THE CLEMENTI REPORT

To recap briefly… OFT Report, Competition in the Professions, March 2001 In the Public Interest consultation, July 2002 DCA Scoping Study March reviewed weaknesses in current market - looked at options for a review

To recap briefly… Government appointed Clementi in July 2003 to recommend a regulatory framework to : - promote competition, innovation and a consumer market - create an efficient, effective and independent profession - no more restrictive than is necessary - consistent, flexible, transparent

Themes in the report Independence of legal profession Significant professional involvement in regulation Recognition of professional ethos

Main Recommendations Legal Services Board (B+) Office for Legal Complaints Legal Disciplinary Practices (with outside ownership)

Recommendations Legal Services Board All regulatory powers vested in LSB Replaces current supervisory functions of the Master of the Rolls, Secretary of State, judges and others LSB delegates to recognised front-line bodies but requires separation of governance of regulation and representation Has power to require institutional separation of regulation and representation bodies if bodies do not go far enough on governance

Recommendations Office for Legal Complaints Reports to Legal Services Board Will deal with consumer redress Will pass discipline and conduct issues to the professional bodies Will absorb functions on LSO and LSCC

Recommendations Legal Disciplinary Practices Non-lawyer partners Outside ownership/investment LSB authorise front-line regulators to regulate LDPs if satisfied with their competence and governance arrangements

What that means for the Law Society Legal Services Board Need to demonstrate competence and effective separation of governance

David Clementi said Legal Services Board ‘… it should be a statutory requirement for a front-line regulatory body to separate out its regulatory and representative functions, but … the body would need to satisfy criteria laid down by the LSB.’ ‘The recommendations of the interim report by the Governance Review Group represent a good check list of criteria...’ ‘At present, the governance arrangements made by the Law Society and the Bar Council … are inappropriate for their regulatory functions.’

What that means for the Law Society Office for Legal Complaints Establish separate and independent organisation Based on Leamington Spa

David Clementi said ‘..a single system, free to consumers..’ ‘likely to be based around 300 people at Leamington Spa …I recognise that there is a level of expertise there.’

What that means for the Law Society Legal Disciplinary Practices Need to persuade LSB of competence and governance Need to design ‘fit to own’ test

David Clementi said Legal Disciplinary Practices ‘…non-lawyers would be there to enhance the services of the law practice, not to provide services direct to the public.’ ‘Outside ownership of LDPs should be permitted …subject to a ‘fit to own’ test’ a Code of Professional Practice binding all members of the LDP to professional standards

What else? No longer supervised by OISC Paved the way for MDPs in the longer term No specific recommendation on the regulation of claims farmers

Government’s response Welcomed the report Committed to the independence of the professions – including from government Committed to a fast timetable – White Paper early 2005

What now The Society needs to - Consider the recommendations against steps already taken - Plan next steps; and - Develop our own timetable of work - Demonstrate that we mean what we say - Government could change its mind (lessons of Shipman)

Our timetable Debate tomorrow morning on Clementi Report and GRG Special Council meeting 20 January 2005 Council meeting 23 February 2005 White Paper early 2005 Draft Bill or Bill announced for 2005/2006 Parliament Lobby Parliament New framework implemented 2007/2008?

THE CLEMENTI REPORT