The Mazur judgment sent a shockwave through the legal regulatory system, causing huge uncertainty for many individuals and firms, whose established ways of working were suddenly called into question. While we await with interest the outcome of the forthcoming appeal decision, it also reinforces our long-held view that it is time to shake up the 2007 Legal Services Act (LSA).
CILEx Regulation has been doing what it can to support those affected through this challenging time. Since the Legal Services Board (LSB) approved our application to allow legal executives to obtain standalone litigation rights at the start of November, we have authorised over 650 to conduct litigation on their own account. We are confident that a high proportion of those chartered legal executives wanting acquired practice rights will have them by the spring.
But the time is ripe for reviewing the regulatory framework. The current framework – the LSA – was a product of its time, introducing semi-independent regulators from a self-regulatory structure that was in some parts decades-old. It is clunky and complex. There are an oversight regulator and eight separate regulators that vary enormously in size. Regulation is based on historical activities rather than current risk. Both regulated communities and consumers lack confidence in the system. Tension in the system has been exemplified by failing high-profile firms and rising complaints to the ombudsman. Moreover, the LSB has taken enforcement action against both the Solicitors Regulation Authority and the Bar Standards Board.
In addition, consumers are more diverse, demanding and want to access services in new ways. The market has also been transformed. Our research into the unregulated legal services sector in 2024 found that unauthorised providers represent about 10% of legal services. This share is growing in areas such as personal injury and conveyancing, and for some groups, such as small and medium-sized businesses. Consumers’ understanding of what is and is not regulated is patchy, too. Above all, AI is revolutionising how legal services are provided and by whom.
What are the building blocks of a new regulatory framework? The following are critical.
Regulatory independence: the LSA model is increasingly at odds with the regulatory model in other sectors, such as health, and in most professional services where regulators are independent, operating under their own legislation. In legal services, there are blurred lines of accountability. Old membership bodies still have residual functions. The Commons justice committee said in its letter to the lord chancellor in 2024: ‘The Legal Services Act 2007 does not appear to provide a stable long-term framework for the regulation of the legal professions. The committee is concerned by the amount of discord and dysfunction between the approved regulators, the regulatory bodies and the LSB.’
Risk-based: legal regulation is based on title, not risk. This results in many key consumer activities, such as will-writing and estate administration, being unregulated by the LSA. It also means that chartered legal executives – who are highly qualified with years of experience – cannot perform tasks such as lodging a document with the Probate Registry unless they have secured additional probate practice rights. A new framework should be based on the inherent risk of the activity.
Proportionality: the regulatory framework needs to recognise and cherish the differences between multinational City conglomerates through to single practitioner firms. In areas such as economic crime and ethical standards, we must not apply a one-size-fits-all approach but be proportionate in our requirements. Firms would then have the capacity to meet client needs and innovate rather than being tied up in red tape. We need the LSB to assess the costs of its rules before mandating them on regulators. We also need to promote innovation. We set out plans (‘Law Firm in a Box’) four years ago to help people set up new companies more easily and guide them through the steps required to ensure regulatory compliance. We hoped to promote more competition and innovation, and also help groups underrepresented in the law set up new firms. We are committed to returning to these plans as part of our current strategy.
Transparency: accountability is central to regulators’ success. Regulators should be as transparent as possible. Over the last three years, CILEx Regulation has overhauled its approach to make nearly all board papers accessible before meetings, and to invite comments. For the first time, we consulted publicly on our draft Corporate Strategy. With more than 20,000 viewing our webinar, this figure comfortably exceeded the number we regulate.
Conclusion
The next few months will see a renewed focus on what the law requires of litigators, and what the LSB’s role is in the regulatory landscape. We welcome justice minister Sarah Sackman’s announcement that the government has launched the first independent review of the LSB in nearly a decade. In this period, there have been significant developments in the legal services sector, along with the rapid growth of lawtech.
But I think we should go further. There is a real opportunity to shape legal regulation in a way that: puts consumers’ interests first; is independent of professional bodies’ interests; builds a shared evidence base; and creates a regulatory framework that is fit for the 2030s and not rooted in the last century.
Jonathan Rees is chair of CILEx Regulation Ltd
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