A leading local government lawyer has accused the Law Society of “blatant protectionism” in favour of private practice firms after it questioned a Solicitors Regulation Authority proposal to allow local authority solicitors to charge charities for legal services.
In its response to the SRA’s consultation, the Law Society poured cold water on the proposal – one of ten changes put forward as part of the watchdog’s red tape initiative – to amend rule 4.15 of the Practice Framework Rules. The changes would allow local authority solicitors to charge charities “whose objects relate wholly or partly” to the council’s area.
Local government lawyers have campaigned for several years for the rules to be changed, something given added impetus by the rapid growth in schools converting to academies, and some have argued that the SRA change does not go far enough.
Chancery Lane, however, suggested the proposal should be “significantly limited”, with “consideration given to the precise terms of its provisions”. It insisted that the amendments represented a change in policy and could lead to an inconsistent and incoherent regulatory framework.
The submission from the Law Society said: “It seems that local government in-house solicitors will be able to compete with private practitioners, without entity regulation, in areas where previously this would not have been possible.
“This suggests that local government in-house solicitors will be at an advantage to firms in private practice, who have higher regulatory costs and burdens; it is unclear why this should be the case. Such services could of course be provided if the organisation in which the solicitors worked were to become an ABS [alternative business structure].”
But the Law Society’s submission drew a robust response from Geoff Wild, Director of Governance & Law at Kent County Council.
In a letter to Lucy Scott-Moncrieff, the President of the Law Society, Wild said: “The response demonstrates clear bias on the part of the Law Society in protecting and promoting the interests of private sector solicitors above those of their public sector counterparts.
“It is unbalanced and disproportionately supports one sector of the profession over another. From an organisation that purports to represent the interests of all its members (including 4,000 solicitors in local government), this is quite disgraceful and wholly unacceptable.”
Kent’s Director of Governance and Law argued that local government in-house solicitors had been competing with private practitioners for more than 40 years, “by trading quite freely and lawfully with thousands of public sector bodies under the provisions of the Local Authorities (Goods and Services) Act 1970”.
He said: “During that time, no-one has claimed this to be inappropriate, unfair or that it should be limited or more heavily regulated. On the contrary, successive governments have sought to encourage and enable local authorities to charge for and trade services freely in the open market. It is only the Law Society and the SRA (until now) that have failed to keep in step with this progression.”
Wild also disputed the claim that the proposal would give local government in-house solicitors an advantage over private practice firms, due to the latter's high regulatory costs and burdens.
“What this implies, quite dangerously, is that private practice firms should be protected from lower cost competition,” he argued. “Indeed, preventing such competition from operating in the marketplace appears to be the principle objective of the response….
“It follows that the Law Society would wish to see local government in-house lawyers kept at a disadvantage in comparison with their private sector colleagues, when what should really matter is that clients (in this case charities) receive a much-needed legal service at the lowest possible cost.”
Kent’s Wild is one of a number of local authority lawyers who have been campaigning for the removal of the restriction on charging charities.
Allan Wells, Legal Services Lead Manager from Surrey County Council, is another. On the Law Society response, he said: “In-house solicitors are already heavily regulated by the Legal Services Act provisions in any event - all this amendment is doing is enabling us to do things that the law permits us to do anyway.”
A spokesman for the Law Society said Chancery Lane had received the views of Solicitors in Local Government (SLG) and these had been "considered by the Regulatory Affairs Board in formulating the Society’s position". The issue had also been considered by both the Board and the Rules and Ethics Committee in 2011, he added.
"The Society took the view that the suggested rule change would allow local government in-house solicitors to compete with private practitioners, without entity regulation, in areas outside their employment," the spokesman said. "Thus, in-house solicitors would have an advantage over firms in private practice, who will have higher regulatory burdens."
He added: “The Society and its members aren’t anti-competition but expect that all competitors should be subject to the same regulatory requirements. Such services could of course be provided if the organisation in which in-house solicitors provided their services were to become an ABS [alternative business structure]. This is reflected in our response, which argues that, if the rule change is to be adopted, it should be significantly limited in the precise terms of its provision."
He added that the Law Society would "be working closely with the SLG on any proposals" arising out of the SRA's wider review of in-house regulatory requirements. "We understand that the SLG has already put together a sub-group to work with the Society on this."