What you need to know about the Clementi Review

The recommendations of the Clementi Review have the power to affect both the way in which you are trained and the profession that you ultimately join. Peter Wright, former chair of the Trainee Solicitors Group (TSG), writing in 2005, explains why.

In December 2004 Sir David Clementi finally concluded his wide-ranging review into the provision of legal services. The potential consequences of his findings had the potential to bring about the most significant wave of change to the legal profession in its history, and create a markedly different landscape. What was the reason for the review, what happened in the short term and how did it  affect future entrants to the profession?

Why?

The reasons for the review stem back to Labour's election victory of 1997. The government carried out comprehensive reviews and subsequent reforms in numerous public and private sectors in its ensuing eight years in power. For example, the provision of financial services was radically altered by the creation of the Financial Services Authority (which the coalition government has since abolished and replaced with the new, ostensibly tougher, Financial Conduct Authority).

It's no secret that, as lawyers, we routinely receive bad press and are frequently put in a similar bracket to politicians and estate agents by the media.. Consumer groups in particular used to take issue with the way that the profession is self-regulatory. As things stood, a client complaint would pass through the ranks in a firm until the partner who dealt with complaints or the practice manager made a decision on its merits. If the client remained dissatisfied, he/she could then take the matter to the Law Society.

However, the labour government identified 23 individual regulators of legal services. These include:

• the legal services complaints commissioner, an office created in October 2003 by the lord chancellor at the time, Lord Falconer;
• the lord chancellor himself;
• the master of the rolls;
• service regulators, such as the Council for Licensed Conveyancers; and
• large purchasers of legal services like the Legal Services Commission, which technically instruct lawyers how to operate.

However, the Law Society is still a body created and run by the profession, and the public perception has always been that the handling of complaints is a 'closed shop', with lawyers looking after the interests of other lawyers.

The review

The government felt that it had to do something to correct this general perception. Sir David Clementi was commissioned to carry out a wholesale review of the provision of legal services in England and Wales. The brief he was given was total. Not only did he look at reforming the way the profession was regulated, he considered the fabric of the profession itself, specifically in relation to legal disciplinary practices (LDPs, where solicitors, barristers and/or legal executives set up together) and multi-disciplinary practices (MDPs, where solicitors or other legal professionals, and accountants or other non-legal professionals set up together).

It is important to remember that the review covered the provision of all legal services, not just those offered by solicitors, barristers and chartered legal executives. The activities of patent agents, licensed conveyancers, will-writers and trademark attorneys were all considered by the review and could consequently be subject to wide-ranging reform.

The consultation process

A consultation paper was produced, setting out the various issues under review and inviting responses from all interested parties. Three regulatory models were considered:

• Model 'A' would, at a stroke, replace the Law Society, the Bar Council and the Institute of Legal Executives with a single "super regulator". The Legal Services Authority would regulate the provision of all legal services, in the same way that the Financial Conduct Authority now governs the financial services sector. 
• Model 'B' would affirm the status quo, with the Law Society, Bar Council and CILEx still dealing with regulation, representation and training, but with an additional upper tier created to review their actions. The Legal Services Board would act in a similar way to the (now defunct) Strategic Rail Authority in the way it oversaw the running of the rail network.
• Model 'B+', a variation of Model B, would see the professional bodies devolving representation from their regulatory functions. 

The TSG/YSG joint response

The Law Society produced a response to the consultation paper, but both the TSG and the Young Solicitors Group (both of which have since been replaced by the Junior Lawyers Division of the Law Society) wanted to make their own statements on the potential future running of the profession. By joining forces and producing a joint response, the groups were able to set out a unique position on behalf of the combined membership of 104,000.

A joint working party created a thorough response to the consultation, coming up with its own unique 'Model A-'. The crux of the solution was that a Legal Services Board (LSB) should oversee the other professional regulatory bodies, dealing with complaints and discipline within the profession. The Law Society, Bar Council and other professional bodies would retain their regulatory and enforcement functions, and continue to be responsible for training and standards. However, these bodies would no longer carry out the dual function of regulating and representing the profession. Separate, independent professional bodies would be created to protect the interests of solicitors, barristers, licensed conveyancers and others. LDPs and MDPs, it was hoped, could also flourish under the authority of the new LSB.

The conclusions of the Review

Clementi essentially concluded his review by following a version of B+, which took on board many of the recommendations in the TSG/YSG response. The LSB would become a reality, while an Office of Legal Complaints would also be established.

In effect, the LSB would be an independent legal services regulator accountable to parliament. It would promote the interests of consumers and the public over the interests of legal services' providers. While not reaching conclusions on quite such a radical scale as those envisaged by Model A, Clementi acknowledged that, rather than starting from scratch, the system at the time needed effective reform. Crucially, the LSB would be run by a majority of non-legally trained staff, while both its chairperson and CEO would come from non-legal backgrounds.

The Law Society, Bar Council and other professional regulatory bodies would have to separate out their regulatory and representative powers as envisaged in the TSG/YSG response (which prompted the creation of the Solicitors Regulatory Authority (SRA) and the Bar Standards Board (BSB)).

The Office for Legal Complaints would function under the supervision of the LSB. Meanwhile the legal services ombudsman and the legal services complaints commissioner would also be abolished, removing some of the current regulatory maze that consumers find so confusing.

LDPs would be permitted, with a general code of practice to be agreed and enforced by the new LSB. Non-lawyers would be able to become partners in these businesses. Clementi saw LDPs as being the acid test, with their success allowing for the possibility of MDPs in the future, provided adequate regulation is in place.

Consequences

Following Clementi's recommendations, the government established the LSB as a new ‘super regulator' for the legal profession. However, regulation of the legal sector has not run entirely smoothly since due to well documented tensions between the LSB and the profession's other regulators, including the BSB and SRA. The LSB has argued that these frontline regulators operate inconsistent codes of conduct and should be streamlined. Meanwhile, the LSB has itself been criticised as a vehicle by which the government may impose controversial policies to overregulate the profession and bring it in line with neoconservative ideology, such as in the cases of the legal aid cuts and the Quality Assurance Scheme for Advocates, which proposed the introduction of ‘plea-only advocates' who are only able to enter guilty pleas on behalf of their clients. Another example is the current widespread opposition among lawyers and regulators to the LSB's legal education and training framework, and its proposal to invoke statutory powers to bring the frontline regulators into line with is vision.

Ultimately, the regulatory framework underpinning the legal profession remains deeply problematic.

Peter Wright is the current president of the Yorkshire Union of Law Societies and former chair of the TSG. He is also the managing director of DigitalLawUK.