20 YEARS OF THE LAWYER: REGULATION
5 December 2007
7 February 2007
10 August 1996
2 April 2007
11 October 2003
13 October 2006
Woolf, Clementi, the Legal Services Act… The impact of regulation on the profession has been immense, from the Courts and Legal Services Act introduced by Lord Mackay in 1990 to the Woolf reforms in 1999 and, most recently, the passing of the Legal Services Act in 2007.
There have been massive changes to how the legal profession is run.
It is only now that commentators can reflect on what impact Woolf and Mackay have had on the profession. Indeed, it will be some time before the full implications of the Legal Services Act can be recognised.
Courts and Legal Services Act 1990
The Lord Chancellor at the time, Lord Mackay, introduced the Courts and Legal Services Act in 1990 following a sustained period of debate and lobbying within the profession. The act allowed solicitors rights of audience in the higher court, which had previously been only allowed to barristers, and also introduced conditional fee arrangements (CFAs).
Initially it was the solicitors’ rights to audience that sparked controversy in the legal world. Barristers claimed a monopoly on the High Court that solicitors were unable to break. The legislation was aimed at opening up the bar and making it much more transparent.
But, says The Law Society’s director of government relations Russell Wallman, it failed to have the far-reaching implications that were originally intended.
“The change in the law was good at the time,” he explains. “Although there were plenty of barristers working in the House of Lords, and the bar had great influence on that level, they were able to put in a lot of exemptions into the act and suddenly it became a very complex piece of legislation.”
So complex, in fact, that many solicitors were discouraged from facilitating it. Today the Solicitors Regulation Authority (SRA) is looking into the area in an effort to simplify the system.
The implementation of CFAs was intended to bring access to justice for all. During the late 1980s there had been a string of national disasters, including Hillsborough and the Zebrugge ferry and he Lockerbie disasters. Prominent figures such as personal injury lawyer Rodger Pannone started to emerge as they fought for the right for victims’ compensation.
“The CFA scheme was a fair arrangement,” says Wallman. “At the time a lot of people were saying that the Government planned to restrict access to justice by driving out legal aid. But it didn’t make sense to restrict how a case can be funded unless it’s for ethical reasons. It was ridiculous for it be improper to allow solicitors to charge a fee.”
Lovells litigation partner Graham Huntley says changes to the way in which solicitors could fund cases were instrumental in making today’s profession.
“The most major changes come in the area of funding,” he explains. “The gradual move towards CFAs, the later relaxation of the indemnity principle and the introduction of success fees has had a huge impact.”
But the CFA regime also sparked the rise of the controversial claims management companies.
“Claims management companies became a solution to a problem that no longer existed,” says Wallman. “It made sense to have them when solicitors were seen as being unfriendly in the 1980s, but by the 1990s that wasn’t the case and solicitors were much more client conscious.”
It is an area still in turmoil today. Litigation fees have escalated and the number of cases reaching the High Court has dwindled.
The Woolf reforms
In April 1999 the Woolf reforms came into force. The new civil procedure rules (CPR) were designed to reform the way civil claims were pursued in the courts.
“Lord Woolf was instrumental in the radical review of the litigation system,” says past president of The Law Society Fiona Woolf (no relation). “Everything was pulled into the spotlight. The review acted as a catalyst to allow us to look at litigation with a new set of eyes, and that had implications for other areas.”
Allen & Overy (A&O) head of litigation Andrew Clark adds: “The Woolf reforms were brought in as a reaction to a number of things. Cases were becoming too risky and too costly. There were some practical reasons for it too. For example, litigation cases in a county court could be worth anywhere between £5,000 and £5m. It was necessary to streamline cases by their worth.”
Upon reflection, leading lawyers say the reforms had the opposite effect to what was originally intended – speeding up pre-trial procedure and reducing the cost of litigation.
Neil Kinsella, chief executive at Russell Jones & Walker, says: “Woolf brought about contingency fees and there was a huge incentive to weed out the bad cases. Or so you thought. Woolf and the introduction of CPR opened the room to The Accident Group and Claims Direct. Rather than weeding out the bad cases, those lawyers were allegedly pulling in the bad cases.”
“We’d all have liked the reforms to achieve greater efficiency,” Fiona Woolf adds.
SJ Berwin commercial litigation partner Tim Taylor goes a step further. “Woolf has had the opposite effect for access to justice,” he states. “Today it’s not worth going to court unless you have very deep pockets.”
However, the reforms have also had a positive impact. “Clearly Woolf has made a difference, and not just because it’s helped to push down the number of cases that come to court,” says Clark. “Pre-Woolf, disclosure was much more limited than it is today – parties have to focus on the wider issues up front. You didn’t disclose in the same way and you weren’t forced to consider mediation.
“Today firms proactively do more work up front and you have to be more thorough and think about your reputation.”
“I would hope that there’ll be a Woolf reform part two,” says Fiona Woolf. “The reforms have achieved efficiency, but there’s room to build on that.”
The Legal Services Act
The removal of the Lord Chancellor Derry Irvine in 2003 opened the floodgates to new legislation governing the profession.
“There had been very little constitutional reform up until Irvine was sacked,” says Holroyd. “We’d reached a point were the pressure for reform had reached breaking point.”
Under Irvine’s successor, Charlie Falconer, the profession has entered its greatest period of regulatory change to date.
“There’s no doubt that, during his time, a lot of reform was instigated,” says Holroyd. “A lot of that work needed to be done in partnership with the profession. He set up a cross-party joint committee on the Legal Services Act when it was first discussed – that hadn’t been done before.
“It was a model in how legislation should be brought forward and the outcome is a piece of legislation that will serve the profession for another two decades.”
The working party on reform, led by Sir David Clementi, produced a Legal Services Act that was not without its own controversy. The Lord Chancellor was to be given unprecedented powers to appoint members of the new regulator, the Legal Services Board (LSB). The profession responded with alarm at the prospect of the politicisation
The joint parliamentary committee established to examine the first draft of the bill published a scathing report on the original proposals.
Lord Hunt of Wirral, formerly senior partner at Beachcroft, said at the time: “If the Government seeks to establish the Legal Services Board as an arm of government,
it will come to regret it, as will the country.”
Plans to allow non-legal firms to set up alternative business structures (ABSs) were slammed for being rushed and not properly thought through. And there were serious concerns about what it could mean for access to justice.
“The LSB was given wide and draconian powers,” says Fiona Woolf. “They could almost be seen as micro-managers and they could only act if they were called upon. Falconer had always promised a light-touch regulator.”
Since the initial Clementi report was transferred into the Legal Services Bill, The Law Society and the Bar Council have lobbied hard to get it amended.
“We have Lord Hunt and Lord Kingsland to thank for the fact that they never gave up on this legislation,” adds Fiona Woolf.
“Today,” says Wallman, “the main worries have been taken away. The LSB will be a light-touch regulator and the Government’s done a lot to guarantee the independence of the LSB. That’s removed the main fears.”
The Courts and Legal Services Act 1990 had more in common with the Legal Services Act than it first appears. The Law Society blocked a change in the law that would allow building societies to give conveyancing advice. According to Wallman “The Law Society thought it would be dangerous to have building societies both lending money and giving legal advice.
“Whether or not the building society would be able to provide that service under the Legal services Act is another matter,” he continues. “There are conflict rules in place to prevent any potential conflict from arising.”