Falconer: Legal privilege to extend to non-lawyers over mortgages

Falconer: Legal privilege to extend to non-lawyers

Accountants and other professions will be given legal professional privilege if they work in partnership with lawyers under the terms of the Legal Services Bill, published today (24 November).

The shock news is one of the few major changes to the draft legislation which was published in May this year. It follows scrutiny to the draft Bill by a joint committee of Parliament.

Announcing the new legislation at a press conference, Lord Falconer, the Lord Chancellor, called the Bill “reform with a vision, to put people first”.

Falconer said the Government’s aim had always been to create a legal services environment which would benefit consumers.

He admitted that the changes caused by the Bill could put some smaller firms out of business.

“It’s difficult to predict what the effect will be. It could make some firms less profitable than they otherwise might be,” Falconer said, adding that firms have a choice about taking up opportunities offered by the Bill.

The major clauses of the draft legislation have been maintained, with the Bill providing for the establishment of an oversight regulator, the Legal Services Board (LSB), a single complaints handling body, the Office for Legal Complaints, and also allowing alternative business structures (ABSs).

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The current front line regulators, including the Law Society and Bar Council, will automatically be approved as regulators under the new system. Front line regulators will have to apply to the LSB for permission to regulate ABSs.

The LSB is to be made up of a chairman, a chief executive and between seven and 10 other members. It will have to have a lay majority.

Despite concerns raised by the joint committee about the independence of the legal profession, all board members except the chief executive will be appointed by the Lord Chancellor.

Falconer said that the selection process is similar to that of other regulatory authorities such as the Financial Services Authority, where members are chosen by the Chancellor of the Exchequer, and that it would not hinder the profession’s independence.

He added: “It’s not self-regulation in the way that it has been in the past.”

Bridget Prentice MP, parliamentary under-secretary of state for the Department of Constitutional Affairs, said the Government had taken on board three-quarters of the joint committee’s recommendations, including adding a clause about independence in the legal profession in the Bill’s regulatory objectives.

The costs of the new system, and transition costs, will all be borne by the legal profession.

The Bill had its first reading in the House of Lords yesterday (23 November). It is expected to receive Royal Assent in summer 2007. It will take up to 18 months after that for the new system to be implemented.

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