The Law Society has admitted to its council that the Government could remove its disciplinary powers by 2005
This would be the most severe blow to the Law Society since the Government wrested control of Legal Aid from it in 1989.
The Lawyer has seen a letter from the Lord Chancellor, Lord Irvine to Law Society chief executive Janet Paraskeva, stating that the Government is profoundly worried about the Law Society's complaints-handling record.
The Law Society's admission follows a subsequent threat from the Lord Chancellor to increase the powers of the Independent Legal Services Commissioner, the former head of MI5 Sir Stephen Lander, who was appointed in July.
On Thursday 5 December, Law Society Council members will vote on whether to purchase a new £23.5m building in the Midlands to relocate its complaints-handling staff to a single site.
Law Society backbenchers are expected to vote against committing the extra money in light of the Lord Chancellor's damning letter, which many council members have seen.
In a paper proposing the new Midlands building, the Law Society makes the gloomy admission that it may need to be sold in the event of the Government taking away its disciplinary powers.
The paper reveals that the Government will review the overall regulatory sector for legal services and introduce new measures by 2005.
It then goes on to state: "Even if the Government were to make different arrangements for part or all of our regulatory functions, the likelihood is that they would take existing staff and premises. This is what happened when the Government took over responsibility for legal aid from the Law Society in 1989. To the extent that the Government did take over the premises the Society would of course have assets which could themselves be leased or sold."
A spokesperson for the Office for the Supervision of Solicitors said: "This debate follows a decision in October to allocate an additional £21m to enhance the Law Society's regulatory work. This substantial investment will be used to improve the turnaround of complaints, step up our monitoring of firms subject to significant numbers of complaints, and enhance the Law Society's work against dishonesty.
"The continual enhancement of the Law Society's regulatory work is very high on its agenda, as is a commitment to self-regulation."