In-house inside the ropes?

A key recommendation within the recently published report is that all providers of legal services should be registered with and regulated by a single regulator.

The report highlights the fact that there are currently multiple front-line regulators within the legal services sector, overseen by the Legal Services Board.

This is viewed as being “cumbersome” and confusing for clients and consumers alike.

The report accordingly recommends that the existing system be replaced with a single body, suggested as being the ‘Legal Services Regulation Authority’.

It further recommends that in-house legal professionals and legal departments be regulated by such an entity, so that an in-house legal department could be subject to the same regulatory obligations as any other registered provider. As such:

“Lawyers and others who wished to be part of an in-house team would therefore know that they would be joining a fully regulated legal department where their input as a qualified, independent and regulated individual is likely to be valued and respected as such.”

Comment

Whilst there are no current proposals for a review of the Legal Services Act 2007, the report raises a number of pertinent issues, including the regulation of in-house functions.

As it recognises, an increasing volume of lawyers (approximately 20%) and legal services are to be found in in-house settings and there are a number of potential benefits in being regulated.

When the client for legal services is also an advisor’s employer, tensions with the principle of independent legal advice are clearly to be expected

Professional in-house advisors may benefit from a strengthening of their ability to maintain their “professional independence, ethics and standards and not bow to any organisational or commercial pressures to modify their advice to make it more palatable to their internal clients“.

Regulating in-house legal departments would also signal their additional duties and responsibilities, over and above those that are not regulated.

Further, in-house counsel, at senior level and with a recognised and valued independent voice, may assist in ensuring effective corporate governance and additional scrutiny of decision-making.

The nature of extent of regulatory oversight would need to be carefully mapped out.  There will inevitably be situations where decisions at board level and actions made on behalf of an organisation could conflict with regulatory obligations and require regulatory action. The report comments that:

About the author

As with other members of Blake Morgan’s Regulatory Group, Delme is a regulatory specialist with a particular expertise in the regulation of the legal profession.

Delme has advised the Solicitors Regulation Authority (SRA) on a wide range of matters including intervention challenges, investigations, proceedings before the Solicitors Disciplinary Tribunal and judicial review proceedings.  He provides support to regulators, organisations and individuals undergoing investigations and enforcement action.

Delme regularly advises individuals and organisations facing SRA investigation and prosecution and is able to assist at all stages, from providing initial support through to advocacy at a hearing

If you are a legal professional or organisation requiring specialist advice and support, please contact Delme Griffiths or James Danks.