Activity Based Regulation versus Professional Identity: Some thoughts on the LSCPs thoughts on…

The Legal Services Consumer Panel has published its thoughts on the early stages of the Legal Education and Training Review. Their point of view can best be summed up in the following quote:

“The system is failing because it tries to train the typical lawyer, when in reality there is no such thing. The legal market is simply too diverse to sustain the general practitioner training model any longer. Future education and training system should be built around an activity – based authorisation regime for individuals and entities. This reflects that different legal activities carry varying levels of quality risks for consumers and so different competency thresholds are needed.” (4)

Also, the panel restates its belief in regular reaccreditation “for at least the higher quality – risk areas of law”. Associated with this is a strong belief that, “it makes sense to give employers the freedom to determine the shape of their workforce and demonstrate to their regulator they are ensuring employees are appropriately trained and supervised.” Equally, however, because “incentives of employers are not always aligned with the needs of consumers” they also needs to be authorisation requirements for individuals.

Improved CPD is advocated based around an approach where individuals, in dialogue with their supervisors, formulate training needs and respond to those rather than simply ensuring they accumulate the necessary powers or points.

I would like to concentrate on the implication that “as divisions between branches of the profession fall away, the need to retain different entry routes becomes harder to maintain”. In particular, the emphasis on activity-based regulation over identity-based regulation is an important ongoing debate. To stimulate competition, encourage diversity and assure competence without increasing cost of the consumer, both the Legal Services Consumer Panel and the Legal Services Board appear to favour activity-based regulation over the traditional approach which has emphasised, in particular, the status of professional qualifications as the badge of competence in the market for legal services.

There are a number of good reasons for proceeding on an activity-based approach. One is that legal services are, at root, currently regulated on an activity-based logic. It is through reserved legal services (putting immigration to one side) that restrictions on who can provide those services is placed. Ironically, much of the solicitors’ profession’s work, in particular, falls outside of reserved services requiring their regulation. Similarly, the market has shifted towards a much higher degree of specialisation. Specialisation has been built around particular activities (although in the commercial sphere an approach which seeks to serve particular clients or client types has also emerged which cuts across particular types of activity). Specialist accreditation schemes have been developed around legal aid and other areas of work again – an activity-based model. Such an approach also fits with one of the core findings from research on the quality of legal work. There are a number of studies which have repeatedly shown that specialisation, rather than professional qualification, is the stronger proxy for good quality advice, assistance and representation.

A difficulty with activity-based regulation, is how does one decide which activities should be regulated? Specialisation may be fluid. Community care law, for instance, has emerged relatively recently. Specialisation also reflects both an attempt to secure market advantage through distinguishing oneself as different from the bulk of a particular market. Thus, medical negligence emerged as a separate specialisation from personal injury. White-collar crime emerged as separate from ordinary criminal defence. Not all specialisations aim at ‘higher end’ work. Firms specialising in motoring work have also emerged cultivating particular client groups alongside a reputation for particular expertise. Regulators keen to regulate in this activity-based way need to keep up with such market developments, spot potential risks to consumers and be able to adapt training and regulatory regimes to cope. A key question will always be: how many activities? There will come a point quite quickly when someone will urge the regulator: go on then, count them up. The LSCP is aware of the problem as its document shows; but the solution to the problem is less clear.

A system which specifies which areas require specialist knowledge, designs a training regime appropriate to that need and then assesses competence and repeats this across a number of different specialisations is, from the point of view of regulatory design, one requiring considerable thought and investment. The closest we have come was in relation to legal aid franchising/contracting requirements. These tended to concentrate on supervisor requirements and, even then, were criticised for bureaucracy/cost implications (though they did improve quality). That is not to say the idea is a bad one; I reiterate that specialisation is the closest thing we have a reliable indicator of quality in the legal services market.

Similarly, one should not criticise the idea of activity-based regulation simply because it will not be able to encompass all new developments. After all, the current regulatory regime is very much based around a general model that specifies the courses on the degree/GDL and legal practice/bar professional training courses followed by a modest specification of on-the-job training thereafter. Some movement towards how law is practised on the ground and towards proper assessment of competence must be a good thing, done proportionately. There is, however, a real complexity issue where activity-based regulation is sought to be laid upon an already complex mixture of professional regulators. The consumer panel appears to see a withering away of relevance for professional titles. To reiterate, they see a “growing fusion between different branches of the profession” and, “as divisions between branches of the profession fall way, the need to retain different entry routes becomes harder to maintain.”

The problems of regulatory complexity and the apparent trajectory of market reform towards the blurring, and probable removal, of traditional professional distinctions means that our current system of regulation cannot last for long. We effectively have a system where activity-based regulation may be overlaid onto an already complex set of front-line regulators who elect in or out of seeking accreditation for each of the activities. The regulatory maze that concerned Clementi and at least one Legal Ombudsman before him suddenly looks like a Labyrinth. If the suppliers can cope and the consumer does not have to understand it then this may not matter. The Panel seeks to overcome the consumer problem by suggesting a uniform badge for all regulated legal advisors. The supplier problem I think is more acute; unless there is a strong central regulator, regulatory arbitrage may be acute and damaging to competition (not to mention professional reputations if the regulators and representative bodies continue to try and fight each other to a standstill).

There is, also, a broader concern to the weighed in the balance when one considers activity-based versus identity-based regulation. Both moral psychologists and Durkheimian sociologists can point to the importance of “belonging” to a social group in encouraging members of that group to behave ethically. In the field of legal services, evidence of such an ethics affect is rather hard to find; indeed, there is some evidence to the contrary; but in broader society such bonds have been shown to yield higher levels of altruistic behaviour. The ethics affect is thought to be built on in-group loyalty; I am good, so the notion goes, because it helps the interests of the group which I live or work within.

It may be that because different sections of the legal services sector are effectively fighting it out in the marketplace that in group loyalty becomes more self-interested and less altruistic. It may also simply be the case that market economics squeezes out professional altruism. It is not difficult to see how the current level of mistrust being exhibited between the criminal bar and criminal defence solicitors could diminish ethicality on both sides. If one side perceives the other to be getting away with poorer quality or ethics or having too much market power, then they can feel vindicated in lowering their own standards to catch up.

An alternative approach would be to actively and positively advocate a fused profession with one code and reputation to defend, with multiple specialisms and levels within it. It would still be complicated but it would be less complicated. That profession would need to be independently regulated, of course and one can well imagine the bureaucratic rivalries, not to say practical barriers, that would stand in the way of its creation. As part of the mission would be to establish a professional identity which practitioners could both believe in, and compete within, the success of such an Institution is not easily envisaged. It is difficult to see, the Bar and Solicitors, in particular, overcoming historic rivalries and reputations, to down swords and come together as one profession. Yet, there are benefits to identity based regulation which might yet be retained.


About Richard Moorhead

Director of the Centre for Ethics and Law and Professor of Law and Professional Ethics at the Faculty of Laws, University College London with an interest in teaching and research on the legal ethics, the professions, legal aid, access to justice and the courts.
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One Response to Activity Based Regulation versus Professional Identity: Some thoughts on the LSCPs thoughts on…

  1. Pingback: UK Blawg Review #10 – Part 2 « Charon QC

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