Combating Tesco Law: The Legal Services Act 2007

Michael Scutt Dale Langley & Co60 Lombard StreetLondon EC3V 9EA

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Agenda

• The Legal Services Act 2007

• Why ?

• What?

• Tesco Law

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WHY?

• Brief History – OFT, Clementi Report

• Legal Profession – the last cottage industry?

• Need for reform

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What?

• Simplify Regulation– new regulatory structure

• Reform Complaints Procedures- Office for Legal Complaints to be created

• Increase Competition - “Tesco Law”

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Pre- LSA Regulatory Structure

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Master of the Rolls

The Law Society

Department for Constitutional

Affairs

Bar Council ILEX CLC

DTI

CIPA

Archbishop of Canterbury

Faculty Office

Higher JudiciaryLegal Services OmbudsmanLegal Services

Complaints Commissioner

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Regulatory Structure

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Legal Services Board

SRA BSB ILEX CLC CIPA Faculty Office

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Regulatory Structure

• Eight Regulatory Objectives LSA 2007 s.1(1)• Five Professional Principles – s.1(3)• Six Reserved Legal Activities – Part 3 s.12• Only authorised persons or exempt persons

may carry on reserved legal activities

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Regulatory Structure cont’d

• A person who holds a practising certificate from one regulator will be governed as well by regulator of his employer

• Non-lawyers managing or working in a regulated entity will be governed by the relevant regulator

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Reform of Complaints Procedures

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Reform of Complaints Procedures

• Legal Services Complaints Commissioner – abolished

• Legal Services Ombudsman – abolished• Office for Legal Complaints created – in force

by late 2010 – single body for all legal complaints

• OLC – creates the Legal Ombudsman to deal with complaints NOT misconduct

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Increase Competition

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New Ways to do Legal Business

• Legal Disciplinary Partnerships (LDPs)• Allows mixed lawyers and non-lawyers to own

and manage a law firm• But, up to 75% of owners/managers must be

qualified lawyers and hold at least 75% of shares and voting rights

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More on LDPs

• SRA has to approve non-lawyer members• In existence since 30th March 2009• Will become ABSs from 2011

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Alternative Business Structures

• Allowed from 2011• A “Licensable Body” is one that carries on

reserved legal activities and a non-authorised person is a manager of the body or has an interest in it

• At least one manager must be an authorised person (member, director, partner)

• Every Body will need a Head of Legal Practice and Head of Finance

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Alternative Business Structures (cont’d)

• The ABS must carry on a licensed activity through a person authorised to carry on those services

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Tesco Law

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Tesco Law (2)

• Opportunity or threat?

• Threat? High Street wipe-out in face of powerful brands that people “know” – faster service, efficiency, response - but see later

• Opportunity? External investment may be a good thing

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Tesco Law (3)• Commoditised Services at risk – Wills/Conveyancing/Personal

injury/Compromise Agreements in employment law/ET proceedings? Co-Op Legal Services

• Will Tesco law appeal to client SMEs? cf Peninsula in ET proceedings • Will Tesco be interested in potentially costly and lengthy court

proceedings, e.g. family proceedings/care/social welfare – where no cost orders likely at the end of the day?

• The LAG is worried that this area might be completely neglected – suggests partnerships between law firms and CABx.

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But ...

• See the ComRes poll commissioned by the SRA – 1014 respondents, May 2009

• 69% of people said they would be concerned about the quality of service offered by banks/supermarkets

• 83% of people had a positive experience of solicitors, up from 65% the previous year.

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Perhaps ...

• Clients buy people - especially where there is any emotional involvement for them – e.g. litigation/family proceedings/employment.

• Traditional solicitors may struggle where they rely on conveyancing and wills.

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How to avoid meltdown

• Build relationships w. clients and other suppliers

• Marketing – social media/word of mouth – raising profile – demonstrate excellence

• Cross selling of services; wills to conveyancing/newly divorced clients

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How to avoid meltdown (2)

• Quality not Quantity• How do you demonstrate value?• The end of GPs?• Do you need a secretary?• Effective use of social media

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Social Media

• Web 2.0 – what is it?• Not just websites• Blogs – www.michaelscutt.co.uk• Online Communities – • Social Media Strategy• Ideal way to get “out there”

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Don’t Panic!

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Combating Tesco Law

• Michael Scutt• Dale Langley & Co• 60 Lombard Street, London EC3V 9EA• michaelscutt@dalelangley.co.uk• Blog = michaelscutt.co.uk• @michaelscutt

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