Legal Services Bill reveals a few shocks

Accountants and other professions will be given legal professional privilege if they work in partnership with lawyers under the terms of the Legal Services Bill.

The shock news is one of the few major changes announced on Friday 24 November to the draft legislation which was originally published in May this year. It follows scrutiny to the draft bill by a joint committee of Parliament.

Announcing the new legislation at a press conference on Friday, the Lord Chancellor Lord Falconer described the bill as “reform with a vision: to put people first”.

Falconer said the Government’s aim had always been to create a legal services environment that would benefit consumers.

He admitted that the changes caused by the bill could put some smaller firms out of business. “It’s difficult to predict what the effect will be. It could make some firms less profitable than they otherwise might be,” said Falconer, adding that firms have a choice about taking up opportunities offered by the bill.

The major clauses of the draft legislation have been maintained, with the bill providing for the establishment of an oversight regulator in the guise of the Legal Services Board (LSB), a single complaints-handling body called the Office for Legal Complaints, and also allowing alternative business structures (ABSs).

The current frontline regulators, including the Law Society and Bar Council, will be approved as regulators under the new system automatically. Frontline regulators will have to apply to the LSB for permission to regulate ABSs.

The LSB is to be made up of a chairman, a chief executive and between seven and 10 other members. It will have to have a lay majority.

Despite concerns raised by the joint committee about the independence of the legal profession, all board members except the chief executive will be appointed by the Lord Chancellor.

Falconer said the selection process is similar to that of other regulatory authorities such as the Financial Services Authority, where members are chosen by the Chancellor of the Exchequer, and that it would not hinder the profession’s independence.

The costs of the new system and transition costs will all be borne by the legal profession.

The bill had its first reading in the House of Lords on Thursday 23 November. It is expected to receive Royal Assent next summer. It will take up to 18 months after that for the new system to be implemented.