Examination of Witnesses (Questions 1-19)|
25 FEBURARY 2009
Chairman: Welcome. Thank you for being
here early so that we are able to start early; Wednesday is always
a busy day for Members! We welcome you to your new responsibilities,
some of which will not kick in effectively until 2010, so if I
can tease you with a question, which does not imply that any of
this is your fault, here you are running an organisation whose
name suggests it is in charge of all sorts of things that it is
not in charge of and is easily confused with the Legal Services
Boardthe Legal Services Commission
Alun Michael: Exactly!
Q1 Chairman: I make my point! You
are sitting on top of an apparatus of regulation: how on earth
are you going to make any public coherent sense of this?
David Edmonds: The easy answer
is with a degree of difficulty because the Legal Services Board,
the Legal Services Commissionthe nomenclatures of the numbers
of organisations that are active in this areadoes give
rise to potential public confusion. I think a more complex answer
to your question, the real answer to your question, is that, as
you know, Chairman, I have spent a lot of time in the last six
months building a board and starting to build an organisation;
so much of my individual focus has been on putting together a
high-quality board and recruiting some high-quality staff. What
we now need to do is move into the second phase of our life, because
it is only since 1 January that we have had a degree of independence
in how we run ourselves; until that time we had been working in
effect at the Ministry of Justice. We now need to set out very
clearly what we propose to do. I think that the document that
many of you have seen, which is our first draft business plan,
gives you a clear idea of the detailed work that we propose to
focus on. For the first three, four or five months, we need to
produce a consultation document on independence of regulation
as against representation within the regulatory authorities. We
need to produce material on alternative business structures and
how we begin to broaden the whole question of access to justice.
We need to start giving some clear ideas on how we will raise
the levy to fund what we do. We have a coherent business plan
with a lot of actual work that we are going to do. I totally accept
that, until the second tranche of powers comes our way, on, hopefully,
1 January 2010, there will be a degree of sucking and seeingputting
stuff out and waiting for reactions to come. However, we do have
some powerswe have some rule-making powers, and we have
produced, I hope, good, intelligent consultation, and we can talk
in a very wide and comprehensive way to the stakeholders.
Q2 Chairman: How are you getting
on with the professions which have up until now conducted regulation
while also serving as, if you like, trade unions and having this
mixed role, and view you with some apprehension?
David Edmonds: They have not shown
apprehension. That is not meant to be a flippant reply. In my
first six to eight weeks as Chair, I talked individually to the
chairmen, the presidents, the secretaries, the directors-general
of all of the regulatory bodies, the smaller ones as well as the
larger ones, who fall within the compass of the Legal Services
Board. Basically, I have established a personal relationship with
many of the key players already, as indeed I have with many of
the key players on the consumer organisations that I also went
to see. We have conducted a series of discussions and meetings.
We had an extremely interesting and productive workshop only a
week ago on the question of alternative business structures with
the Solicitors' Regulatory Authority. We agreed to put together
a project team to look at how we might drive that work forward.
What we have tried to doChris, my team, myself and my Board,
is to talk to the approved regulators, both at principle level,
and increasingly in a more detailed way, about how we might work
together. As I know, because I have spent seven years of my life
as a regulator, there is an interesting interface between the
regulator and the regulated bodies. It is much more effective
if one can work together and plan a route through, always with
the interests of the consumer at the heart of what we do, than
if you get into a confrontation and conflict zone. So far, so
good; but regulators and regulatees always fall out!
Chairman: An interesting doctrine!
Q3 Alun Michael: I am sorry, all
these changes of organisations are quite confusing, but your experience
in regulation was pre-convergence of Ofcom, was it not?
David Edmonds: Yes. For five years
I was the single regulator for telecommunications. I then worked
with my colleagues to set up Ofcom, and I spent two years on the
board of Ofcom, so I spanned telecoms and the whole communications
Q4 Alun Michael: For the outside
members of the general public and the innocent Member of Parliament,
there are two things that it is almost impossible to get inside:
one is the legal profession in its diversity and capacity for
self-protection; and the other is the generality of the criminal
justice system. Can you say in one sentence what you are for?
David Edmonds: What I am here
for and my board is here forthe only difference between
being a single regulator and having a board is just thatwhat
we are here forcan I tell you in two sentences?
Q5 Alun Michael: Just, if they are
David Edmonds: Okay, I will work
my way through it. What I am here for is to provide for the consumers
in England and Wales an assurance that the regulatory regimes
by which the legal profession conducts regulation are conducted
in a way that gives proper protection to the consumer and are
conducted in a way that means there is real independence in the
regulatory arms as distinct from the representative function within
the approved regulator.
Q6 Alun Michael: I think part of
the problemI do not know if I can speak for my colleagues,
but it is certainly my experience that everything that looks as
if it is going to do proper regulation of the legal profession
ends up being internalised.
David Edmonds: Yes.
Q7 Alun Michael: You have just spoken
about building good relations with people. I know you have to
work with them, but that sounds as if you are disappearing inside
the protected environment again, does it not?
David Edmonds: No. If it does,
I would withdraw from that. I am absolutely clear that the first
set of real discussions that we have with the approved regulators,
particularly the Law Society and the Bar Council, will be to do
with the issue of the independence of the regulatory function
within those organisations. We will be producing within a relatively
short space of time a consultation documentyes, we have
to consultwhich will be quite clear, with our views on
independence. So there is no question of us disappearing or no
question of regulatory capture; there is no question of us not
being absolutely clear what we think is right. We have to make
the rules by which the regulators apply the separation within
their own organisations. What happened, though, Mr Michael, is
this Act, which is 330 pages long: it is a very complex piece
of legislation that Parliament has presented me with and I have
to try and make it work. I think making it work needs a nice balance
of working with and being quite clear that we do not fall into
that hole that you have just described.
Q8 Alun Michael: I think that is
right. The reason that I ask you to say it in two sentences is
thatI asked for one but you got fairly closeis that
if people are coming to us about issues, we have about one sentence
to say: "This is the person who will do X, Y and Z".
I am concerned that having read all the stuff here about what
you are going to doI am not sure that I could replicate
that. For instance, when you refer to the clarity of the draft
business plan, I am sure that we would all agree that putting
the consumer and public interest at the heart of the system would
be a good idea. Widening access to the legal marketquestion
mark! Improving service by resolving complaints properly: that
would be a really good idea and a big step forward; developing
excellence in legal services regulationthey are very, very
high-level objectives. Then, when you say what you will do, you
go straight into "subject to resources being available"
in appointing the consumer panel. Personally the consumer panel
may be a useful adjunct but it does not sound as though it is
at the cutting edge of doing things. What difference are we going
to see within a year or five years as a result of the activities
of you and your board?
David Edmonds: Can I make a quick
remark about the consumer panel? I do not think the consumer panel
is a useful adjunct; I think the consumer panel is absolutely
central to what we do. The consumer panel is a vehicle by which
you get focus inside on to the board about what you should be
doing and total concentration by the panel on the interests of
the consumer. You also get the research that the consumer panel
will commission. I do not see it as an adjunct; I see it as a
central part of what we do. You asked me what would be different
in a year. I hope that within a year we will be able to see clarity
in the separation of the regulatory and representative functions
within the two principal regulatory authorities. Within a year
you will see the starting up of the new complaints organisationand
you talked to Elizabeth France a few weeks ago, and we are responsible
for building that with her. Within a year, I hope you will be
seeing the first rule book, the first rules coming out on how
alternative business structures might come in to the market place.
To some extent this sets out our targetor to a large extentbut
I hope you will see some improvement. The ordinary consumer, the
person in the street, may not see a lot of difference in a year.
Over five years we hope to see numbers of organisations coming
in to the market place to provide legal services of decent quality
and of reasonable cost. We hope to see a complaints machinery
that will deal promptly and quickly with consumer complaints,
offering redress. I hope you will see a freeing up generally of
the market place and the ability of people to do things in different
kinds of way. I hope you will see an expansion of access to justice.
Again, I spent four years on the Legal Services Commission; I
am very conscious that for that sector of the population who are
not entitled to legal aid and do not have significant chunks of
money, access to justice is often seriously constrained. There
are obviously fine words in here, and I hope you would expect
that because it is an aspirational document. I hope that within
five years we will have made a difference.
Q9 Alun Michael: I have a couple
of specific questions because, like the Chairman, I am slightly
puzzled about the potential confusion of the name. Will you regulate
prosecutors, or oversee the regulation of prosecutors?
David Edmonds: No. We regulate
Q10 Alun Michael: That is right;
that is why I said, "regulate or oversee the regulation".
David Edmonds: In so far as a
prosecutor is a barrister or a solicitor and has a practising
certificate which comes from the Bar Council or the Law Society,
we will be regulating the Law Society and the Bar Council.
Q11 Alun Michael: Do you think it is
clear enough what prosecutors ought to be doing? What do you think
of the prosecutor's pledge, for instance; what do you think of
the plethora of advice and guidance that is produced for the lawyers
that work in that field by the Crown Prosecution Service?
David Edmonds: Can I ask my Chief
Chris Kenny: We do not, as the
Chairman implied, have any formal role in monitoring or overseeing
the CPS; effectively our role is constrained to looking at the
approved regulators under the Legal Services Act rather than the
Q12 Alun Michael: The reason I am
asking the question is that for the ordinary members of the public,
if you are overseeing legal services, one of the most important
services is the lawyers who work within the Crown Prosecution
Service or are commissioned by it, to deal with cases coming before
the courts. Are you saying that is outside your ambit?
Chris Kenny: I am saying that
we would catch it only indirectly, in so far as, if they fail
in their performance and their own professional regulator is in
some way remiss in picking up any problems there, we would then
deal with the professional regulator.
Q13 Alun Michael: So they have to
individually prove to be pretty bad before it gets anywhere near
your ambit of responsibility!
Chris Kenny: Yes.
Q14 Alun Michael: You said in the
submission that you expect to employ 35 high-quality full-time
staff, and you have referred to this and I am sure we are delighted
that high quality is being underlined in that way; but it is still
a very small number compared with 120,000 lawyers practising in
England and Wales. How did you arrive at that number?
David Edmonds: I arrived at it
on the basis of a lot of work that had been done by the Ministry
of Justice before, while the legislation was going through Parliament;
they hired teams of consultants. The organisational design I have
come up with with the Chief Executive is quite different from
what was envisaged as the bill went through Parliament. I came
up with it because there was a budget envelope within which I
had to work. I also came up with it because of my experience of
working in other regulatory agencies where I knew the quality
of the top team was the key. I am dealing with the Bar Council
and the Law Society: these are extremely
Q15 Alun Michael: Quite good at looking
after their own interests!
David Edmonds: I would not say
that. I know they are very bright people who know the law backwards,
and I need quality people who can relate at that kind of level.
It was a mixture of working within a resource envelope, and a
mixture of trying to put together a team that has sufficient expertiseit
will have sufficient expertise in the law, in economics, in competition
theory and in consumer; and then working in project teams. I am
trying to build something that is very much like a high-class
consultancy services' organisation. I want to put teams together.
I have a great board and we have used it in a very different way
from how regulatory boards are normally used. I have no idea in
real life whether what I am pitching forI know what I am
building in the first yearwill be enough, too few, in the
longer run; but I have to work within a resource envelope, and
that is what I have done.
Q16 Alun Michael: Talking about the
resource envelope, you have an implementation budget which has
increased by £800,000 from £4.1 million to £4.9
million. How did that come about? How will the money be raised?
How will you ensure that it does not fall back on the consumer
at the end of the day?
David Edmonds: I am consulting
at the moment. This is a consultation on moving from that number
to the higher number. At the moment the whole organisation is
posited on the number that is given to Parliament, which is the
£4.1 million. What I have said is that I would like the resource
to go up to that higher level. It increased for a variety of reasons
to do with the timing of when we took on accommodation and new
space; a different mix of people; and, above all, because the
original estimates did not include what I believe are the adequate
resource for building a consumer panel and doing research. When
you add all of those up, there is a difference. Howeverand
this is the point I really would like to emphasisethe overall
envelope, which includes the creation of the new complaints machinery
of £19.9 million, Elizabeth France and I have talked about,
and we are quite clear that were the consultation to come back
with a view that our budget should move by about £600/700/800,000
it would be constrained within the overall envelope. Who pays?
At the end of the day the approved regulators pay because the
set-up costsagain ministers and Parliament decidedshould
be clawed back from the sector by means of a levy. In due course,
the consumer pays the fees for people who pay the levy; so I suppose
at the end of the day the answer to your question is that some,
if not all, of this will flow back into the charges that are made
into the community. The alternative is public expenditure and
taxation, and Parliament has decided it is a levy.
Q17 Alun Michael: Can I be clear
about those figures? You are saying that effectively there is
agreement to increase your budget by £800,000, and that would
come out ofso the sum would be reduced in terms of the
resources available for the Office for Legal Complaints.
David Edmonds: In effect, yes.
Q18 Alun Michael: Will that constrain
the work of what effectively is the doing bit?
David Edmonds: I think I would
say that we are a doing bit as well. My expectation is that it
is not. I have to say that I do not have a set of numbers that
I can go through with you and say we do 4.9m and the complaints
machinery does whatever the balancing factor is, and that is how
it will be made up. We are not far enough in the construction
of the new organisation. Elizabeth France, though, as you are
aware, has previous experience of setting up a complaints and
ombudsman machinery, and between the two of us we think we can
do it, there is, I have to say, a little bit of putting your finger
in the air and hoping that it comes out right.
Q19 Alun Michael: That is very honest,
and we will watch how your finger develops! Can I ask about the
clarity for people who need the benefits of regulation, whether
it is by complaint or by confidence? What requirement is there
for the approved regulators to make consumers in the wider sense
aware of the existence of functions of the Legal Services Board,
and perhaps even more directly important the Office for Legal
Chris Kenny: I think you have
highlighted exactly the right area. Signposting to the Office
for Legal Complaints is far more important than to the Board,
and I hope that at the end of the day consumers will see the benefits
of what the Board has achieved. I do not think there is any particular
benefit in consumers knowing precisely what we do, and our precise
constitution. In relation to the OLC
1 Note by witness: All CPS Associate Prosecutors
will need to be regulated by an approved regulator, in many cases
the Institute of Legal Executives, by 2011. Back