Justice Committee Contents

Examination of Witnesses (Questions 40-49)


25 FEBURARY 2009

  Q40  Mr Heath: Will you be assessing the consequence of that to the whole provision of legal services, because one of the concerns that some of us have is that this may have a perverse consequence of reducing the scope for small practices, say in rural areas, to be viable. Is that something that will be part of this?

  David Edmonds: Absolutely. The analysis you have just described is one that we will do. We cannot invent the new alternative business structures. When I say that we are an advocate, we are an advocate for the principles. We will look at how it can be done, where it can be done and the impact of what happens. At the end of the day, though, it will be the market responding to a different set of rules, to a different environment, to different constraints, which I think will produce the ideas and thoughts and mechanisms for this moving forward. Again, one cannot predict in two to three years' time, or I cannot predict, what will emerge. We will see many of the interesting things that are happening at the moment in terms of the provision of legal services through telephony, through the Internet—you can download legal documents, agreements of various kinds, at the moment. How all of that emerges and how all of that develops is going to be fascinating. It is at the heart of much of what we are going to do.

  Q41  Mr Heath: You can have as much telephony and Internet and the rest of it as you like; it still does not represent you when you are up before the magistrates' court on a wet Wednesday afternoon!

  David Edmonds: Absolutely correct, and when you—sorry, one—appears before court on whatever day of the week, they need the confidence that whoever is going to be representing them has the skills, and has had the advocacy training and everything else. That, of course, is for the approved regulators and for the bodies who currently apply discipline and standards. There is a whole lot of stuff in this legislation about our ability—indeed our duty—to promote high standards, to work with the profession. In Mr Michael's early questions, he touched on how we could do it, and there is an awful lot that we are still just scratching the surface of. If one reads the legislation carefully, our ability to be constructive—this constructive challenge—but our ability to also talk about good practice, our ability to set the rules by which the regulators work, give us great influence. What we must not become is an organisation that interferes for the sake of meddling; we really do want to establish principles and good practice, and drive out good ideas, rather than be a bunch that sits on the top allegedly nit-picking. We are trying to think about this in a different kind of way. It is an experiment in developing a regulatory agency. I think it can work—I am sure it can work.

  Q42  Mr Heath: One of the things you say in the annual report as part of your business is, "We expect to see a shift in the power balance from the professional provider/client relationship to an empowered consumer/commercial provider relationship". Do you see that across the whole sector, and what does that really mean in terms of the way that your high-street solicitor or indeed your barrister in private practice actually operates?

  David Edmonds: I do see it across the sector. I see it as—again, if I may be honest—a very aspirational sentence for us to put in. I cannot answer the last part of your question because I do not know, but I do know that if we have that as an aspiration that underpins our actions and the proposals we make, and which underpin the challenges that we make to the professionals, we can move towards that. Chris has already talked of that. We, and the approved regulators, share exactly the same objectives. Parliament has given the approved regulators exactly that same set of objectives that we have: public interest, access to justice, rule of law, the interests of the consumer, competition—they are set out there and are explicit. The Law Society and the Bar Council have an objective, set out in the legislation, to encourage competition in the provision of legal services. The Bar Council and the Law Society may not necessarily have seen that as one of their objectives in the past. If we can articulate the debate around this set of principles and this set of aspirations, I think we can make progress. Perhaps ask me back in five years or whenever, and we can look back! As of now, I make no apology for being highly aspirational in the material we are putting forward because it gives me, the Board and our staff an intellectual, if you like a principal framework on which to do our everyday work.

  Q43  Chairman: The suggestion was that alternative business structures would include banks and insurance companies providing legal services. Are you really going to go out on a limb and start advocating that banks should extend their activities in this area in the current circumstances?

  David Edmonds: The easy answer is to say "no"—of course that would be a daft thing to do at the moment. I think the right answer to the question, though, is: if we can produce, working with the approved regulators, a set of principles by which access to the legal sector may be brought about, and if those kinds of institutions felt there was an opportunity that they could take up, one would not necessarily say at this stage it will not—I do not think they will because from my conversations in another capacity with banks at the moment they are too busy doing other things—I do not know where the new provision will come from. People constantly talk about Tesco and indeed I have talked to people from the Co-op, which runs a very good legal advice service, as far as I can see. Professional law firms are already building different ways of talking to consumers. You can get advice if you have an insurance policy with somebody from a professional—there are all sorts of areas that are emerging. If we can take away some of the restrictions and put in some of the incentives through de-restriction, who knows where it will come from, Chairman!

  Q44  Chairman: I hope we have not forgotten that professional law firms have found very innovative ways of accessing consumers in mining areas, and several of them took vast sums of money from miners who suffered terrible illness and suffering.

  David Edmonds: I know. We have not forgotten that at all.

  Q45  Chairman: You realise that regulation in this area certainly—relaxing regulation does not sound an attractive concept after that experience.

  David Edmonds: I think much of the last few months has shown that relaxing regulation in other areas has not necessarily been—indeed it has often not been—in the consumer interest at all. I am not sure what I am talking about is relaxing regulation. What I think I am talking about is creating sets of rules and principles which provide for the effective regulation from the outset of new bodies coming in to the sector. I am sorry, but I am not an expert on miners, but we have clearly looked at it and we clearly are conscious of what has happened. It seems to me that we have a responsibility to ensure that as new ways of providing legal services come in to the market place, the approved regulators have a framework for properly and proportionately regulating that activity. I am genuinely not talking about relaxing stuff for the sake of relaxing it; it is making sure there is an effective regime in place so that new business can be regulated properly from the start.

  Q46  Chairman: Are you going to finish up regulating LloydsTSB and Tesco?

  David Edmonds: If LloydsTSB and Tesco were to decide to create a venture which wanted to provide alternative business structures, alternative ways of providing legal services, and if they apply for a licence, which they would have to do ab initio to the approved regulator, which I guess in this case would be the Law Society, we would be responsible with the Law Society for ensuring that the set of rules by which the new entrant was regulated was effective and provided proper and proportionate regulation, yes. Have I got that right?

  Chris Kenny: Yes.

  Q47  Chairman: So you have to succeed where the FSA failed!

  David Edmonds: I am not going to answer that, Chairman!

  Q48  Chairman: In your business plan you state that making a legal career accessible for all with the necessary ability is an important part of the wider access to justice agenda. I am sure we agree with that, but what has that got to do with you? What responsibilities do you have which assist in making a legal career accessible?

  Chris Kenny: There are two relevant duties, Sir Alan. One is one of the regulatory objectives which talks about encouraging a strong, independent, effective and diverse legal profession, with a duty that is on both us and the approved regulators. We also have a duty to assist in setting standards and maintaining high standards in relation to education and training. In policy terms, I would say that both of those duties come from a recognition that you will get better access to justice if citizens believe that the legal profession they are interacting with mirrors the social and ethnic diversity of the UK population. I think it will help in encouraging fresh thinking and fresh imagination about alternative business structures. Some of the progress we would hope to see would come from the role the Chairman has described in relation to getting the building blocks in place to allow new business structures to emerge; some of it will come from what I was talking about in acting out a fulcrum/pivot/catalyst or whatever, around debate on workforce and training issues, where there certainly appears to be scope for fresh thinking. Undoubtedly the panel on fair access to the profession that the Government has set up in recent weeks and which will report before the summer, will have a very important part to play in advancing work in this area, and we want to work very constructively with the panel in doing that.

  Q49  Chairman: Thank you very much. Mr Edmonds, Mr Kenny, we are grateful for your attendance this morning. We will obviously be in contact with you as your work develops, and it will probably not be five years before we call you back again!

  David Edmonds: My contract is only for three years! Thank you for the opportunity to come and talk to you; we appreciate it.

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