LSB’s decision of 26 July 2013 to grant a joint application to the Bar Standards Board (BSB), SRA and ILEX Professional Standards (IPS) for approval of alterations to their regulatory arrangements – R (on the application of Lumsdon and others) (Appellants) v Legal Services Board (Respondent)  UKSC 41
- 7 December 2015 - LegalZoom buys Beaumont Legal
- 13 January 2016 - Competition and Markets Authority (CMA) launches market study into legal services in England and Wales, predominately to ascertain whether they are working well for consumers and small businesses
- 30 March 2016 – BSB application to become a Licensing Authority for ABS’ approved by the LSB
- 8 July 2016 - CMA publishes interim report into legal services
- 11 September 2016 - LSB’s vision statement published proposing one independent regulator to oversee the legal profession. LSB calls for the new regulator to be independent from the profession and government
- 15 December 2016 – CMA publishes final report on the legal services market study. ‘It has found that competition in legal services for individual consumers and small businesses is not working well, and has made recommendations in order to address the issues that it has identified’
- 15 February 2017 – following representations by the SRA, the LSB launches investigation into whether the Law Society fetters the SRA’s independence
- 4 August 2017 - Gordon Dadds becomes the second listed law firm
- 11 September 2017 – the Chartered Institute of Legal Executives (CILEx) submits its application to license ABS’
- 21 September 2017 - Lord Chancellor rejects the ICAEW’s application to become an approved regulator and Licensing Authority for five reserved legal activities: the exercise of a right of audience, the conduct of litigation, reserved instrument activities, notarial activities and the administration of oaths.