Legal governance: Separating representation from regulation
agendaNi asks if it is time to reform governance in the legal services industry in Northern Ireland.
The recent controversy around the US investment house Cerberus’ purchase of NAMA’s Northern Ireland asset portfolio and the interaction between Cerberus, the former Managing Partner of Belfast solicitors firm Tughans, Ian Coulter, and other intermediaries, has raised some fundamental questions for a range of interested parties in Northern Ireland. While these parties include Government, politicians and law enforcers, another one is the Law Society of Northern Ireland, the representative body for solicitors.
Whatever the facts are, and they may become clearer as a Northern Ireland Assembly Committee inquiry and a formal police investigation proceed, the whole matter does focus attention on governance in the professional legal services industry in Northern Ireland and specifically the regulation of solicitors.
In Northern Ireland, the solicitors’ professional association, the Law Society of Northern Ireland, performs the dual role of promoting and representing the solicitors profession as well as regulating the industry, enforcing professional standards and dealing with complaints about solicitors.
This is not however the prevailing governance arrangement in England and Wales where, since 2007, following the passing of the Legal Services Act (primarily designed to liberalise the legal services market) these two distinct functions – representation and regulation – have been separated. The Law Society of England and Wales continues to represent the solicitors’ industry and continues to be its public face. It also retains responsibility for lobbying Government and regulators, providing advice, managing accreditation services and responding to public consultations. However, while it remains the approved regulator for the industry, its regulatory functions, as required by the Act, are delegated to an independent regulatory arm, the Solicitor’s Regulatory Authority (SRA).
The SRA regulates 130,000 solicitors and practices in England and Wales including Alternative Business Structures (ABSs) and registered European and foreign lawyers. The SRA’s purpose is to protect the public by ensuring that solicitors meet high standards and by acting where risks have been identified. It deals with all regulatory matters, sets its own procedures and makes decisions on individual cases. All solicitors must follow the SRA’s Professional Principles and Code of Conduct.
Legal services governance structures in England and Wales also include an independent statutory tribunal, the Solicitors Disciplinary Tribunal. Usually it is the SRA which prosecutes cases before the tribunal although there is the facility for members of the public to go to it directly.
Another governance entity established by the Act was the Office for Legal Complaints which in turn set up the Legal Ombudsman (LeO) in 2010, with formal powers to resolve complaints about lawyers. It is independent of government and is available to members of the public and small businesses.
All of the new governance entities and regulatory bodies, including the SRA, come under the oversight of the Legal Services Board, set up in 2009. The Board is independent of both the Government and the legal profession and its central mandate is to ensure that regulation in the legal services sector is carried out in the public interest and that the interest of consumers are put at the heart of the system.
Overall this substantial governance architecture can be carried by a very large legal services market such as England and Wales but it is undoubtedly of a scale that would be burdensome if applied to the small Northern Ireland market. Nonetheless, the central principle of separating legal services industry representation from regulation, is a compelling one and may be something that Stormont’s Justice Minister David Ford and the Law Society of Northern Ireland might in due course turn their minds to.
