LSB consults on key principles for decisions over in-house lawyer regulation

The Legal Services Board has launched a consultation on a set of principles that would inform decisions it makes about the regulatory arrangements for in-house lawyers.

The LSB has previously expressed the view that the relevant regulatory arrangements of the Solicitors Regulation Authority (SRA), the Bar Standards Board (BSB) and the Intellectual Property Regulation Board go beyond the minimum restrictions set out in s. 15(4) of the Legal Services Act 2007.

The high level principles are outlined in a draft statement of policy, which would be issued under s. 49 of the 2007 Act and can be viewed here.

They will be considered by the LSB alongside its regulatory rules, should it be required to exercise its statutory functions. This is most likely to be when a legal services regulator wishes to amend or introduce those regulatory arrangements that pertain to s. 15(4).

The LSB said adoption of a statement of policy would be timely given that both the SRA and the BSB have outlined their intentions to review their regulatory arrangements for in-house lawyers.

The principles are:

• The approach taken to rules pertaining to s. 15(4) is evidence based. An approved regulator that chooses to apply regulatory restrictions additional to the Act would have to justify its approach “with a sound evidence base”. For rules which pertain to section 15(4) of the Act, “it will be particularly important for LSB to understand any evidence that informs a decision by an approved regulator to place regulatory restrictions on in-house lawyers providing unreserved legal services to consumers unconnected to the employer’s business”;
• Rules that pertain to s. 15(4) must have been considered in light of wider regulatory arrangements;
• The impact on consumers of any rules that pertain to s. 15(4) of the Act must have been assessed. “This will involve, for example, assessing the extent to which regulators have balanced access to justice with mitigating risks around potential consumer detriment";
• Consistency in approach to regulating in-house lawyers has been considered. “When proposed changes to regulatory arrangements relate to section 15(4), LSB will consider the extent to which there is consistency in the approach to regulation taken across the different regulators and across those lawyers, regulated by the same regulator, who work in-house and those who do not.”

Legal Services Board chief executive Richard Moriarty said: "The draft policy statement is, based on feedback we have received to date, and is aimed at reducing unnecessary regulatory restrictions on in-house lawyers.

“All the legal regulators should take a hard look at their rule books to make sure that any restrictions on in-house lawyers can be clearly justified and do not unnecessarily impede their ability to improve their services, innovate, or grow their business.

“This consultation represents an opportunity for anyone with an interest in this area to help shape the final policy statement and so we would welcome any feedback on the draft contained within the consultation."

The closing date for the consultation is 5 pm on 18 November.