LSB to tackle issue of regulatory costs
A survey is to be launched to ascertain whether or not regulation in the legal field is an unnecessarily costly burden.
The Legal Services Board (LSB) will be seeking answers from members of the profession in an effort to see what expense is associated with legal services regulation and what this impact has on the regulated community.
A number of bodies - including the City of London Law Society, the Law Society and the Bar Council - have previously complained about the cost of regulation.
Indeed, a previous study by the Law Society found that compliance was deemed to be excessive by 37 per cent of law firms, while 74 per cent reported an increase in paperwork as a result of regulation.
Another problem flagged up by the society is the fact that although the system is expensive for the profession to maintain, it gets little say in how the money is spent. This, in turn, hinders innovation in the legal profession.
What are the aims of the project?
The scope of the project is going to be very broad as it seeks to investigate the drivers of costs and have an informed debate on the topic. The LSB has set out five aims:
- Complete a detailed and thorough assessment of regulatory costs facing professionals
- Test the hypothesis that the regulation of legal services is unnecessarily expensive
- Carry out a high level investigation around the cost of regulators and LSB
- Identify common areas where providers can reduce compliance costs
- Gather evidence for policy makers and regulators to base future work on
"Effective, well-designed regulation plays a vital role in protecting consumers, businesses and employees," the LSB stated.
"However, some regulations may be unnecessary, overcomplicated or out of date. These regulations can waste providers' and consumers' time and money, and damage economic growth."
Giving legal services a voice
The survey is designed to give lawyers the opportunity to have their say on the cost of legal services regulation. It is an issue many are concerned about, with a study from 2012 showing that 58 per cent of law firms believe the burden of regulation is harmful to their business, up from 42 per cent in 2009.
Since outcomes-focused regulation was introduced in 2011 by the Solicitors Regulation Authority, there is a wide consensus that costs have increased, as only three per cent said the new regime is cheaper than its predecessor.
The majority of this added expense can be attributed to the need to fund two new roles - Compliance Officers for Legal Practice and Compliance Officers for Finance and Administration. On top of this, 66 per cent of firms also now find compliance more difficult.
According to the LSB, the only way the project can be successful is if a wide and diverse range of legal service providers give their views. While the cost of regulation faced by these groups will be looked at, a separate investigation is also going to be examine the expense of the regulators themselves.
What do you think the outcome will be? Is regulation too costly for the legal sector?