"Out-dated, inflexible, over-complex and insufficiently accountable or transparent."

This is the Government's damning assessment of the regulatory regime solicitors, barristers and other providers of legal services currently work under.

The statement provides David Clementi, the man charged with heading the Government's regulatory inquiry into the legal profession, with a mandate for a radical shake-up of the way lawyers in this country conduct their business.

The Government wants a revolution in the provision of legal services that will see solicitors and barristers lose their historic right to regulate themselves, in the interests of a consumer-driven regulatory system in which the public has a significant voice.

The reform programme looks set to strip both the Law Society and the Bar Council of their regulatory powers, replacing them and a host of other legal regulators, with a single body in the mould of the Financial Services Authority.

The Lord Chancellor, Lord Falconer, announced the root and branch shake-up of the regulation of lawyers last Thursday (24 July).

The calibre of the figure called on to conduct this task – the former deputy governor of the Bank of England and the current chairman of The Prudential – suggests that the Government means business.

And, given his terms of reference, there is little chance of Clementi 'going native', as one former Lord Chancellor's Department official put it.
Clementi is going to have a lot of explaining to do if he decides that the Law Society's regulatory powers should be preserved.

Indeed, there are signs that the society itself is preparing to throw in the towel.

A scoping study conducted by the Department for Constitutional Affairs (DCA) as a precursor to the inquiry, which was based on a series of interviews with various interested parties, notes near-unanimous support for the removal of the Law Society's regulatory powers.

The exceptions to this, says the report, are the society itself and the Master of the Rolls, Lord Phillips, "though neither argued very forcefully in favour of retaining the existing system".

Tellingly, the report expresses concern at the lack of the society's "enforcement rigour" when dealing with business law firms.

"[There are] suggestions that powerful City solicitors' firms [are] able to break the society's rules and the society showed a low inclination to enforce in such circumstances," it says.

Clementi will no doubt be perusing a piece of research conducted by Bristol University academic Janine Griffiths-Baker, which concluded that the top City firms regularly flout the Law Society's conflict of interest rules with impunity.

The Government has also indicated it wants rules preventing multi-disciplinary partnerships (MDPs) and the so-called 'Tesco law' – companies offering legal services to their clients – swept away. But it will also want this liberalisation to be accompanied by a robust regulatory regime capable of ensuring that the public interest is protected.

Not acting in conflict of interest situations is specifically identified in the scoping study as a key ethical consideration for Clementi to bear in mind when he draws up his plans, which must be finalised by the end of next year.

Nevertheless, the review has been cautiously welcomed by City solicitors, the majority of whom, according to last week's Legal Week/EJ Legal Big Question poll, want an independent regulator.

"The tension between the Law Society's role representing the profession and regulating it has been an issue for some years – and now it is make your mind up time for all concerned," said Clifford Chance's head of public policy Michael Smyth.

But if the Law Society is steeling itself to be shorn of its regulatory brief, the same cannot be said of the Bar Council, which can legitimately point out that its complaints handling record has not been the subject of controversy.

It is not going down without a fight. "There is no reason for removing self-regulation [from the Bar]," said chief executive Niall Morison. "Just because the Office for the Supervision of Solicitors is in trouble, it does not mean that the Bar should stop being self-regulating – we need to make the point to David Clementi that we run a good regulatory ship."

There is a lot at stake. The Bar Council is implacably opposed to MDPs, claiming they will lead to the 'Enronisation' of the legal profession.

Any move to allow barristers into partnership with solicitors will also be seen by the Bar Council as a grave threat to the long-term viability of the Bar – as would an end to existing bans on barristers forming partnerships with themselves and conducting litigation.

These threats to the Bar's existence certainly put the heated debate over whether or not barristers should continue to be made QCs into perspective.
Let battle commence.

Main objectives of the DCA