Want to keep learning?

This content is taken from the University of Birmingham's online course, Corporate Lawyers: Ethics, Regulation and Purpose. Join the course to learn more.

Skip to 0 minutes and 4 seconds STEVEN VAUGHAN: Today, I’m in central London and standing outside the headquarters of the Legal Services Board, the overarching regulator of legal services in England and Wales. We’re going to go inside and speak with Caroline Wallace, the LSB’s director of strategy, about her views on legal services and on the future of legal services regulation. Caroline, thanks so much for agreeing to speak with us today. Can you tell us a little bit, please, about the work of the Legal Services Board?

Skip to 0 minutes and 28 seconds CAROLINE WALLACE: The Legal Services Board is the independent body that oversees the regulation of legal services in England and Wales. We hold to account the regulators for legal services, which includes the Solicitors Regulation Authority and the Bystanders Board. But we also have a very important role in driving positive change in the sector to achieve a modern and effective legal services market that better meets the needs of consumers, while also functioning in the public interest.

Skip to 1 minute and 0 seconds STEVEN VAUGHAN: And what would you say is the purpose of legal services regulation? Who is it there to protect?

Skip to 1 minute and 5 seconds CAROLINE WALLACE: Well, I think that’s a very interesting question, and we think there are two reasons. Firstly, there are some very important public interest outcomes that we’re asking the legal services sector to deliver. Those are things like the rule of law and effective and efficient administration of justice. Secondly, there is inherent power and knowledge imbalance between consumers and practitioners in this sector. That’s why laypeople consult experts who have specialist knowledge. But when there is that kind of power imbalance, consumers are particularly vulnerable. For example, it’s very hard for them to know about the quality of the service that they’re receiving.

Skip to 1 minute and 49 seconds Also, it’s possible in those circumstances for a single rogue practitioner to undermine the profession and the reputation of the profession as a whole and to actually deter consumers from buying legal services.

Skip to 2 minutes and 3 seconds STEVEN VAUGHAN: What would you say are some of the biggest challenges that you face as a regulator?

Skip to 2 minutes and 7 seconds CAROLINE WALLACE: Since the Legal Services Act was passed in 2007, the pace of improvement from a consumer’s point of view has been really quite slow. There are some indications of things getting better. There is a little bit more shopping around. There is slightly better transparency of prices. But the changes have been very small, and the pace of change is very slow. Other things which create challenges for us as an oversight regulator is the number of separate legal services regulators that we oversee. I think it’s eight or nine. And they cover a really greatly differentiated sector with barristers, solicitors, but also notaries, and legal executives and there are licensed conveyances, and intellectual property lawyers as well.

Skip to 2 minutes and 51 seconds So it’s a great diversity amongst the community that we oversee. And last but not least, one of the challenges that we’re facing is the Legal Service Act 2007 in itself. And we very much support the need in the case for a thorough overhaul of that legislation.

Skip to 3 minutes and 8 seconds STEVEN VAUGHAN: If we could talk a little bit more about the Legal Services Act– how challenging do you find it when there are eight objectives in an act, and those objectives aren’t ranked?

Skip to 3 minutes and 18 seconds CAROLINE WALLACE: Having clear regulatory objectives is obviously very important for a regulator. They set the boundary and purpose for the regulators work. And there is no doubt about it that eight regulatory objectives, which aren’t in any kind of hierarchy, do make it difficult for a regulator. It makes it difficult to know what you should focus on. I’ve been in regulation for many years, and I think experienced regulators are used to resolving tensions between different regulatory objectives. That’s often what regulators are doing across the economy. And it can allow greater flexibility.

Skip to 3 minutes and 55 seconds STEVEN VAUGHAN: The LSB is said to be independent of the government and of the legal profession. What does that mean?

Skip to 4 minutes and 1 second CAROLINE WALLACE: What that means is that our regulatory decisions and policy development are free and seemed to be free of undue influence from both government and the profession. And it’s achieved through our statutory framework and our funding in governance arrangements. Independence from government has a special significance in the legal services sector as you can imagine. Because citizens who are in dispute with the state need to know that their legal representative is not being controlled by the state. That’s one key element– absolutely critical element– of the rule of law.

Skip to 4 minutes and 39 seconds STEVEN VAUGHAN: So next year is 10 years since the anniversary of the Legal Services Act 2007. What would you say are the benefits the act has brought over those 10 years?

Skip to 4 minutes and 48 seconds CAROLINE WALLACE: The Legal Services Board carries out an evaluation of the market every three years to see how well the regulatory objectives set out in the Legal Services Act are being achieved. Our latest evaluation was published earlier this year, and its main findings were that there are positive developments in terms of competition but very slow pace of improvements in outcomes for consumers. In terms of access to legal services, the research shows that the same proportion of people are taking action when they’re faced with a legal issue, but more consumers now than in the past are handing their matter alone rather than seeking advice, which is a cause for some concern.

Skip to 5 minutes and 30 seconds More positively, the data shows that the quality of legal services has been maintained since the market was liberalized and even, in many areas, has actually improved. So that’s encouraging.

Skip to 5 minutes and 41 seconds STEVEN VAUGHAN: If we think about the future, how do you think the Legal Services Act could be changed for the better?

Skip to 5 minutes and 46 seconds CAROLINE WALLACE: The key elements of what we’re suggesting are, first of all, that there should be one overarching regulatory objective, which is to safeguard the public interest by protecting consumers and ensuring the delivery of outcomes in the interests of society as a whole. Another element of what we’re proposing is that there should be activity-based regulation according to the risk of the activity being undertaken, rather than the current blanket regulation by professional title. We think there should be full regulatory independence from both government and the profession, which is something that the Legal Services Act doesn’t achieve.

Skip to 6 minutes and 24 seconds They should also be an independent sector-specific consumer voice for the sector given the special nature of the sector and importance of hearing the consumer perspective. And last but not least, to deliver all of that, we think there should be one regulator for all of legal services rather than the current fragmented multi-regulator approach.

Skip to 6 minutes and 45 seconds STEVEN VAUGHAN: How do you think the legal services landscape might look in the future? Do you think it’s going to be very different from what we have today?

Skip to 6 minutes and 52 seconds CAROLINE WALLACE: Absolutely. I think it’s probably going to be very different. And many commentators agree on that, although they disagree about the details of what it might look like. For me, I would highlight the impact of changes in technology and changes in consumer behavior across the economy, which are certainly going to be felt in legal services just like they’re felt everywhere else. And that includes the rise of a desire among some consumers to, what we would call, “self-lawyering.” But there are also market changes going on, which will have quite an impact I think. Things like the erosion of traditional professional boundaries– in the past, I think a solicitor was a solicitor.

Skip to 7 minutes and 32 seconds And a barrister was a barrister, and never the twain shall meet. And we are seeing more legal disciplinary practices, more multi-disciplinary practices right across different professional groups. I think lawyers will face a more challenging and businesslike environment for a lot– not necessarily all– but a lot of the work that they do as well.

Skip to 7 minutes and 49 seconds STEVEN VAUGHAN: So I’d like to end with a rather open-ended question. Next week in the course, we’re going to be looking at lawyers ethics. And so my question is this– how would you describe an ethical lawyer?

Skip to 7 minutes and 59 seconds CAROLINE WALLACE: Well, I like Potter Stewart’s take on ethics. And what he said is that ethics is knowing the difference between what we have a right to do and what is right to do. And that seems quite profound to me. Ethics are obviously critical for lawyers, and they’re something we, at the LSB, believe in passionately. Lawyers are in a position of trust, and they also have wider duties to the public interest, which we’ve mentioned earlier in the interview and to the court. So all legal services regulators including the LSB have a regulatory objective of promoting and maintaining adherence to the professional principles. And the Legal Services Act goes as far as setting out those professional principles in statute.

Skip to 8 minutes and 47 seconds And they cover things like acting with independence and integrity, proper standards of work, acting in the best interest of clients, maintaining confidentiality, and respecting the duty to the court. So ethics are actually enshrined in my view as part of the legal framework for regulation of legal services, and I think it’s critical to remember that there is no inherent conflict between being and acting as an ethical lawyer and market liberalization. Our research here at the LSB has shown that since the market was liberalized there has been no collapse in professional ethics. And in fact, things like some of the quality indicators and quality of services provided are improving.

Skip to 9 minutes and 31 seconds And some of the new business structures are better, for example, at complaints handling than traditional firms.

Skip to 9 minutes and 36 seconds STEVEN VAUGHAN: That’s great. Thank you so much for your time.

The legal services board

Watch this video in which Steven talks to Caroline Wallace, Director of Strategy at the Legal Services Board. See if you can connect the discussion to the issues in the regulation of legal services we have already looked at on this course.

Caroline Wallace leads the LSB’s policy, research, statutory decision, investigation and enforcement work. She is responsible for producing the LSB’s strategic plan and ensuring that the LSB’s strategic priorities are reflected across all the LSB’s activities. She joined the LSB in 2014 from the Competition Commission (now the Competition and Markets Authority). She spent nearly nine years at the Competition Commission as an Inquiry Director, where she was responsible for merger and market investigations under the Enterprise Act, and led investigations in a very wide range of sectors, including transport, chemicals, food, financial services, IT and construction. Before the Competition Commission, Caroline spent five years at Oftel, as the Chief Engineering Advisor, and then at Ofcom where she was a Director of Competition Policy. Prior to joining Oftel, Caroline worked in the private sector in telecoms and manufacturing.

Reflect on any new information or ideas and share your thoughts with other learners in the comments area.

Share this video:

This video is from the free online course:

Corporate Lawyers: Ethics, Regulation and Purpose

University of Birmingham