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Draft Legal Services Bill - Comments by the Bar Standards Board

Introduction

1. The Bar Standards Board came into existence on 1st January 2006 to regulate the Bar. The Board has a lay Chair, Ruth Evans, and 7 of the Board’s 15 members are lay persons. All the members of the Board were appointed on merit in accordance with Nolan principles. The Chair and many of the other lay members have extensive experience of regulation and corporate governance. The barrister members are not and may not be members of the Bar Council. A brief biography of the Chair and a list of the Board’s members is at Annex 1. 

2. The Bar Council has delegated all of its regulatory functions to the Board including, without limitation, responsibility for: (1) qualifications and conditions for entry to the profession; (2) all aspects of training; (3) the setting of standards for those practising at the Bar; (4) the determination, amendment, monitoring and enforcement of rules of professional conduct; and (5) investigation and prosecution of complaints against barristers and students.

3. The Bar Council and the Inns of Court have agreed that, although entitled to be consulted, they will not have the right to review the decisions and regulatory arrangements made by the Board.

4. Reporting to the Board are four new regulatory committees. These committees also have significant lay membership. They are:

The Rules Committee
The Conduct Committee
The Qualifications Committee
The Monitoring Committee
Details of the roles and terms of reference of these committees are at Annex 2. 

5. In regulating the Bar, the overriding aim of the Board is to act in the public interest and to protect the interests of the consumers of barristers’ services.

6. Since its inception, the Board has focussed on establishing its own identity and in developing its principles, working practices and strategy. Among other matters:


The Board’s Attitude to the Bill

7. In general the Bar Standards Board supports the proposals reflected in the draft Legal Services Bill. In particular, the Board supports:


8. The Board has no comments to make at this stage on the provisions of the draft Bill relating to Alternative Business Structures. 

9. There are some respects in which the Board believes that the draft Bill can be improved. The Board’s main concerns relate to:

10. We develop each of these two points below.

(1) The Powers of the Legal Services Board

11. The Bar Standards Board considers that the “Model B+” statutory framework recommended by Sir David Clementi in his Review is the appropriate model for the regulation of legal services and will best serve the interests of consumers. In particular, the Board believes that this model has the ability: to combine the advantages of lay input and scrutiny with utilisation of the knowledge and practical experience of members of the profession; to provide regulation of a higher quality at a lower cost than any other model; and to sustain both the support of the profession and the confidence of the public.

12. In order to ensure that these benefits are achieved, however, the Board believes that two points are critical:

13. The Board further believes that these points are closely connected. As Sir David Clementi wrote in his report1:

"If the LSB is to remain an oversight regulator, and have only a small staff itself, it has to have confidence that the underlying regulatory boards are satisfactorily constituted.”

Conversely, if the LSB is satisfied that an underlying regulator is satisfactorily constituted and has appropriate governance arrangements in place, the occasions when the LSB would be justified in interfering with the substantive decisions and regulatory arrangements made by that regulator ought to be correspondingly rare2. 

14. The Board has considered the draft Bill with these points particularly in mind.

Proportionality

15. The draft Bill confers on the LSB a wide range of powers and sanctions. The Bar Standards Board accepts the need for the LSB to have these powers, but only on the basis that they are to be exercised only where absolutely necessary.

16. The draft Bill contains some very limited safeguards in this respect by providing that the most extreme powers available to the LSB (taking over the exercise of a regulator’s function by making an “intervention direction” or cancelling a body’s designation as an approved regulator) may not be exercised unless the LSB is satisfied that a regulator’s failures cannot be adequately addressed using other powers available to it3. There is also a general duty on the LSB to “have regard to” principles which include the principle that regulatory activities should be proportionate4. But the Board does not consider that these provisions are sufficient to ensure that any use of the LSB’s extensive powers is matched to the severity of the harm which necessitates intervention, and is targeted appropriately.

17. The Board suggests that the Bill should include an express duty on the LSB to exercise each of its powers in a proportionate manner and only when necessary.

Clause 24

18. The Board agrees that the powers of the LSB should include a power to set performance targets. However, the draft Bill does not require the LSB to consult the regulator concerned before this power is exercised – in contrast to the provisions relating to the exercise of other powers5. There should be an obligation on the LSB to give formal notice to an approved regulator and consider any representations made before any performance target is set which the regulator is to be required to meet under this section. 

Clause 25

19. Clause 25 is an important provision of the draft Bill since it specifies the circumstances in which the LSB may give a direction to an approved regulator requiring it to take particular steps. The Bar Standards Board has two concerns about this clause as it is currently drafted:

20. Taking the latter first, the Board is concerned that clause 25(1)(d) as drafted does not give the LSB sufficient power to make sure that the governance arrangements of an approved regulator are satisfactory and comply with best practice.

21. If, for example, the Bar Council were to permit barrister members of the Bar Standards Board to be involved in the representative functions of the Bar Council, then it is clear that clause 25(1)(d) in its current form would give the LSB the power to issue a direction requiring the Bar Council to remedy the position. But if, for example, the LSB considered that the Bar Standards Board was too large or too small to carry out its functions effectively, or had an insufficient number of lay members, or that it was inadequately resourced, it is far from clear that the LSB would have the power to make any remedial direction.

22. The Board suggests that consideration should be given to amending this provision so that it corresponds to Schedule 5, paragraphs 14(2)(a) and 14(3), by inserting the additional words underlined below:

“to ensure that it has appropriate internal governance arrangements in place for the performance of its regulatory functions and in particular that the exercise of its regulatory functions is not prejudiced by any functions it has in connection with the representation, or promotion, of the interests of the persons regulated by it”

23. We also consider that the Bill should provide for the LSB to publish a statement setting out the criteria which the internal governance arrangements of an approved regulator should satisfy with respect to the performance of its regulatory functions. Consideration should be given as to whether or not, if the change recommended above is made, this point will then be sufficiently covered by clause 41.

24. Provided that the regulator has satisfied the criteria for independence and good governance laid down by the LSB, then the LSB should be permitted to interfere with the detailed regulatory arrangements made by that regulator only in limited circumstances. The Board does not consider that clause 25(1)(a), as currently formulated, is sufficient to achieve this.

25. The Board agrees with the Bar Council that clause 25(1)(a) ought to be qualified so as to make it clear that the power to make a direction may be exercised only if the failure to perform to an adequate standard is of such a degree that it has caused or is likely to cause substantial harm to the regulatory objectives. 

26. The same point applies to clauses 28(1)(a), 30(1)(a), 34(3)(a) and 38(6)(a).

Alterations of regulatory arrangements

27. Provisions concerning alterations made by an approved regulator to any of its regulatory arrangements are set out in Schedule 5, Part 3 (pp.111-115). As this is drafted:

Every alteration of whatever kind, and however trivial, to any of the “regulatory arrangements” of an approved regulator requires approval from the LSB, unless the LSB decides to exempt the alteration from this requirement6;
Unless the LSB decides to approve the alteration within an initial decision period of 28 days (or fails to deal with the application), an elaborate decision procedure will ensue which may take up to 12 months (or 18 months if the period is extended) to complete.

28. The Bar Standards Board believes that these provisions are unduly cumbersome and liable to impede or delay change and innovation. They are also inconsistent with the policy of allowing properly constituted and independent front line regulators freedom to regulate. A perverse result of the legislation as currently framed is that the LSB has much greater power to intervene if a minor rule amendment is proposed than if existing rules are simply left unchanged.

29. The Board considers that the powers of the LSB to restrict amendments which an approved regulator decides to make to its regulatory arrangements ought to correspond to the LSB’s powers to require an approved regulator to alter its existing regulatory arrangements (and to be similarly circumscribed).

(2) The Handling of Complaints

30. From 1st January 2006, the Bar Standards Board took over from the Bar Council the handling of complaints about barristers. The Board has appointed a new lay Complaints Commissioner, Mr Robert Behrens, who took up his post on 1 June 2006. Mr Behrens was formerly a senior civil servant in the Cabinet Office, and most recently (since 2003) served as Secretary to the Committee on Standards in Public Life7.

The Board’s complaints system

31. A description of the current complaints system is at Annex 3. The Bar Council has in the past achieved high satisfaction ratings from the Legal Services Ombudsman8. However, the Board is concerned to ensure that the system complies with best practice and has asked its new lay Commissioner to undertake a comprehensive review of the current system and to make recommendations as to how it can be improved.

The proposals in the draft Bill

32. The Board has focussed on whether the Office of Legal Complaints (OLC) can be expected to provide a service for handling complaints about barristers that operates in the best interests of consumers. Notable features of the Bill as presently drafted are the following:


Characteristics of complaints about barristers

33. There are two general characteristics of complaints about barristers which should be borne in mind when considering the proposals in the draft Bill.

34. First, most complaints about barristers involve issues of professional misconduct as well as consumer dissatisfaction. This reflects the nature of barristers’ work, most of which is court-related. Because a barrister’s conduct in court is closely regulated both by rules of law and by rules of conduct, issues of misconduct are particularly likely to arise in this context. It may be helpful to give some examples of some common types of complaint about barristers’ services:

35. In these and many other situations which give rise to complaints about barristers, issues both of proper professional conduct and potential redress are involved (and often are inextricably interlinked). Under the system administered by the Board, both aspects are determined through a single process. Where a complaint is upheld, the appropriate disposal is likely to involve both ordering redress to the complainant and disciplining the barrister concerned.

36. Second, if the OLC deals with all legal complaints, complaints about barristers will represent a tiny fraction of its caseload – less than 3% on present figures9. In these circumstances it may be difficult for a large organisation, which is dealing with many thousands of complaints, as the OLC will be, to achieve the same expertise and efficiency of performance in dealing with complaints about barristers as an organisation which is dedicated to handling such complaints.

Questions

37. In considering the complaints system proposed in the draft Bill, the Bar Standards Board has focussed, in particular, on three questions:

The appropriate criteria

38. To answer these questions, the Board has first sought to identify the criteria which a system for handling complaints about barristers should meet. It has then considered the system proposed in the draft Bill against these criteria.

39. The Board has identified the following criteria:


40. For the reasons explained below, the Bar Standards Board believes that the system proposed in the draft Bill, as currently formulated, fails to meet these criteria in a number of significant respects.

Independence

41. As can be seen from Annex 3, the complaints system which the Board has taken over from the Bar Council makes provision for substantial lay input into the determination of complaints about barristers. For example, all complaints are considered initially and investigated by a lay Commissioner; and no complaint may be dismissed by the Conduct Committee without the agreement of a majority of the lay members. However, Sir David Clementi concluded that the system current at the time of his report, under which the representative professional bodies (such as the Bar Council) were responsible for handling complaints, did not provide sufficient independence from the legal practitioner10. We agree with that view. At the same time, we see no reason in principle why the necessary independence cannot be achieved by a regulator approved under the Act.

42. Provided that an approved regulator is able to satisfy criteria for independence and best practice laid down by the LSB, we see no reason why such a regulator should be disqualified from handling complaints – any more than it should be disqualified from performing other regulatory functions.

Consistency

43. As mentioned, most complaints about barristers raise issues of misconduct as well as consumer dissatisfaction. To separate the determination of complaints from the determination of questions of misconduct, as proposed in the draft Bill, therefore creates a risk of inconsistent decisions.

44. For example, in determining a complaint the OLC might decide that the barrister’s conduct was improper and not in accordance with the Bar’s Code of Conduct and grant redress on this basis. There may then be a disciplinary proceeding in which a panel decides that the barrister’s conduct was in fact appropriate under the Code of Conduct. If this happens, the barrister and the complainant will both have a justified grievance and the system will be brought into disrepute.

45. No attempt appears to have been made to grapple with this problem in the draft Bill.

Expertise

46. It is vital for the fair disposal of complaints that lay persons should play a substantial part in the determination of any legal complaint. Indeed, the Bar Standards Board considers that a strong case can be made for requiring any final decision about a complaint to be taken either by a lay person or by a body which contains a majority of lay persons. But it is also essential to have input from knowledgeable practitioners. There are many cases in which it is difficult to judge whether the reason given by a barrister for his or her actions is a good or a bad reason without relevant knowledge. Sometimes the relevant knowledge is about where a barrister’s professional duties lie in particular circumstances (e.g. when conducting a case in court or in relation to conflicts of interest). Often knowledge of legal procedure, or of a particular field of law, is required.

47. The Board is concerned that no provision is made in the draft Bill for any professional or legal input into decisions of the OLC. Even if the OLC decides to seek external advice in some cases, it will almost certainly have to pay for such advice and we doubt whether it will obtain advice of the same high quality as the Board obtains (at no cost) from barristers of high standing who are expert in particular areas of law and practice. We are concerned that in consequence the OLC will make poorer decisions – for example, failing to recognise when a barrister has fallen below proper standards of professional conduct or legal competence.

Speed

48. The current system for handling complaints about barristers has a good record of dealing with cases swiftly. For example, in 2005/2006, 56% of cases resulting from external complaints were completed within 3 months and a further 21% within 6 months. There is no back-log of cases. There are no delays on the part of the Board in investigating complaints or in dealing with correspondence. The main cause of delay, where it occurs, is the failure of respondents and third parties to respond timeously to requests for information (which, in the case of barristers, is itself a disciplinary offence).

49. The Bar Standards Board is concerned that the OLC will not deal with complaints about barristers as speedily as the Board – particularly when such complaints will represent a tiny proportion of a much larger caseload. It would be disappointing if the result of the legislation were to provide a slower and less efficient service for consumers.

50. A further, and still greater, concern is that the separation of complaints-handling from disciplinary processes will cause delay in disposing of those complaints about barristers which raise issues of misconduct (as most such complaints do). Under the proposed arrangements, complaints will first be investigated and determined by the OLC before they are referred to the approved regulator for possible action. If the evidence obtained by the OLC is considered insufficient to prove a charge of misconduct in a disciplinary proceeding, further investigations will need to be made by the Board. But by that time many months may already have elapsed. Evidence may be stale. In addition, both the complainant and the respondent (and any relevant witnesses) may be required to give evidence twice. There will be no final resolution of the matter from the point of view of either the complainant or the respondent until the eventual conclusion of the disciplinary process.

51. The Board does not consider that such a duplicative process will be in the interests of consumers or in the general public interest.

Cost

52. It is in the interests of consumers that any system for handling complaints should deliver value for money – since increased practising costs resulting from increased costs of regulation will inevitably be borne ultimately by consumers – either through higher charges or, in the case of publicly funded work, by a reduction in the quality of service.

53. The Board believes that its complaints system provides excellent value for money, delivering a good quality of service at a comparatively low cost.

54. The Board has seen the Bar Council’s submissions on the costs of setting up and running the OLC and is concerned about the likely burden of those costs if complaints about barristers are handled by the OLC. This concern is all the greater since it will be necessary for the Board in any event to retain its own system in order to deal with all complaints that raise conduct and disciplinary issues – as most complaints about barristers do – whether those complaints are handled by the OLC as well or fall outside its jurisdiction. The Board believes that, as the draft Bill is currently framed, the result will be substantially to increase the overall costs of regulating the Bar without any corresponding benefit to consumers.

Simplicity

55. An advantage of a system under which all complaints are made to the OLC is that it would provide a single point of entry, which is clear for consumers. For example, if a client wishes to complain about both her solicitor and her barrister, the complaint can be made to the same body.

56. The Board sees a potential advantage for consumers in such a system. However, this seems to the Board to be entirely compatible with an arrangement under which a particular category of complaints – for example, complaints about barristers, or all such complaints which raise issues of misconduct – is referred to another body following receipt. 

Flexibility

57. The Board believes that it is an important requirement of any system for handling complaints that it should be flexible, and should adopt procedures which are appropriate to the nature and seriousness of the particular complaint and to the issues raised. We are concerned that the draft Bill adopts a ‘one size fits all’ approach, under which all complaints about barristers – however minor or serious they may be, and whether or not they raise issues of misconduct – are required to be dealt with by the same mechanism, with no flexibility built into the proposed legislation which would allow for other methods of determination.

Proportionality

58. It is a principle of better regulation not to introduce regulatory solutions which go further than is really necessary and, as an application of this principle, not to create new institutions if existing ones are capable of being modified in line with required objectives. It is always a danger that the additional burdens and unintended consequences of intervention are found to outweigh any benefits obtained.

59. Two options have been suggested for setting up the OLC:

taking over staff from the Law Society’s Consumer Complaints Service; or
setting up the OLC as a completely new organisation. 

60. Neither option in the Board’s view would be at all satisfactory for dealing with complaints about barristers. While the Consumer Complaints Service has experience of handling complaints about solicitors, it does not have experience or expertise in dealing with the particular issues that arise in relation to barristers and the Bar’s Code of Conduct. By the same token, a completely new organisation would have no experience in dealing with legal complaints.

Summary of key concerns

61. In summary, the key concerns of the Bar Standards Board are that:

To separate the handling of complaints about barristers from matters of misconduct in the way proposed will result in duplication, delays and substantial additional costs, and will create a risk of inconsistent decisions;
Unless provision is made for professional and legal input, which the Board believes that it is uniquely well placed to provide, the quality of decisions in the many cases where complaints about barristers raise issues of professional duty and/or of law is likely to be poor.

Suggested amendments to Part 6

62. The Board believes that Part 6 of the draft Bill would be improved by the following changes:

A provision should be included which makes it possible for any function relating to the handling of a particular complaint, or a category of complaints, to be delegated to a regulator which has been approved for this purpose by the LSB.
Clause 125 needs to be strengthened so as to require, where any complaint is determined by the OLC, a greater degree of liaison between the OLC and the responsible regulator. In particular, there should be a requirement, where a complaint raises a question of proper professional conduct, for the OLC to consult with the regulator on that question before the complaint is determined.
Clause 127, which prohibits an approved regulator from including in its regulatory arrangements any provision relating to redress, should be removed.

63. If there is no delegation of complaints-handling, the Board considers that confidence in the efficient operation of the new system would be increased if undertakings were given that the OLC would set up specialist small units to deal with complaints against barristers (and any other specialist categories) which would have access to appropriate expert advice and could develop the necessary experience in handling such complaints. However, while this would address some of the Board’s concerns, it would not provide a solution to the problems of duplication, additional cost, and potential inconsistency of outcomes which are identified above.

Bar Standards Board
15 June 2006

1 Clementi final report, p.39, para 39.
2 As Sir David Clementi has said in his evidence to the Select Committee, if regulatory boards “meet the criteria for independence laid down by the LSB, then there should be no reason for the LSB to intervene in its day-to-day decision making”: see transcript of oral evidence given on 12 June 2006 (uncorrected and unapproved) at p.29 (Q.169).
3 See clauses 34(4) + 38(7).
4 See clause 3(3).
5 Compare e.g. clauses 29 and 31 which set out the procedure which must be followed before, respectively, the LSB engages in public censure or imposes any financial penalty.
6 The term “regulatory arrangements” is extremely broadly defined and includes all practice rules, rules of conduct, disciplinary arrangements, regulations relating to qualification, education and training, and “any other arrangements, which apply to or in relation to regulated persons” (unless made by the body in exercising any representative function): see clause 16.
7 This is the independent watchdog which advises the Prime Minister about necessary measures to maintain and improve the standards of conduct of public institutions and all public office holders.
8 For example, the satisfaction rating of the LSO in relation to cases referred to her office in 2005-06 was 88%.
9 For example, in 2004-05 the number of complaints made by members of the public about barristers was 455, compared with 17,299 complaints about solicitors and other lawyers: see Annual Report of the Legal Services Ombudsman for 2004-05, p.14.
10 Clementi final report, p.63, para 33.
11 The draft Bill already contains a limited provision to his effect in clause 105(5)(e).

Annex 1

Annex 2

Annex 3