Five years after its creation, the Bar Standards Board has gained broad approval from the profession, but it is about to face its biggest test to date. Claire Ruckin examines how the watchdog plans to grapple with the arising issues

The Bar Standards Board (BSB) has come a long way since its inception in 2006 when the Bar Council split off its regulatory arm from its representative function. But with the profession entering its most challenging period yet, as Government spending cuts take their toll and the Legal Services Act (LSA) comes into effect, the BSB is facing its most crucial test to date.

After the watchdog celebrated its fifth birthday last month, the question being asked is how the BSB will cope with the changes ahead to regulate the profession successfully. As the regulator for barristers in England and Wales, the BSB takes responsibility for setting the education and training standards of barristers throughout their careers as well as monitoring their quality and conduct. With the LSA bringing about fundamental changes to the profession, not least to its culture, by allowing barristers to form partnerships and join forces with solicitors, it is clear that the regulator must evolve once more.

Shaping up for the LSA

It would appear that BSB chair Ruth Deech is not entirely sold on the LSA and the changes it will bring. In her speech on the role of regulation in the future of the Bar delivered in June 2010, Deech (pictured) referred to the LSA as "ill-considered legislation". Despite this, there has been a sense of pragmatism to her actions and working with the Bar to accommodate its needs is at the top of her agenda.

Already, the BSB has gone some distance to adapting its rules for changes under the LSA and in November, following a consultation, the Bar regulator signalled approval for barristers to join legal disciplinary partnerships (LDPs) and barrister-only practices (BoPs) – forerunners to the main changes set to take place under the LSA, which will allow for entity-based regulation from October 2011.

LDPs form a key strand of the LSA and allow firms to add non-lawyers to their partnerships, up to a cap of 25% of total partner count. The BSB has recently introduced changes allowing barristers to become partners in an LDP without having to re-qualify as solicitors. The BSB has also shown its support for procurecos – an initiative encouraged by former Bar Council chairman Nicholas Green QC that sees chambers forming separate businesses as a means of winning work directly from companies and public bodies, cutting out solicitors. The one-stop shops are intended to allow chambers to offer services at cheaper rates than solicitors – reversing the traditional referral system that sees solicitors appoint chambers on behalf of clients.

Michael Todd, vice chairman-elect of the Bar Council and former Chancery Bar Association president, comments: "Over the past year in particular, with Nicholas Green QC driving forward modernisation, the BSB has shown itself to be working in the interests of the Bar. The regulator has shown that it is prepared to consult on issues that the Bar thinks are necessary to go forward in a bid to modernise."

Entity regulation

However, a bigger challenge on the horizon is the question of how the Bar will respond to alternative business structures (ABSs) – often dubbed 'Tesco law' – proposed under the LSA permitting companies to invest in law firms and provide legal services outside of traditional partnerships. Following its consultation paper, Regulating Entities, which closed at the end of last year (23 December), it looks as though there is enough interest at the Bar to take advantage of these new structures.

"Entity-based regulation is exciting, but regulating it is definitely going to be a challenge. Although it is a minority that seem to have so far expressed an interest in taking up the new structures, it is a significant minority nonetheless, so we need to see how we can adapt as a regulator to accommodate those needs. Although some sets are not interested now, they may be in five to 10 years' time, so we need to be ready," says Deech.

The BSB is likely to start making changes to become an entity regulator imminently – and is quite specific about how it sees its role within the new landscape. Deech does not see the benefits of having two regulators – the BSB and the Solicitors Regulation Authority (SRA) – competing for the same work. To draw a line between the two, she suggests that any entity the BSB regulates should have advocacy at its heart.

Despite having a vast range of different sets under its remit – both geographically and practice-wise across areas such as criminal, commercial, chancery and family – it is the common base of advocacy that has meant the BSB has been able to regulate them all, she believes.

The BSB is set to survey barristers who have taken advantage of the LSA to date, to facilitate what Deech calls "evidence-based regulation". It is also set to launch the fourth in a series consultations run by its LSA working group to consult the profession on all the rules and practical changes needed to take place for entity regulation.

"It is important to offer something different to that which the SRA offers. By all means let there be competition but there is no point directly competing with them. We don't have the expertise to regulate entities that are like large solicitor firms."

She adds: "We believe advocacy is the right hallmark for the entities which the BSB might regulate so we are looking for a focus on barristers or advocacy specialists. This will be our unique selling point."

The profession broadly agrees on this route: "It makes sense for the BSB to regulate the entities that are made up of advocacy specialists – ultimately it is the Bar's distinguishing feature," comments Fountain Court director of clerking Alex Taylor. Todd (pictured) reinforces this point: "The Bar wants the BSB to be its regulator, not the SRA. We are a specialist advocacy profession – that is where we can add real value – it makes sense for the BSB to regulate all advocates including solicitor advocates and Crown Prosecution Service in-house advocates."

However, in order to regulate entities there is a lot more work to be done, not least with regard to handling client money, which is proving to be a key issue. The BSB is looking to see if there are ways around barristers having to handle money, for instance instructing a third party such as a bank to hold client payments. Low insurance premiums as a result of not handling money are a major contributing factor to allowing the Bar to retain a competitive edge as a result of its low overheads.

But all these changes will in themselves cost money, with significant reorganisation and new people needed to overlook the new entities. While the Bar has signified its support to bear the initial restructuring costs, it is likely that the new entities will have to pay for the ongoing operation costs.

Darren Burrows, senior clerk at One Essex Court, comments: "If the BSB becomes an entity regulator, let's hope that it has done its homework and has commercial people in there to understand how the Bar can achieve and compete in existing markets without restrictive, black and white rules."

Educating new entrants

With the legal landscape changing, Deech believes a number of new career options will naturally open up for those entering the profession in the future, which means that legal education needs to adapt to the changes, too.

Together, the BSB and SRA, along with the Institute of Legal Executives (ILEX), have established the Future Legal Education Committee, to look at the similarities and differences between the courses that prepare students to be solicitors and barristers. The final aim is to enable graduates to take one course that gives them the option of covering advocacy as well as management, accounts and Bar ethics, potentially merging the Legal Practice Course (LPC) for solicitors and Bar Professional Training Course (BPTC) for those wanting to join the Bar.

In her speech on the role of regulation, Deech said: "It seems to me inevitable that we must revisit the entirety of professional legal education… The course that [a law student takes] to qualify for the profession should be one that fits them for the new world of referral barristers as well as dual capacity practitioners, ABS practitioners as well as Tesco law workers."

Separately, the regulator is also attempting to drive up the quality of graduates at the Bar, trying to mitigate against the growing imbalance between the number of new entrants and the number of places available. It is currently running the second pilot of an aptitude test for entrance to the BPTC, after failing to gain approval from the competition authorities for its original plans.

Keeping a closer watch

While there are still some questions over what will fall under the BSB's remit in the future, in the meantime it is undoubtedly tightening its watch on its current reports. Earlier this year the body rolled out a monitoring scheme to oversee the compliance of sets and sole practitioners with the regulatory regime. The scheme was launched in October and required more than 700 chambers and sole practitioners to complete a compulsory online questionnaire focusing on four key areas of regulation – pupillage, complaints handling, money laundering and equality and diversity.

If non-compliance is found, the BSB will contact chambers to discuss follow-up action to address the issue. If remedial action is not taken or there are serious concerns about the compliance of a particular set of chambers, disciplinary action can then be taken, such as fining a head of chambers.

Nick Hill, senior practice manager at 3 Verulam Buildings, comments: "The monitoring scheme is a worthwhile experience because as a profession it is important that we adhere to processes and ensure across the board that we keep in line with the various standards and receive confirmation if we have."

Approximately 600 questionnaires were returned on time with the initial findings indicating that there are a fairly limited number of non-compliant chambers and sole practitioners.

The BSB hopes that in filling out the questionnaire it will become clear to chambers where they need to do more work to get themselves in order, while also getting an early indication of chambers in financial trouble. It will send out a similar survey this year and decide whether the process should become an annual one or not.

BSB head of standards and quality Oliver Hanmer says: "We have started analysing the data and it seems encouraging as there is a fairly limited non-compliance aspect to it. Sets will benefit from the monitoring scheme as it will help them get their administration in order, which will help them to provide efficient, effective, good legal services."

However, the process has also highlighted a major grumble chambers have with recent regulation. In October last year, the Legal Services Board (LSB) introduced a requirement that all chambers must notify clients directly of their complaints procedure and details of the legal ombudsman each time they receive an instruction from solicitors. Many find this onerous, as well as sending out the wrong message to the clients before they even start working for them. The BSB is due to meet with the LSB to see if there is a way of ameliorating the issue.

Burrows comments: "In relation to the chambers complaints procedure, many of us feel that immediately highlighting to clients how they can complain about chambers is not necessarily striking the right tone. Naturally, we must have a procedure to deal with any issues, but now we're also being required to highlight the same directly with the lay-client, even having already done so with the instructing solicitor. In any event, many solicitors are just not happy for us to be bothering the lay-client with bureaucracy. I believe a number of sets have spoken to the BSB, as has the Commercial Bar Association. The BSB is reviewing the position."

Looking to the future

It would be fair to say that the BSB has come a long way since 2006, when it spent the first part of its existence justifying its relevance. But going forward it certainly will not all be plain sailing. The BSB looks determined to be the profession's regulator, but it will have to face up to some concerns from the industry.

Wilberforce Chambers senior clerk Declan Redmond says: "When the BSB was created, for a long time it was the general impression that it was justifying its existence. There was teething trouble with a relatively new regulator that wanted to show teeth… The amount of red tape chambers has had to deal with has been onerous at times. Whatever activities the BSB engages in, it must make sure it has a wider understanding of how the market operates."

He adds: "To be fair, the way chambers was run had to be shaken up generally and there are still some quarters which need tidying up and bringing into the modern world. Anything that makes chambers more modern, client-facing and responsive is a good thing."

Other criticisms which have been levelled at the regulator include its inclination towards conducting numerous consultations and the fact that the BSB has become increasingly expensive. However, its relationship with other regulatory and representative bodies, including the Bar Council, Law Society and SRA, is looked upon positively by the profession. In particular, Deech's appointment to chair the BSB is credited with helping to thaw initial tensions between the regulator and the Bar Council. Deech, who took over the role from Ruth Evans at the beginning of January 2009, is viewed as having taken an empathetic approach to the profession's modernisation rather than approaching it from a civil service perspective.

Todd says: "The success of the BSB is that it has transformed from a regulator that did not seem to be acting in the interests of the Bar into something the Bar Council has grown to trust. A large part of that has to be down to Ruth Deech."

Whatever shape the profession takes, the BSB has made it clear that it intends to adapt the rules to facilitate the Bar's push for modernisation. It most probably won't be ready for the October deadline when major changes under the LSA come into effect, but given the Bar's wealth of tradition and history as well as the strong demand for its high-quality services, the profession is likely to grace the BSB with a little more time if it ensures the future of a successful and competitive Bar.

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