Legal Services Regulation in 2018 – 6 things to watch

12 January 2018

New Year is, of course, prediction season. Some commentators are placing bets on who will win the World Cup, others bullishly forsee FTSE highs and some are punting on whether Gary Oldman will win an Oscar for Darkest Hour.

Legal Services Regulation is no less ripe for crystal ballgazing. These are my 6 things to look out for in the year ahead:

  1. More fines involving Large Firms.  In 2017 the SRA found a way of imposing fines on large firms without the risk of major litigation.  We saw 4 cases come before the Solicitors Disciplinary Tribunal where a fine had been agreed in advance between the firm and the SRA.  These involved Clyde & Co, White & Case, Locke Lord and Clifford Chance.  We can expect to see similar cases in 2018 where both the SRA and firms are willing to agree a fine rather than face a greater risk to their reputation in litigation.
  2. Price transparency.  Price transparency remains the dark horse of legal services regulation.  In September 2017 the SRA published its proposals to make firms publish more information about costs on their websites. This along with other information to be published by the SRA, Legal Ombudsman and bodies such as the Land Registry, will then be available to comparison websites such as Price comparison websites could revolutionise the way law firms obtain work; particularly those with a consumer client base.  Is 2018 the year that they begin to take off with law firms taking them seriously?
  3. Ethics and Data.  January sees the publication of “Ethical Business Practice and Regulation” by Christopher Hodges and Ruth Steinholtz.  In my view ethical behaviour is the next big thing in regulation and enforcement action.  A further parallel trend will be the use by regulators, including the SRA, of data to drive its supervision and enforcement.  By mining their own data and the data that becomes publically available through the price transparency initiative the SRA will be in a better position to spot firms that sit outside the normal pattern and to focus its supervision on those firms.  
  4. Lack of Integrity.  There have been a number of recent cases that considered the meaning of lack of integrity.  Mr Justice Mostyn decided in Malins v SRA [2017] EWHC 835 that dishonesty and lack of integrity were the same.  However this view was subsequently rejected by Sir Brian Leveson in Williams v SRA [2017 EWHC 411 (Admin). However, who would bet against Mostyn J? His apparently heretical views on dishonesty in Kirschner v GDC [2015] EWHC 1377 (Admin) were upheld by the Supreme Court last year in the landmark case of Ivey v Genting [2017] UKSC 67. In February the Court of Appeal considers the question of lack of integrity in SRA v Wingate.  Malins is also before the Court of Appeal.  We can therefore hope to have some clarity around the issue this year.
  5. SRA Handbook is finalised.  In September 2017 the SRA published their proposals liberalising the way in which solicitors can practise including allowing them to provide services in companies not authorised by the SRA and regarding freelance work which could potentially allow uberisation of parts of the profession.  The Legal Services Board will need to approve these changes during 2018 when the consultation exercise is through.  By the end of 2018 we should therefore know what the future will look like and when it will arrive.
  6. Brexit, standard of proof and Leigh Day.  It is a bit of a cheat to include 3 different things in my last item.  It may be that the SRA’s appeal of its unsuccessful prosecution of Leigh Day will be heard in 2018.  If it is then it will generate headlines.  It is not clear at this stage as to whether any issues of wider principle are raised by the appeal.  On a different note, if the Solicitors Disciplinary Tribunal amends its procedure rules this year, the standard of proof in cases against solicitors seems likely to change to the civil standard. The Bar Standards Board agreed to adopt the civil standard at the end of 2017.   Finally, there is Brexit.  It is still not clear as to how the regulation of the legal services market will be affected by negotiations with the EU particularly in relation to practise rights in EU countries and free movement of services.  We may or may not know by the end of the year.

A shortened version of this blog first ran in The Brief on 9th January 2018.

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