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COUNCIL MEMBERS REPORT MAY 2008

COUNCIL MEMBERS REPORT

MAY 2008

LINDA LEE

SUMMARY

Since the Council meeting took place, the announcement has been made by the Legal Services Complaints Commissioner to levy a fine of £275,000 in relation to its complaints handling for 2008/2009.

At the May meeting, Professor Saggar had reported that although some of the targets had not been met there was significant improvement against the targets and he hoped that a fine would not be levied.

Although there had been an improvement in the standards, there was still failures to meet targets and the Commissioner was very critical of the cost of complaints handling, a view which is no doubt shared by a majority of the profession.

There are proposals to amend the Charter and to the Bylaws to allow for changes to be made in respect of the Legal Services Act 2007.

These are important in that potentially these amendments could allow for non-solicitors (other than trainees who are currently permitted to be associate members) to be members of the Law Society.

A special general meeting will be convened at 2pm on the 17th July 2008 to allow the amendments can be placed on the agenda for approval at the AGM to be held on the 17th July 2008.

It is understood that the Membership Board have recently rejected proposals to allow an extension of associate membership to non-solicitors and if this is correct it is not clear why the amendments are being proposed in this form.

There has been pressure to extend the role of contingency fees in litigation cases and the role of third party funders including potentially allowing solicitors to be third party funders. At a future meeting Council will be considering whether it should consult the profession on this issue.

The rules relating to the Assigned risk pool have been amended making it clear that salaried partners will be liable for sums due under the scheme for example the premium and also making it clear that the SRA does not approve qualifying insurers nor does it review their policy terms.

There was a debate as to the level at which the Compensation Fund should be set at.

Disappointingly the review promised by the SRA last year has not been completed and therefore there is still no appropriate methodology for calculating the level of the contribution. Peter Williamson promised the review would be completed well before the 2009 contribution needed to be set.

It is thought that technically there may be no need to ask for a contribution this year as the Fund has sufficient monies and because the Legal Services Act will give the Society the power to levy the profession at any point in the year if the need arises, however there are concerns about the current financial climate and the need for a smoothing effect.

The SRA recommended a levy of £300 for the full contribution whilst the Management Board recommended £150.

Council voted to set the contribution at £150 for the full contribution and £50 for solicitors not holding client’s money. The full details are set out in the report below.

The SRA is planning to improve compliance on referral arrangements. This includes works on rules and guidance and investigating the possibility of a scheme for approved entry in to referral arrangements, the annual reporting of referrals targeting and monitoring of firms and a public information campaign

Council decided to follow the Council Membership Committees recommendation to hold in abeyance the Education & Training and the Resolution seat and to consult further on the vacant Housing Law Seat and whether this should be filled or held in abeyance pending the review of the size of Council.

ANNOUNCEMENTS
David Merkel reported upon the death of Sue Maynard-Campbell OBE, former Chair of the Group for Solicitors with Disabilities. Sue had been the Chair for the last four years and David, the incoming Chair paid tribute to her achievements.

The new Council member for solicitors in local Government, George Curran was welcomed to the meeting and Linda Lee was congratulated on her election as the Deputy Vice President.

GLOBILISATION OPPORTUNITIES FOR SOLICITORS AND THE LAW SOCIETY BRAND

A debate took part in Part 2 of the proceedings as it concerned development of policy by the Law Society Council. However, the facts considered by Council can be reported.

It is anticipated that there will be a shift in the global economic balance of power over the next 20 years and the demand for legal services will become increasingly global. It is anticipated there will be a global war for talent and it is likely there will be increased outsourcing of work.

The Law Society intends to increase business opportunities for its members by opening markets, promoting English law and will be assisted in some of this work by the newly formed International Division.

It will be the Society’s intention to protect and promote the wider interests of the Law Society and the solicitors’ profession by representing the profession at meetings of international legal bodies and at European level through the Brussels office. There already exist strong relationships with individual foreign Bars.

The Society intends to fulfil its wider professional obligations by promoting international legal good governance and access to justice, by undertaking international human rights work and by assisting developing Bars.

It is estimated that international earnings annually are in the region of 4 billion pounds. 4 of the top 6 global law firms have their home base in our jurisdiction and London has 20% of the global legal market and this is rising.

There is an open market in England and Wales. Any foreign lawyer can work in London doing non-reserved work and over 200 foreign law firms are already here. When working in partnership with English solicitors in England and Wales, foreign lawyers need only register as registered foreign lawyers.

However there is a risk to this open approach. At the present time the qualified lawyers transfer test (QLTT) is under review. It is essential that the standard of entry is equal to ‘day one’ requirements for solicitors who have qualified in England and Wales but the test should not constitute an unreasonable barrier to entry to our market for the brightest and the best.

The Society must also consider how best to deal with the demand for the England and Wales qualification as an international standard. In contrast and how we compare with other jurisdictions. The United States is fragmented. There are 50 states and 50 regulatory regimes in the US. Only 24 US states have rules permitting foreign lawyers to establish in those states. European jurisdictions tend to be quite restrictive. India and other major emerging markets are slow to open up and cannot meet local demand for legal services. However there are more open jurisdictions in key locations such as Hong Kong, Singapore and the Gulf States and their market is growing. Australia is open but there is little international work done from Australia although Australian firms are competitive in Asia.

The Law Society brand is hugely respected abroad and is 160th in the UK’s top 500 business brands. England is the mother of all common law jurisdictions and English law is the pre-eminent transactional medium in world commerce. The Law Society has already done a great deal of work to promote London as the jurisdiction of choice.

The England and Wales qualification is respected and sought after. It is portable in that there are 5,724 practising certificate holders outside England and Wales and 8,985 solicitors outside England and Wales on the roll. They are distributed in 93 countries around the globe.

The debate did reflect that not all of the opportunities are for city firms and that there are opportunities for regional and small firms and it was hoped that the International Division would not be seen to serve only large firms seeking to develop international work but also smaller firms.

REPORT OF THE BOARD CHAIRS

The Chair of the Regulatory Affairs Board Helen Davies reported to Council. RAB is currently finalising a statement to the SRA drawing attention to the Better Regulation principles and has agreed in principle that a reference group be established to support the Society’s work on regulatory matters.

The Board has also responded to two proposals by the LCS to publish complaints and consulted widely on the issues. It was felt that the proposals would not achieve the LCS stated aims in publishing complaints and may mislead clients.

The Indemnity Insurance Working Group had met the Head of Indemnity Insurance at the SRA to discuss (amongst other issues) problems with run off cover rules and to discover the extent of the problem and if it manifests itself in particular ways. A project has also been proposed to gather evidence from solicitors on problems concerning indemnity insurance cover.

Linda Lee, Chair of the Legal Affairs & Policy Board report reflected the Board remains committed to the principle that voluntary accreditation schemes (including those already in existence) should be a matter for the representative Law Society rather than the SRA who had taken them over in the vacuum that had developed following the spilt between representation and regulation. The Board has outlined its plans to take this work forward together with the other Boards. The LAPB was concerned at plans by the SRA to reaccredit criminal practitioners and Linda Lee, Rodney Warren and Helen Davies will be seeking a meeting with Peter Williamson to discuss this further.

The LAPB is also planning to persuade the Judicial Appointments Commission to address concerns regarding discrimination when selecting and appointing to the Bench. The real paucity of solicitors being appointed to judicial office needs to be highlighted and addressed.

The LAPB reported on the various arrangements following the settlement deed on legal aid and the Committees that have been developed to take this work forward.

A report was also given on the plans to review the committee structure and a paper will be available for consultation shortly.

Of major concern to the LAPB are the problems in the conveyancing market and a series of work plans by specialist groups to tackle these problems were approved.

There has been pressure to extend the role of contingency fees in litigation cases and the role of third party funders including potentially allowing solicitors to be third party funders. The Board will be bringing a detailed paper to Council to consider whether or not it wishes to consult the profession to extend these principles further.

The reports of the Chair of the Management Board Philip Hamer and the Chair of the Membership Board, Kevin Martin were in part 2 and therefore cannot be reported on.

REPORT OF THE CHAIR OF THE SRA

The SRA is planning a further programme of work to improve compliance on referral arrangements. This includes works on rules and guidance and investigating the possibility of a scheme for approved entry in to referral arrangements, the annual reporting of referrals targeting and monitoring of firms and a public information campaign.

The Board noted that the SRA had net expenditure of just over £21 million for 2007. There was an additional £13.4 million cost of the SRA’s representing its contribution to the cost of shared services with the Law Society group.

BME Working Group

Lord Ouseley and his team have been looking at policies at the SRA and interviewing key managers. It has been agreed that individual BME solicitors could make submissions about their experience of the SRA and its regulatory processes. An advertisement has been placed in the BME press and the Gazette. It will also appear on the Law Society website and in Professional Update.

CONTRIBUTION TO THE COMPENSATION FUND
The Solicitors Act 1974, section 36 and Schedule 2, requires the Society to maintain and
administer a Compensation Fund and to obtain contributions from the profession to fund
its operation. Responsibility for financial management of the Compensation Fund rests
with the SRA.

In 2007 Council requested the SRA to review the Compensation Fund arrangements and in particular the cost of administering the fund and the method of calculating the contributions.
In August 2007 the Financial Protection Committee (FPC) of the SRA established the Compensation Fund Review Working Party (WP) to carry out a root and branch review of the Fund.

The immediate priorities for the WP in the first stage of the review were:
• to ensure that controls over collection of the correct contribution are adequate;
• to develop a policy and methodology for contribution setting to underpin contribution proposals for 2008-2009.

The WP’s work continues and its objectives include carrying out a more fundamental review of contribution setting reflecting the move towards firm based regulation and implementation of the Legal Services Act 2007.

The SRA Board’s recommendations are supported by the findings from the first stage of the Compensation Fund review, which covered:
• accounting methodology;
• the size and nature of administrative recharges against the Fund;
• claims forecasting;
• stabilising contribution rates;
• risk tolerance;
• contribution planning.

However the review has not been fully completed and as yet there is no methodology in place for calculating the level of the contribution.

                                                                                                                                                                                                                                                           SRA required Council to approve the contribution level for the compensation fund for 2008/2009.

There must be a sufficient level of funding to be certain that reasonably predicted claims upon the Fund can be met. This level of funding need not be met solely by reserves: the new power under the Legal Services Act to raise in-year levies will provide some further protection when enacted and as part of the wide Compensation Fund Review. The SRA Board will also consider whether protection will also be met through insurance.

The SRA recommended that the fee of £300 be retained so that contribution should be smoothed so that at the end of the four-year period (2011/2012) the Fund maintains a reserve of twice the average value of claims (currently £27 million).

Maintaining such a reserve would provide coverage which would reduce the impact resulting from an exceptional one off default, such as the £10 million in claims arising from the Brandons case which resulted in contribution increases of £300 in 2002 and over £300 in 2003.

The SRA Board describe this as a ‘smoothing principle’. That is maintaining the level of contribution would be beneficial to firms in financial planning but also fairer to solicitors paying contributions who might otherwise pay a substantial contribution resulting from the default of others who have benefited from a particularly low contribution in the previous year.

However, the Management Board was supportive of some contribution and some level of smoothing but considered that £300 was too high.

It was noted the likelihood that Fund reserves would be boosted in future years by transfers of residual balances following distribution from statutory trust accounts. The Management Board also asked the SRA to take a more detailed look at provision of stop loss insurance (also known as excess insurance) to limit the amount of reserve it required.

The SRA Board continued to favour the recommendation to set an unchanged contribution of £300 for 2008-2009 and pointed out that it was not yet settled how final balances from existing statutory trust accounts can be used, although there is provision in the Legal Services Act to allow balance transfers to be made to the Compensation Fund.

Council felt very strongly that there should be a review of the method of calculating the contribution to the Fund and it was confirmed that there would be a professional review of the method of calculation.

It was also very difficult to understand the methodology adopted in this year’s paper in calculating the figures.

Peter Williamson, Chair of the Board of the SRA, agreed that he was disappointed that they had not made progress on the review of the Compensation Fund but said that he intended to come back to Council well before next year’s contribution needed to be determined to agree a methodology.

Comments were made in Council that the cost of administering the statutory trust is greater than the amount paid in claims.

Concerns were raised in Council about the possibility of a catastrophic default in the current financial climate and for that reason it was felt appropriate that there should be contribution

Accordingly, Council all voted to set the contribution at £150 for the full contribution and £50 for solicitors not holding client’s money.

18 voted for the fee to be set as recommended by the SRA
(£300 for a full contribution and £100 for solicitors not holding client’s money)

44 voted for £150 for the full contribution of £50 for solicitors not holding client money.

There was one abstention.

Council then approved the following compensation fund contribution as follows:-

Circumstance

Contribution
(£)

Solicitor holding CM 7th PC and more

150

Solicitor holding CM 4 to 6 PCs

75

Solicitor holding CM 1 to 3 PCs

0

Solicitor not holding CM 7th PC and more

50

Solicitor not holding CM 4 to 6 PCs

25

Solicitor not holding CM 1 to 3 PCs

0

Registered European lawyers (RELs), and Solicitors transferring from REL status pay the same scale of contributions as solicitors based upon the number of years they have been qualified in their own jurisdiction.

Registered foreign lawyer (RFL) practising mainly inside
England and Wales and holding CM.

150

RFL practising mainly outside England and Wales and holding
CM.

25

This was approved For:          52
                               Against:    9
                              Withheld:   1

REPORT OF THE CHIEF EXECUTIVE OF THE LAW SOCIETY

Criminal Justice and Immigration Act

The Law Society lobbying in relation to DCWs (designated case workers employed by the CPS) provisions in the Criminal Justice and Immigration Act 2008 was partially successful. DCWs will be subject to regulation by ILEX.
DCWs will only be able to conduct trials in relation to non imprisonable summary offences (which are quite a limited number of the most minor offences).

Legal Complaints Service Proposals To Publish Complaints

The Law Society remains firmly opposed the Legal Complaints Services proposal to publish complaints records. The Law Society has indicated that the current proposals will penalise solicitors and may mislead clients. It is also felt that it would undermine the positive work by the Society to help solicitors improve standards of client care and complaints handling.

Defendant Client Confidentiality for In-house Lawyers

The Law Society is seeking leave to intervene before the European Court of Justice in the Azko Nobel case. At stake is the right of clients to communicate openly and in confidence with in-house lawyers. This is a privilege crucial to the business community. The CBI is supporting the intervention.

Library and Practice Advice Service

4,500 solicitors have signed up to Law Society library online.

Law Society Ethics – A Helpline

The launch of an in-house Law Society ethics helpline/pastoral care portal will be announced shortly. Is The Law Society website will feature a helpline section with clear signposting and information for members about the services supported by the Law Society and provided by the Solicitors Benevolent Association (SBA) the Solicitors Assistance Scheme (SAS) Law Care and the solicitors’ network.

Lexcel

The Legal Services Commission has announced its plan to work with Lexcel so that legal aid firms who currently hold the LSCs, a specialist quality mark can passport to Lexcel as their own kite mark is phased out.

PROFESSIONAL INDEMNITY –SOLICITORS INDEMNITY INSURANCE RULES 2008

The amendments have implications for those close to the Assigned Risk Pool and information will be circulated to the profession from the SRA.

There are general revisions that solely relate to the normal annual date changes. The commentary to the definition of the Minimum Terms and Conditions in the Rules has been amended to make it clear that the SRA does not approve qualifying insurers nor does it review their policy terms.

Council set this policy in 2000 when establishing the current scheme.

Rule 10.3 and the associated commentary have been amended to make it clear that by applying to enter the Assigned Risk Pool, the firm and any person who is a Principal of the firm agrees and (if the firm is admitted to the Assigned Risks Pool) shall be jointly and severally liable to pay the ARP premium and any other sums due under the policy (e.g. any excess payable relating to a claim and the costs of any monitoring visits).

‘Principal’ includes any person held out as a partner (Rule 3.1).

The previous wording placed liabilities on the ‘applicant’.

These amendments and the consequent changes in the Minimum Terms and Conditions and ARP Policy are to deal with the issue of salaried partners’ liability to the Assigned Risks Pool.

Council approved the changes.

A full copy of this paper is available on request.

REPORT OF THE CHAIR OF THE BOARD OF THE LEGAL COMPLAINTS SERVICE

Professor Saggar reported that the paper prepared for Council was in fact now out of date and although we had still failed some of the targets there were some improvements. He felt that some targets were within a hairsbreadth of being a success and he hoped that accordingly the Law Society would not be fined.

Since the Council meeting took place, the announcement has been made by the Legal Services Complaints Commissioner to levy a fine of £275,000 in relation to its complaints handling for 2008/2009.

Although there had been an improvement in the standards, there was still failures to meet targets and the Commissioner was very critical of the cost of complaints handling, a view which is no doubt shared by a majority of the profession.

LEGAL SERVICES ACT CONSEQUENTIAL CHANGES TO THE LAW SOCIETY CONSTITUTION

These proposed amendments to the Charter and to the Bylaws to allow for changes to be made in respect of the Legal Services Act 2007.

These are important in that potentially these amendments could allow for non solicitors to be members of the Law Society.

It is proposed that the Council will convene a special general meeting at 2pm on the 17th July 2008 to confirm the Charter amendments and Council was invited to approve in principle the proposed Bylaw amendments so that subject to any further drafting changes, the amendments can be placed on the agenda for approval at the AGM to be held on the 17th July 2008.

This was agreed by Council.

NON-GEOGRAPHICAL COUNCIL SEATS

The Council Membership Committee brought forward proposals to Council for the future of three seats, which were currently vacant.

Resolution Seat

After the resignation of the Resolution member 12 months ago, the Council Membership Committee invited Resolution to nominate a member to fill the vacancy. Despite several requests Resolution had not nominated any one and indicated that they did not wish to do so. It appeared appropriate to discontinue the seat.

Education and Training Seat

This is one of the three appointed seats on Council, the other two being the Financial Services and the Investment Management Seat and the Insurance Matters seat (which was left in abeyance following a previous Council decision).

Following the resignation of the previous member, it was decided that it was not essential for the Chair of the Education and Training Committee to be a Council member and the Regulatory Affairs Board had decided that it would advertise for a successor who will be co-opted to the Regulatory Affairs Board but not to the Council.

The Council Membership Committee commented that it would be difficult to see what the role would be of a Council member for Education and Training if the Committee were to be chaired by someone else. |

The Council Membership Committee felt they would need a clear idea of the seat’s purpose before inviting applications. It was also noted in debate that there were a number of Council members who were specialists in this area.

Housing Law Seat

The Housing Law Practitioners Association was informed of the vacancy and the seat is filled by a ballot of Housing Law Practitioners, there were no candidates.

Accordingly, the Council Membership Committee recommended that subject to the outcome of consultation with the HLPA, this seat should be left in abeyance.

The Council Membership Committee will put a recommendation to Council in June once that consultation has been carried out.

In debate, the former Chair of the Council Membership Committee who was in place at the time Council was expanded in size informed the Council that at the time the seats were being filled, they had great difficulty in finding different seats to enlarge Council to the required size. He therefore supported the recommendations of the Council Membership Committee.

One Resolution member felt that it was inappropriate that the Committee of Resolution rather than the membership decided who had the seat but this was a policy adopted by Resolution and therefore, it was not open to the Law Society to approach Resolution members direct to fill the seat.

There was concern expressed about the Housing Law seat as it was felt that housing lawyers were at present particularly vulnerable and therefore, offering them a seat could be shown as a sign of solidarity.

There were those who felt that rather than by reducing seats on a piecemeal basis, Council should be reduced as a whole but reduced very quickly rather than on the present timetable. This was a minority viewpoint. There were those who felt that this was a sensible way to reduce the size of Council as there was no pressing need to reduce the size of Council at the present time.

It was decided to act on the Council Membership Committee’s recommendation to discontinue the Resolution seat on Council

For: 47 Against: 7 Withheld: 1.

Council agreed that the Education and Training seat should be left in abeyance pending the review of the Council’s structure:-

For: 47 Against: 8 None withheld.

As no further work could be done in respect to the Housing Law Practitioners Association the Council Membership Committee simply asked for an indicative vote to assist it in consulting with the Housing Law Practitioners Association.

The indicative vote was to fill the seat: 29 hold the seat in abeyance: 28 None withheld.

COUNCIL MEMBERS REPORT 14TH NOVEMBER 2007

COUNCIL MEMBERS REPORT

14TH NOVEMBER 2007

LINDA LEE

SUMMARY

The Council were shocked that the SRA had granted a waiver to Bostalls Limited, a non-solicitor owned business that would provide advice and representation at police stations under the CLS Direct scheme. Certain types of offenders would have no option but to be represented by employees of this company which is owned by former members of the Metropolitan police service. The Law Society has made further representations to the SRA as they are very concerned that granting this waiver cannot be in the public interest and that there are concerns about the lack of regulation and how solicitors employed by Bostalls will be properly supervised.

The Legal Complaints Service (LCS) indicated that they would be reviewing their policy in respect of ‘Reasonable offer made’. Complaints are not investigated if the firm complained of has already made an appropriate offer to settle. The LCS Board feel that this is not a fair outcome for the complainant.

Waiver to Bostalls Limited

Bostalls Limited has won a contract for the Criminal Defence Service scheme known as CDS Direct. CDS Direct is a telephone advice service funded by the Legal Services Commission for clients who are eligible for publicly funded services. In recent years the service has operated under a waiver granted on the basis that the accredited representatives and solicitors running the service were seconded to and directly supervised by solicitors employed by the Commission’s Public Defender Service. The Commission is now intending to extend the service in a number of ways.

The service will be a permanent service rather than a pilot and for certain categories of offences publicly funded clients will have no option other than to use CDS Direct for advice, assistance and representation at police stations. The service will extend beyond telephone advice to the provision of assistance and representation to police station detainees in the form of liaising and negotiating with the police. The solicitors employed by Bostalls Limited will be directly employed by a non solicitor commercial company which is believed to consist mostly of former members of the Metropolitan Police service and it is believed that some of the owners may be serving officers.

The Law Society has made written representations to the SRA in relation to Bostalls’ application for a waiver.

Andrew Holroyd, the President of the Law Society has written a letter to the SRA Board Chair protesting against the decision to grant a waiver. The waiver will allow this entity to offer legal advice ahead of the introduction of alternative business structures being introduced by the Legal Services Act 2007.

The Society has a number of concerns particularly the supervision arrangements and the lack of regulation for this type of structure.

Report of the Legal Complaints Service(LCS)

This was presented by Professor Saggar and Deborah Evans. They confirmed that following negotiations between the Legal Services Ombudsman and the Law Society no fine will be levied that the LCS are working hard to improve working practices so that the targets will be met next year.

Deborah Evans had given a presentation on publishing complaints to Council prior to the Council meeting and she confirmed that she was aware that there were problems with certain types of clients finding representation. She stated that if it could be demonstrated that publishing complaints would further reduce access to justice, the LCS would not publish complaints. She indicated that the LCS were currently researching as to whether there was a lower proportion of complaints upheld made by this type of client although she accepted that a large proportion of complaints were made by this type of client.. However, perception by firms of the difficulties to be encountered may well persuade them not to take on this type of client.

The Rother Valley Coal Health pilot exercise has been concluded. 3,489 letters were sent out and 394 complaints received. On average, the complainants received £620 per person.

The Service was continuing to have difficulty in applying special payments consistently.

Professor Saggar indicated that on an LCS Board away day, the Board had been concerned at the concept of a “reasonable offer made”. At present, if a reasonable offer has been made by a firm, the complaint is not investigated but an adjudicator is asked to confirm that the award is in line with that an adjudicator would award had the complaint been investigated and the complainant is persuaded to accept the offer. However the Board were concerned that this closes down the possibility of investigation of a complaint for a complainant and breach the concept of a fair outcome for the complainant. The Board are relooking at this.

In response to a question regarding the LCS handling of negligence claims, it was confirmed that at the present time, the LSC will only deal with simple negligence claims with a clear loss although pressure has been put on the LCS to do more. The LSC has resisted this as they would need highly trained and expensive lawyers to deal with claims of this type.

In response to a question about the mean cost per complaint, they confirmed that it was £1,600 at present but this was a very crude figure and they were looking at ways of refining this which would show the true cost as being lower that this figure. This cost will be published from April 2008. The LCS would prefer to move to a unit cost and compare adjudicated complaints against conciliated complaints and also compare the costs of complaints of different work types and compare the cost of different teams settling complaints.

Report of the SRA Board

Publication of Regulatory Decisions

The policy regarding publishing regulatory decisions will shortly be published and the policy will take effect in relation to cases where investigations commence after the 1st January 2008.

Equality & Diversity

There had been recent allegations by Keith Vaz MP as to the disproportionate effect of regulatory decisions on black and minority ethnic solicitors. The SRA has published research findings which show that BME practitioners were over represented in regulatory decisions in 2004-2006 and further work is being undertaken to understand this very complex issue. Mr Vaz requested and was sent statistical information. The Chief Executive has met with Mr Vaz and BME practitioner groups including the Black Solicitors Network and the Society of Asian Lawyers.

It is hoped that these specialist groups will support the SRA and help in understanding the issues facing them and their members. Nwabueze Nwokolo the new Chair of the Law Society’s Equality and Diversity Committee indicated that she would be willing to assist with this.

Release of Solicitors’ Indemenity Fund (SIF) Surplus

The Chief Executive of SIF Limited has indicated that a maximum of 1.5 million of the available surplus is no longer needed for indemnity purposes and that the amount can now be released subject to the appropriate direction of Council.

It was agreed that surplus be released, the fund rules are that the Society may use a surplus for the purpose of providing indemnity in any other way permitted by Section 37 (2) of the Solicitor Act 1974 and otherwise for the overall benefit of the solicitors’ profession in such manner as it may decide.

Governance Review Update

Council size and composition

The target date for changes is the 2009 AGM. The Council Membership Committee are taking this work forward.

Board Chair Compensation

The Management Board concluded that no compensation should be paid to the firms or employers of representative Board Chairs but the matter should be reconsidered as part of a review of remuneration of all Council members alongside the review of the Council size and composition. The Management Board is not therefore bringing recommendations to the Council at this stage.

Equality and Diversity Committee General Regulations Changes

Following the decision to establish a new Equality and Diversity Committee with revised membership and terms of reference, general regulations changes were made to enable the Committee to operate. Nwabueze Nwokolo has now been appointed as Chair and arrangements have been put in hand to appoint Committee members.

Chief Executive Report

Possible sources of support for law firms and the Law Society were set out in the Chief Executive’s report. A full copy of this report is available on request.

Tesco’s Chief Executive met with a representative of Tesco Legal Services to express the Law Society’s concerns about information which had recently appeared on a Tesco website under their Law Pack initiative which contained misleading information about licensed conveyancers and solicitors and was detrimental to solicitors. The information in question has now been changed and Tesco’s has indicated that there was no intention on behalf of Tesco’s to criticise solicitors.

Tesco confirmed that it has no current intention to move into the legal services market beyond the DIY solutions provided on their website through Law Pack although interest was shown engaging with the Law Society more closely on equality and diversity issues.

Tesco’s indicated that their area of interest was estate agency services but they were uncertain of the impact on their proposed business model as a result of revised regulatory advice from the Office of Fair Trading.

Lasting Power of Attorney - Practice Notes

Enduring powers of attorney (EPA) were replaced by lasting powers of attorney (LPA) on the 1st of October. The Law Society has produced a practice note for solicitors wishing to draw up an LPA as well as solicitors who are acting as an attorney under LPA. The note also covers ongoing arrangements for EPAs and is available on the website.

Council Member Motions

Debrah Ball moved the following motion which was passed by Council:-

That candidates for election as Deputy Vice-President should be invited to make oral presentations to and answer questions from Council Members prior to the voting period.

That the forum, format and duration, and procedure for the making of presentations and dealing with questions be settled by the President in consultation with the Immediate Past President and the Chair of the Scrutiny Committee.

Dafydd Jones brought the following motion:-

“The Council urges that consideration be given by the SRA and the LCS to a requirement that every complaint that is made to the Legal Complaints Service be accompanied by a £50 returnable disposit”.

We would all agree that we are today living in a customer-complaint society. It appears that the customer must be protected at all cost. The legal profession has not escaped from such a culture, and many of us have heard of solicitors facing more claims than they have ever done before. This is not an indication that solicitors are performing any worse today than they did in the past.

The effect that complaints and claims have on individual solicitor’s lives is damaging and considerable. Knowledge that the insurance indemnity fund will cover the claim does not alleviate the pain. At times all a wily client will need do is to mention to his solicitor that he is dissatisfied with a particular aspect of the solicitor’s service and that will be enough for the solicitor not to pursue his or her costs.

As a small step of redressing the balance, and this would not prevent the disgruntled client from making a valid and proper claim, I suggest that every complaint that is made to the Legal Complaints Service be accompanied by a £50 deposit. Should the complaint be upheld then obviously the deposit would be returned to the complainant together with the appropriate compensation sum.

It was felt that there was no realistic prospect of success in putting forward such a point of view and that there were the more important battles to fight on behalf of the profession. It is known that the SRA would prefer to be a totally separate entity and it was felt that this could be used in evidence to the LSB. Accordingly, the motion was rejected.

For: 11   against: 49    withheld: 4

Legal Affairs & Policy Board Report for Council
14 November 2007

Meetings

The Board met on 23 October and 29 October, and will meet next on 20 November.

Review of Committee Structure

The Board are still trying to obtain costings for the committee structure as a whole and it is hoped that these will be made available shortly as this will inform the planned review.

The present system is causing dissatisfaction and it has been agreed that whilst each committee can only be allocated policy advisor time based on successful bids (rather than having an allocated policy advisor as of right), the present system needs reviewing and the Chief Executive has agreed that this will take place.

There is clearly confusion as to the role of the Law Society committees, the way in which the committees operate and what is expected of Committee chairs and members and indeed staff. It is important that expectations are clearly set out and there is some degree of uniformity between committees.

There are suggestions that new methods of working could be looked at. It was noted that a good example was the HIPs taskforce which had come into being to deal with a specific task and then had terminated when that work was complete and in some areas this may be more productive than a standing committee. It was felt likely that the committee chairs would be a good source of ideas and information and the meeting with committee chairs is eagerly anticipated.

The review will include the appointments process, committee membership and structure, and outcomes from meetings. It was felt important that the Society be able to measure the effectiveness of committees and a mechanism will need to be developed to measure this, as it is likely that the profession will ultimately demand this.

The Board is preparing a methodology for the review, which will be discussed with committee chairs at the meeting on 10 December.

Committee business plans

The 29 October meeting was devoted to reviewing the business plans submitted by committees.

This was the second exercise in committee business planning, the first having been carried out by a joint meeting of the Law Reform and Representation Boards earlier in 2007. The papers for the 2008 business planning exercise included:

a progress report of the objectives agreed in March 2007, many of which were continuing;

a summary of the Committees’ 2008 business plans with an initial assessment of the relative priority of proposed activities and the resources; and

the assessment criteria based on the proportion of the profession affected and the impact on that section of the profession.

The Board considered the recommendations on the proposed activities and the allocation of resources, mindful of the fact that the resources available were limited and that the Council and indeed the profession has to be satisfied that they are being used to maximum effect.

The outcomes from the meeting will be collated and reported to committee chairs shortly.

The Board’s workplan

The Board has provisionally agreed its workplan subject to a further discussion on 20 November. Key issues which the Board will be focusing on are a review of the committee structure, representation issues for different sectors of the profession, international issues and Legal Aid. It is envisaged that in persuing it’s representative objectives that there must be consultation direct with the relevant sectors of the profession but that this should be by electronic means to save costs.

Legal Aid

The Board has discussed at length the formulation of the Society’s future policy on Legal Aid. The President and the Board agreed that the Council should have a major debate on the principles, and this item forms a significant part of the agenda for the 14 November meeting.

Recently, Bostalls, a non-solicitor firm, won a contract to provide police station representatives, formerly a solicitor-only duty. There is a difficult balance to strike on the one hand the values of the profession and the benefit to the public in using a solicitor must be promoted but the Society must do all it can to ensure that the profession can compete on a level playing field with non-solicitor entities.

Appointments to external bodies
The Board is also reviewing the list of Society appointees to external bodies and the process for making external appointments. The Board feels that where an appointment has been made to a body where the work is of direct relevance to the profession or the activities of the Law Society written reports should be submitted to the Board on a regular basis.
The Board will also be reviewing whether such appointments should be dependent on the person remaining a member of Council, particularly where the appointment was made on that basis.

Policy compendium

The Board were concerned that there should be no further delay in producing a policy compendium as this is vital for the work of the Board and committees. Whilst they expressed interest in a Wiki-style solution they felt that a delay of one year to produce this was unacceptable and in any event the policy material would need to be gathered together to be input on the system. They were extremely grateful to Richard Scholfield for volunteering to take this project in hand.

COUNCIL MEMBERS REPORT JULY 2007

COUNCIL MEMBERS REPORT

JULY 2007

LINDA LEE

SUMMARY

The AGM took place on Thursday 19th July 2007. The new President, Andrew Holroyd was appointed. Paul Marsh was appointed as Vice President and Robert Heslett appointed Deputy Vice President.

Tributes were paid to Fiona Woolf, the retiring President who had had a very successful year and done a great deal of work to foster closer working relationships with City and large firms. It was also agreed that Fiona’s style of chairing had made Council meetings far more open and relaxed.

The council meeting had been held on the 18th and although a number of matters had been concluded before the summer break, it seems likely that legal aid and HIPs will require a great deal of work over the summer period.

Council voted to hold the PC fee at £950 for the year 2007/08.

Council expressed concern at the way in which both the contribution and the reserve of the Compensation Fund were calculated. However it was agreed that the Compensation Fund levy would be set at £300 for solicitors holding client monies and £100 for those not holding client monies provided there was a root and branch review of the compensation fund and that other linked areas such as statutory trusts would be considered promptly. This was agreed by the SRA. The SRA indicated that in any event there would be a less cautious approach in future as in 2008 the SRA would have the ability to levy the profession mid year.

It was noted that Tesco’s have launched an online conveyancing service and it appears that the service is being delivered by solicitors and licensed conveyances. The legal department are considering whether or not the method of operation is legal given that it appears that the solicitors will be giving advice direct to the public under the Tesco banner.

The Lord Chief Justice has announced parity of court dress for all court advocates and this was welcomed by Council as the Law Society has long campaigned for this measure to be introduced.

The new Board structure is now in place and Chairs and Boards appointed.

Council continued to be concerned at the planned extension of powers recently exercised by CPS Designated Case Workers (DCWs) to prosecute Magistrates’ remand courts and supported a Council Member’s motion determined to oppose the proposals.

Governance Review-The new Boards

The Chairs of the new Boards and Board members were announced and the terms of reference of the new Boards were provisionally agreed although it was agreed that further work was required with regard to the terms of reference of both the Membership Board (MB) and the Legal Affairs & Policy Board (LAPB) the new Boards are:-

Legal Affairs & Policy Board - Chair Linda Lee

The terms of reference of the Legal Affairs & Policy Board are:-

To set and oversee the implementation of policy to promote and protect solicitors' interests in all matters. The Board's remit relates to areas not covered by the terms of reference on other Boards.

To set and oversee the implementation of policy to promote the Society as a leading voice on law reform, the effective operation of legal institutions and access to justice, domestically and internationally.

To set and oversee the implementation of policy to promote access by solicitors to other jurisdictions.

To set and oversee the implementation of policy to promote the protection of human rights and fundamental freedoms in other jurisdictions.

To appoint Law Society Committee chairs and members; and to make recommendations to the Council for establishing and disestablishing Law Society committees.

To recommend to the Council the nomination by the Society of representatives to serve on external bodies.

Essentially this is a fusion of the Representation and Law Reform Board and a key part of its work will be outward facing in promoting the profession and the ‘brand’ of solicitors. There is a great deal of work done by volunteer specialist committees and all of the committees will report to the LAPB. Part of the LAPB’s role will be to ensure that this work is recognised and promoted and that the specialist committees receive adequate support.

The Management Board – Chair Philip Hamer

The terms of reference of the Management Board are:

Board Business Plans and Budgets

To carry out, informed by the Regulatory Affairs Board, the scrutiny of the regulatory Boards’ draft business plans and their performance in respect of those plans; their budgets and budgetary control in a manner that reflects the principles of good regulation having taken account of the Boards’ reasonable and proportionate requirements.

To scrutinise the representative Boards’ draft business plans, budget bids and budgetary controls, ensuring that in their activities the secure value for money.

To recommend to the Council the Society’s budget and business plan.

To recommend to the Council the level of the practising certificate fee.

Finances

To deal with all matters relating to the finances, facilities, property, subsidiary companies’ trusts, bursaries and bequests and the common seal of the Society, and that effective management of resources, including:-

financial controls;
human resources;

capital expenditure;
investment management;

the Society’s personnel policies and the staff pension scheme, on the advice of the Remuneration Committee; and
approving bids for unbudgeted expenditure, subject (save in the case of an emergency) to a maximum of £1 million.

Risk management

To approve and monitor the Society’s risk register and monitor and advise on the risk

Management of the regulatory Boards.

To oversee the handling of litigation arising from the Society’s functions, save where this has been delegated to the regulatory Boards.

To hold the Chief Executive of the Law Society accountable for the efficient discharge of his duties.

To hold the Office-holders to account against the Presidential Plan.

This Board is concerned with the internal management of the Law Society as indicated by the terms of reference.

The Membership Board -Chair Kevin Martin

      The terms of reference of the Membership Board are:-

To set and oversee the implementation of policy for managing relationships with the profession, including (but not limited to) local law societies, Law Society groups, associations, sections, networks and divisions.

To set and oversee the implementation of policy relating to services for members and others to include, but not limited to, family members, potential entrants to the profession, non-solicitor employees of firms and to the public.

To set and oversee the implementation of policy to support Council members in their work.

The role of this Board will be to ensure the Law Society delivers a good service to its members, to improve communication with the profession and also look at ways of generating income for the profession to fund its non regulatory activities.

The Regulatory Affairs Board- Chair Helen Davies

This has been established for some months and the
The terms of reference of the Regulatory Affairs Boards are:-

To set and oversee the implementation of policy for the promotion of solicitors’ interests in all      regulatory matters.

To assist the Management Board in carrying out its function of scrutinising the regulatory Boards.

This Board’s sits interface with the Solicitors Regulation Authority Board and the Legal Complaints Service Board.

Amendments were made to the General Regulations on these lines but with the understanding that the terms of reference of both the Membership Board and the Legal Affairs and Policy Board required further work and will be brought back to Council in October. A number of interesting comments were made in relations to the remit and in particular, the relationship between the local Law Society and both Boards.

A Council member representing an independent membership organisation noted that it would need a relationship with the Membership Board but as it was independent of the Law Society, 90% of all its discussions with the Law Society related to policy.

Other members indicated that they would prefer relationships to be the responsibility of one Board rather than be divided by different Boards.

Some were content that the relationship remained with the Membership Board but there were others who indicated that the local Law Society’s role in law reform meant that it was vital that they had a link with the Legal Affairs and Policy Board. It was essential that representative work and law reform work linked up.

Another member expressed concern that if a single Board had control of relationship it would be unworkable unless there was clear structures to allow relationships to develop from other Board’s and the hierarchy needed to be practical.

It was also suggested that the terms of reference dealt with the setting and overseeing of policy of managing relationships and this was not the same as indicating that the relationships could only be with one Board, it simply meant that a specific Board was determining the policy as to how that relationship should develop.

One member was concerned that the committees reported to the Legal Affairs and Policy Boards and that sections such as Property, probate and Law Management would be left in isolation if they did not enjoy a linkage with the Legal Affairs and Policy Boards. There would be difficulties coordinating policy and joint strategy if there were different reporting lines for the sections and groups to the committees.

It was pointed out that in May, it had been the intention that this relationship lay with the LAPB and it was not clear why this relationship had been moved as it had not been discussed in Council.

A sensible suggestion was that the difficulty lay in assigning ownership of the relationship rather than describing the type of relationship practitioner groups, sections or local law societies would have with each Board. It was suggested that future amendments should describe the relationship itself.

It was agreed that the respective Chairs would meet prior to the Council meeting in October and that a paper would come back to Council for decision at that stage.

Report of the Chair of the Legal Complaints Service Board

The Legal Services Complaints Commissioner has invited the Legal Complaint Service to make representations to her regarding her provisional findings of the performance against targets set by the Commissioner for 2006/07. There is currently a dispute between the LCS and the LSCC as to the way in which the figures against the target agreed have been calculated and the LSCC has indicated she is considering imposing a fine. Professor Saggar indicated that he was entirely happy with the way in which the figures had been calculated.

Professor Saggar was asked to explain further about the pilot scheme whereby the DTi were assisting the LSC by writing to miners in the Rother Valley area to enable them to bring a complaint against their former solicitors in respect of the mineworkers’ compensation schemes.

Professor Saggar indicated that he was pleased with the initial result which he felt addressed the unmet need of the potential complainants. Thus far there had been a 10% response rate. He felt that the service had been made more accessible and he strongly rejected a suggestion that he was “touting for business” he also rejected the suggestion that other professional bodies would not behave in this way, he felt that they did where it was easy to categorise a group of people with the same issues.

Professor Saggar also indicated he would consider making representations to the LSC regarding the threat to professional standards by the imposition of fixed fees by the Legal Services Commission.

Report of the Chair of the Solicitors Regulation Authority Board

Peter Williamson reported that the Board had conducted its first interim review of the current referral arrangements regime in the light of evidence acquired through visits and other sources. It agreed to continue to gain evidence through visits, to issue material to the profession and others explaining the harm caused by improper referral arrangements and for means of ensuring compliance with the rules and to research consumer views.

The Board had considered the results of the consultation on higher rights of audience and a majority of respondents had favoured ending the restrictions. A significant part of that majority favoured an alternative quality assurance scheme. The Board took the view that the solicitor should be assessed against the skills needed for a particularly type of work rather than those perceived necessary to appear in a particular court. Considering the various options the Board favoured deregulation of rights of audience for solicitors but with provision for a voluntary scheme and assessment regime covering standards of knowledge, skills and competence. The judiciary will be specifically consulted.

The Legal Services Ombudsman had expressed concern that complainants in miners cases would not know the outcome of any internal disciplinary action taken against their solicitors, whereas the outcomes of those cases prosecuted by the SRA before the disciplinary tribunal will be public. The Board are seeking advice from Council and subject to that advice, the outcome of these cases should be made available to complainants. In future all internal disciplinary action will be made public in accordance with the Board’s published policy.

The Chief Executive of the SRA reported that amendments will be made to the Solicitors’ Act which will have the effect of permitting the SRA to regulate sole practitioners as business entities.

It was noted that the original definition of an ‘entity’ described any thing other than a sole practitioner. The amendments provide that the Society must make rules providing that “sole solicitors” must have an endorsement on their practising certificate which authorises them to practise as sole solicitor. Peter Williamson indicated that it was too early to say if an endorsement will be granted automatically or whether or not it will be necessary to accredited in some manner.

Mr Williamson was asked whether or not the SRA were happy with the relationship it had with the Law Society to which he replied, ‘yes, very! ’

Compensation Fund Contribution

The SRA had asked the Law Society Council to approve a full contribution for the year 2007/08 set at £300 for solicitors holding clients money and that the contribution for solicitors not holding clients’ money should be set a £100.

Council had expressed unhappiness at the way in which both the contribution was calculated and the way in which the reserve was calculated. It was accepted that very little could be done to deal with this this year and Council agreed to approve the contributions at this level and for the calculations to be continued to be made in this way for one year only on the strict understanding that there should be a fundamental review of the compensation fund.

It was agreed there would be discussions with the Law Society about a review for 2008/09. In 2008/09 when the Legal Services Board was established, it will be possible for the SRA to review the position with regard to the fund at any point during the year and levy the profession should there be any shortfall therefore there will be a less cautious approach in future in any event.

It was agreed that the SRA would consult the Law Society about the terms of reference of the review and endeavour to agree jointly the terms of reference for that review. It was also agreed that the review should be undertaken by the SRA and that the SRA will report back in time for next year’s decision by Council on the level of contribution to the compensation funds.

It was also agreed that related issues would be examined expeditiously for example, the scope for possible release of funds from the statutory trust account to the compensation fund.

The new payments were approved
For: 61   against: 5   withheld -:2   total 68

Practising Certificate Fee 2007/08

It was agreed that the Practising Certificate Fee would be held at £950.
For: 65 against: 1 withheld: 2    total voting 68

Council Membership Committee

The incoming Chair of the Membership Committee asked that at its October meeting, Council considers the following matters:-

Does Council want to review the size and composition of Council?

Is now the right time to review the size of Council or should the new Board structure be allowed to bed down before this review is undertaken?

If the answer to both (1) and (2) is yes, Council will need to decide how to approach this process.

Complaints against Regulatory Board Members

It is proposed that if a member of either the LCS or the SRA Board were convicted of a criminal offence or was the subject of a finding of professional misconduct that there would be a fast-track procedure, subject to a process for filtering minor matters. In other cases there would be an investigation carried out by a body analogous to the Council Members Conduct Committee to be established by the SRA and the LCS Boards.
Any decision on removal of a member would rest with Council.

This was approved
For: 55 against: 4 withheld: 1

Chief Executives Report

Review of ICT
The process in relation to compulsory redundancies and reorganisation of ICT is progressing well not withstanding continuing difficulties with trade union representatives. It is anticipated that the programme will be completed on schedule and within budget by the end September 2007.

The Chief Executive indicated that the Law Society had made written and oral representations on the question of whether the LSCC should impose a penalty in the event that she concludes that the Law Society had not handled cases in accordance with the plan agreed by the SRA/LCS with her office in July 2006.

It was confirmed that the annual conference in Harrogate had been cancelled and would be replaced with series of targeted events which would now take events in Central London.

Regional Offices

North East/North West staff have become operational as home workers.
The Eastern Regional Manager has moved in to serviced accommodation.
Administrative and support services are now being provided by a small central unit in the Cardiff office.

The current Newcastle, Manchester and Cambridge offices are being marketed so that we might remove lease obligation.

The lease of the Bristol office has been assigned with effect from 3rd August 2007.

It is hoped that the East Midland staff will be moved into a smaller office accommodation in Leicester by end of September 2007 and that the South West staff will move to home-working with effect from 3rd August 2007.

The Chief Executive also made two important announcements the first that Tesco plc has launched a conveyancing service from its website called “my home move”. It appears that Tesco’s are subcontracting to a firm of solicitors and licensed conveyancers. The Law Society is investigating this further and it appears that disparaging comments about solicitors have been made on these sites. The legal team are also considering whether or not the structure whereby it appears that solicitors are employed to give advice direct to clients is legal.

It was also reported that the Lord Chief Justice has decided that from the 1st January 2008 there will be parity of court dress amongst advocates. In civil courts the wearing of wigs will be dispensed with and in criminal courts, solicitor advocates will be permitted to wear wigs. The Law Society has long campaigned for court dress to apply consistently to all advocates.

Mineworkers’ payments
Following pressure from the LSCC, those mineworkers’ who are still awaiting payment of IPS awards made against solicitors will be paid by the Law Society. These sums cannot be paid out of monies raised by the practising certificate fee but can only be paid from monies raised by commercial activities.

Proposals as to how this will operate have been put to the LSCC and will be reviewed if either the SDT cannot recover the monies from the solicitors concerned or alternatively if the scheme becomes too expensive. It was stressed that this will not set a precedent.

Legal Services Bill
The Legal Services Bill will not reach the report stage until 8th October 2007. It will then proceed to the House of Lords and Royal Assent is expected at the end November.

Although many of the changes campaigned for by the Law Society will not be made (for example joint financing of the set up and operational costs)

It is hoped that there will be a form of the Legal Services Bill that we can live with and the following appear to still be possibilities.

It is hoped that the Lord Chief Justice will be consulted in the appointment of the Chair of the LSB but it is certain that his concurrence will not be required.

That there will be some form of wording relating to Access to Justice in relation to the licensing of alternative business structures.

That the principle of light touch regulation will be put into the Bill some form.

That the polluter pays principle as understood by the Law Society may be adopted.

Council Member Motion

In accordance with General Regulation 9, Tim O’Sullivan (seconded by Ian Francis) moved the following motion at the Council meeting on 18 July 2007.

‘This Council expresses its concern over the extension of powers recently exercised by CPS Designated Case Workers (DCWs) to prosecute Magistrates’ remand courts and;

Notes that DCWs are not ‘Officers of the Court’ or subject to a professional regulators Code of Conduct,

Expresses concerns over the adequacy of training for DCWs and the level of supervision by a Crown Prosecutor,

Opposes proposals by the Director of Public Prosecutions for DCWs to conduct Trials hearings in the Magistrates Court’

Tim O’Sullivan in support of his motion gave the following statement:-

The purpose of this motion is very much to safeguard the public interest whilst preserving the brand of solicitor. I am pleased to say that retired Crown Prosecutor Ian Francis is to second.

CPS Designated Caseworkers – sometimes also called DCWs – are employees of the CPS. The grade requires no formal legal qualifications or membership of a professional organisation. Such as ILEX.

Until recently DCWs prosecuted traffic courts and presented straightforward guilty please. This was little known and worked well enough.

In recent months the Director of Public Prosecutions has rolled out a process whereby DCWs – as opposed to Crown Prosecutors – prosecute remand courts. This includes making applications to remand people into custody.

And, under Clause 58 of the new Criminal and Justice and Immigration Bill DCWs would also be able to conduct all trials in the Magistrate Courts.

Not just summary offences – such as excess alcohol. But either way dishonesty offences, with a maximum of 12 months imprisonment on conviction.

Members of Council, this is a step too far!

The CPS is now the largest single employer of Solicitors in England and Wales.

This motion is designed to ensure that the de-lawyering of public prosecutions in the summary courts should not happen without scrutiny. The issue is one of Due Process.

The concerns – which have also been considered by the Criminal Law Committee – are in the Text of the motion.

DCWs are not subject to a professional regulators code of conduct. Merely the Civil Service Code of Conduct primarily concerned with political activity, the acceptance of hospitality and so on.

Unlike prosecuting solicitors, DCWs are not ‘Officers of the Court’ and so owe no primary duty of care to the Court.

And, concern arises over the limited In-House training for DCWs. Work previously undertaken by qualified solicitors is now undertaken by caseworkers who complete a residential course. Two hours lectures on offences against the person, one hour on sexual offences and so on.

As a matter of professional conduct CPS solicitors remain responsible for supervising DCWs performance in the courtroom. Whilst also prosecuting elsewhere.

To my mind this de-values the ‘brand’ of solicitor. And, more importantly fails to safeguard the interests of victims and witnesses of crime. The reason of course is money. DCWs are cheaper to retain and recruit.

With Carter, means testing and unadmitted legal advisers legal advisers advising lay-Justices I believe that this is part of a piecemeal process of de-lawyering the summary criminal courts. …..A step too far!

How long will it be before the Legal Services Commission reaches the conclusion that with a DCW prosecuting you need only pay for a DCW or Legal Executive to defend?

This motion concerns all Solicitors, Crown Prosecutors – the surprisingly large number of Solicitors who act as CPS Agents – and Defence Practitioners alike.

I urge Council to support it.

Council agreed unanimously to support this proposal

COUNCIL MEMBERS REPORT JUNE 2007

COUNCIL MEMBERS REPORT

JUNE 2007

LINDA LEE

SUMMARY

The meeting on the 21 June 2007 was an additional date to allow Council to discuss and consider proposed governance changes particularly those relating to the remit and operation of the new Boards.

This work will be finalised at the July meeting and appropriate changes made at the July AGM.
A full report on the new Boards and their remits will therefore be offered in the July report. The key decisions made at this meeting are listed below. The title of Treasurer will be reinstated and retained although it will describe the conflated role of the Treasurer and the Chair of the yet to be named Management Board. [At a subsequent meeting of the Corporate Governance Board it was decided that the name ‘Management Board’ would be used unless the new Board itself determined a new name.]

The Council also decided in very broad terms its annual work plan for 2007/8 which allow for increased consultation with the profession.

AMENDMENT TO THE SOLICITORS FINANCIAL SERVICES (SCOPE) RULES 2001 & THE SOLICITORS’ FINANCIAL SERVICES (CONDUCT OF BUSINESS) RULES 2001 – CHANGES TO TAKE EFFECT ON 1 JULY 2007

The paper was presented by Antony Townsend, Chief Executive of the SRA. The changes to the rules are a tidying up exercise consequent on the new code of conduct and the establishment of the new regulatory boards. The Rules only apply to solicitors and firms providing financial services and the SRA will commence a publicity campaign to inform such solicitors of the changes.

Since the 1st December 2001 the FSA has been the single statutory regulator of financial services in the United Kingdom. Its regulatory powers derive from the Financial Services and Markets Act 2000 and under this Act, firms carrying on regulated activities as defined by the Financial Services and Markets Act 2000 need to be regulated by the FSA.

However, Part XX of the Act makes special provision for professional firms which do not carry on main stream investment business but may carry on regulated activities in the course of the professional services provided to their client. This section enables firms of solicitors which meets certain conditions to be treated as exempt professional firms and to carry on activities known as exempt regulated activities. These firms do not need to be regulated by the FSA but are able to carry on exempt regulated activities under the supervision of and regulation by the Law Society which is a designated professional body for this purpose. This regulation and supervision is now undertaken by the SRA.

The amendments requested were approved by Council.

It should be noted that the substance of the Rule has not changed simply the nomenclature.

A full copy of this paper is available on request.

Overpayments to the compensation fund

In July 2006 Council reduced some payments by certain groups however due to an administrative error this was not picked up. The SRA reported the error promptly as soon as the error had been picked up. Since then the SRA had been working to arrange repayments to those affected. Antony Townsend of the SRA said he was less worried that the initial error had been made by SRA staff but it was more worrying that it had not been picked up. He felt there may be criticisms of the SRA and the Law Society more generally. He reported that letters would be issued to those who had been overpaid and a notice published to those who did not receive such a letter to make representations if they felt they had overpaid.

Mr Townsend was asked if he could reassure Council that the profession as a whole would not suffer as a result of this error. Mr Townsend reported that he could not offer such reassurance as the SRAs only income was from the profession. However the SRA have adopted the cheapest method possible and although he stressed this was very much of an estimate, he felt the total cost of repaying the overpayment was in the region of £6,000-£7,000.

SRA consultations

Mr Townsend was asked about the number of consultations that had been issued by the SRA. He reported that the rate of issuing consultations would slow down as there was now quite a lot of work to be done on the consultations already put out. Consultations were very cheap but he did not have costings. He reported that he had been very pleased by the way in which the Law Society had responded to consultations and the SRA will publish a summary in response to consultations.

The Presidential Plan

Mr Holroyd published his president plan for 2007. The primary purpose of the president’s office is as follow:-

Represent the Law Society to the profession and stakeholders

Represent the profession to stakeholders and the public

Oversee the effective governance of the society

In future the presidential plan will be integrated into the business plan.

A full copy of the paper is available on request.

It amplifies how Mr Holroyd intends to fulfil those purposes and seek to achieve the objectives sent out in the presidential office section of the business plan. In his paper Mr Holroyd comments that the president needs to be perceived by the profession as its leader and so the overarching aim for the president’s office work is a demonstration of leadership in both political and practical terms. This can be described as professional leadership. It means listening to the profession and responding but also spotting new issues and trends – horizon scanning – and ensuring that this informed the Society’s work in support of solicitors.

The additional Themes for 2007-2008 will be

Promoting and celebrating excellence in practice
Engaging with small and medium sized practices and promoting packages of support developed by the Society
Engaging the profession more effectively
Working with the Council to achieve effective governance changes; and
Promoting a sense of common purpose in the delivery of the Society’s objectives

Mr Holroyd will also devote himself to continuing current activities established in Ms Woolf’s year. Mr Holroyd also intends to influence the planning and design of the implementation of the Legal Services Bill and its new regulatory regime and prepare for the introduction of alternative business structures and working with the profession to grasp opportunities and manage the threats.

Mr Holroyd intends to continue to attempt to secure a sustainable future for Legal Aid by continuing to lead the Society’s campaigning work in association with the new Legal Affairs and Policy board and to work with practitioner associations and the LSC to design a truly sustainable future for Legal Aid.

He will also work to support the new Membership Services Board as they develop new networking and communication tools to maximise engagement with as wider cross section of the profession as possible by

reaching out to the network of mid-tier firms in the regions and London

developing a programme of regional engagement with small firms

promoting packages of support for small and medium firms who need to change and adapt to changing market conditions

sustaining the degree of engagement with large firms

working in partnership with Law Society Sections and recognised groups as well as local law societies and other interest groups within the profession

Mr Holroyd also reports that we will continue the professional newsletter and president’s blog as part of the communications plan. He also intends to work with the Junior Lawyers Division of the Law Society and others to plan a programme of engagement with non-owner solicitors in the first stage of their professional careers as well as visiting firms and meeting managing partners to engage with “future movers and shakers” as well as in house and government lawyers.

Audit Committee Annual Report for the year 2006

A full copy of this paper is available on request.

The committee in respect of those systems of a internal control which is just considered, found no major items on which to report apart from: _

1. The collection of compensation fund contributions which led to £3.5 million being over collected and which will be refunded to members by the Solicitors Regulation Authority as reported earlier in this report.

2. Risk management
The audit committee still feels there is a need to re-establish risk management in 2007 through all the businesses in the society but it is most concerned that the process should be fully integrated and include the bottom up aspect as recommended to Council last year but not actioned;

3 Governance
The audit committee was pleased to note the progress in relation to reforming Council and its sub-structures and is most concerned that the Council should carefully consider the status of the new management board.

4 Purchase Ordering
The audit committee has commented before on purchasing ordering which is operated through an extensive system of delegated financial authority in every business unit. The committee again draws to attention to the fact that a current audit indicates that it is still not functioning as well as it should and needs improving in 2007. The committee recommends that the Council take action to ensure better compliance with the purchase ordering system.

5. Compliance with the combined code
The committee has highlighted areas of non-compliance for example at the AGM the chairs of audit and re-numeration are unable to attend and speak as of right at the AGM because as lay chairs they are not solicitors.
The committee believes that the highest possible degree of compliance with the combined code is essential to protect the reputation of the society and its officers not withstanding that such compliance is not obligatory and believes that non-compliance with the code should only be accepted when the fact that the society is not a listed company makes it impossible to apply a particular requirement or devise an appropriate equivalent.

Governance Review

A great deal of time is spent considering the new boards and the ways in which they will operate. However, as these matters will not be finalised until the July meeting, it is intended that a full report would be made available in the July report. It should be noted that by the time of the July meeting, the chairs and new board will already have been appointed and will meet following the next Council meeting. The decision as to whether the relationship with the local law societies will be the prime responsibility of the membership services Board or the Legal Affairs and Policy Board will be taken in July. The role of the Treasurer and the Chair of the Management Board (the name of this Board is yet to be finalised) will be conflated into one role to be known as the ‘Treasurer’
The key decisions taken were as follows (full papers can be supplied on request)

The office holders’ role will be enlarged so that they will be ex officio members of all Boards. However Council expressly rejected the idea that the office holders would extend their roles further by chairing the new Boards.
Job descriptions for the office holders and Chairs were agreed although the job description for Council Members was deferred until July.
However the list of key skills and abilities in the Council Member’s job description will be removed.

Council Annual Work Plan
Council intends to set its own agenda and agreed an indicative list for 2007/8 as follows:-

Member Services Board

Policy for member services (strategy, planning and pricing principles)
Services for legal aid practitioners
Communications strategy (across all boards)
New ways of supporting Council Members in engaging with the profession
New ways of working with local law societies, Groups, and practitioner associations
Strategy on international services for members

Legal Affairs and Policy Board

Legal aid strategy
Strategy on e-law and e-conveyancing
Future of civil litigation
Priorities for the Ministry of Justice
Money laundering – implementation of Third Directive
Pro bono strategy
Small claims – development of Fast and Fair
HIPs – monitoring developments

Regulatory Affairs Board

Preparing for the advent of Legal Services Board and implementation of the Legal Services Bill
Training framework strategy
The move to proportionate, targeted, risk-based regulation (a strategy for rules and ethics)
A strategy for regulating ABSs
Priorities for pressing for changes to the new Rule Book (and guidance)

Management Board

Budget, business planning and group budgetary control
A strategy for efficiency and value for money across all Boards (including the Regulatory Boards)
Turnbull risk analysis
Monitoring of the working of the separation of the regulatory functions
Corporate planning and monitoring
Scrutiny role in relation to SRA and LCS
Equality and diversity (across the Group)

Council also agreed to consult the profession using but not limited to the following methods:-
Council Member newsletters;
A special letter generated by the Society for Council Members to send to local law societies, Groups, Sections and practitioner associations with which they are associated;
A link in Professional Update to a survey on a list settled by Council;
A link on the website to the survey;
A link in the President’s newsletter to a survey;
An email from the President to managing partners and General Counsel/Heads of Legal Departments with a link to the survey.

COUNCIL MEMBERS REPORT MAY 2007

COUNCIL MEMBERS REPORT

MAY 2007

LINDA LEE

SUMMARY

Although much of the meeting was dominated by discussions as to the plan for the introduction of HIPs on 1st June 2007, this has subsequently being rendered obsolete by the announcement by Ruth Kelly that the start of HIPs will be delayed until the 1st August and will initially only affect houses with 4 or more bedrooms. The team who have been educating the profession on HIPs have cancelled all further lectures until the Government have issued further guidelines as to how the new scheme will be implemented. As soon as the new guidelines are available the Property Section of the Law Society will announce new course dates. Although RICS have forced the government to undertake a 12 week consultation period, the recent press releases by RICS have confirmed their commitment to HIPs and it seems unlikely that HIPs will be abandoned entirely. The Chair of the Property section Michael Garson advises solicitors not to become too complacent and to continue to prepare their businesses for the likely changes to the property market.

The SRA have announced that although the new Rules will come into force on the 1st July 2007 firms need not change their notepaper to “regulated by the SRA” until 1st October 2007 although they can of course change their letter heading sooner if they so wish.

A new editor is being recruited for the Gazette and once in place, there will be changes to the format of the magazine. Council have already approved a change to the editorial policy and it will provide a platform for ordinary members of the Society as well as key figures and organisations, for example local Law Societies and Practitioner Associations. The editorial control over advertisements in the Gazette will be removed.

The Chief Executive of the LCS, Deborah Evans reported that the LCS is working closely with the DTi to contact miners who had made compensation claims. Letters would shortly be sent to former miners and their families inviting them to put forward a complaint. The Chief Executive of the LCS reported that the Ombudsman’s targets were now being met.

Further steps were taken to shape the new look of Council and the four new Boards which will replace the existing Boards. The four new Boards will be the Regulatory Affairs Board (to promote the profession’s interest in relation to regulatory matters) a Membership Services Board (to generate revenue and oversee members’ services), a Management Board (responsible for internal matters including finances, business planning and budgeting and a Regulatory Affairs Board (a merger of the Representation Board and the current Law Reform Board).

Report of the Chair of the SRA Board

Notepaper

The SRA will shortly email the profession about the need to change the wording on notepaper. The wording will need to read, “Regulated by the SRA”.

It will not be necessary to change the notepaper until 1st October 2007. If however firms wish to change their notepaper earlier than this date, this is permissible.

A Council Member queried whether or not solicitors would be allowed to use the SRA logo on the firm’s notepaper. Mr Williamson could not give an answer and indicated he would report back to the Council at a later date.

Legal Practice Course Registration Fee

The SRA Board agreed to set the fee for the academic year 2007/2008 at £110 for full-time and £55 for part-time students.

Panels and Accreditation Schemes

The SRA is reviewing how this will operate in the future. It is likely that the SRA will begin a consultation process towards the end of 2007 beginning in 2008.

Referral Fees

From the 23rd April the provision of Claims Management Services has been a regulated activity. Under the Compensation Act 2006 businesses providing any type of claims management services must be authorised by the Department for Constitutional Affairs. The SRA has already warned solicitors that if they take introductions from claims management businesses they must ensure that the businesses are duly authorised and at the same time, the SRA will strengthen its compliance work in respect of referral fees.

A number of firms have already been notified that they will be visited as part of the project. Staff in Ethics are working on a warning card, similar to that issued to solicitors, aimed at solicitors’ clients and potential clients. It is envisaged that this may be circulated via public libraries, Citizen Advice Bureau and possibly hospitals. The SRA are also contacting various organisations with a public interest remit e.g. consumer bodies, regulatory bodies and certain government departments to advise them of the rules to which solicitors are subject and of the increased enforcement activities. The SRA are also writing to a number of introducers, their trade associations etc., in attempt to seek their co-operation in ensuring that their schemes do not lead solicitors to breach the rules on referrals. The SRA are warning that if particular schemes are likely to cause solicitors to breach the rules, they may need to “name and shame” such schemes.

Quality Assurance Schemes for Advocates

At its meeting on 8th March, the SRA Board considered and commented upon proposals for piloting a quality assurance scheme for advocates in criminal cases. This has been developed under the auspices of a DCA chaired working group in which the SRA has been participating. The SRA raised a number of points including:-

the need for clarity on how evidence of performance was to be secured, linked to the required standards and validated;

some scepticism about how light touch this would turn out to be and possible costs;

confirmation that the scheme would not apply at the level of magistrates’ courts;

a firm view that QCs should be covered by the scheme;

lay involvement in oversight of the scheme;

the importance (not least from a diversity perspective) of ensuring that small firms and sole practitioners were fairly treated;

support for the view that the scheme did not need to require that a junior should be no more than one level below the lead advocate.

The DCA seemed receptive to the views that were expressed.

Immigration and Asylum Accreditation Scheme (IAAS)

Its has now been agreed with the Legal Services Commission that on the 1st May 2007 the SRA will assume full responsibility for the IAAS from the Commission. This means that the SRA will now process the registration of solicitors and their employees who wish to complete the necessary assessments in immigration and asylum law and practice. The SRA will determine the knowledge and skills standards against which individuals seeking accreditation are assessed and it will validate and monitor assessment providers of which Central Law Training is currently the only one. The SRA will also carry out character and suitability checks on those who seek registration. It continues to be the case that for solicitors and their employees, publicly funded work is only available to those who are members of the scheme.

Solicitors Indemnity Insurance Rules 2007

The Financial Committee (formerly the Indemnity Insurance Committee) and the Board of the SRA are recommending various changes to the Rules and documents in response to comments from stakeholders and in the light of experience gained during the current indemnity period.

The Council approved amendments to the Solicitors’ Indemnity Insurance Rules and to the Minimum Terms and Conditions that form Appendix 1 to the draft Rules. These Rule changes are subject to the concurrence of the Master of the Rolls. A full copy of this paper is available on request.

Solicitors’ Indemnity Rules 2007

The Council was requested to make the Solicitors’ Indemnity Rules 2007 subject to approval by the Master of the Rolls. This year the Rules serve four purposes, all previously agreed by the Council, as follows:

To provide cover for “run-off” claims – that is new claims made in 2007/08 in respect of principals who had retired before 1 September 2000 with no successor practice.

To provide cover for “excess claims” – the Solicitors Indemnity Fund (SIF) indemnifies principals who had retired before 1 September 2000 with a successor practice to the extent of the part of any deductible (excluding any penalty deductible) which would have been paid by SIF on their behalf under the Solicitors’ Indemnity Rules 1999.

To provide for the refund of contributions for the 2001/2002 and 2003/20003 indemnity years.

To provide for post 6 year run-off cover under the current professional indemnity scheme for the period 1 September 2007 to 30 September 2017.

A review of the Rules had been undertaken as many of the Rules had become redundant, particularly those relating to the collection of practice information and the calculation of contributions. The redundant Rules have been removed or else replaced with short Rules in order to retain residual powers. A full copy of this paper is available on request.

Home Information Packs: Amendment Rule

The SRA Board has agreed an amendment to rule 18 (Property selling) of the Solicitors’ Code of Conduct (2007), and an amendment to the Solicitors’ Practice Rules 1990, to address the requirements of the new home information packs regime, in force from 1 June 2007. The Council approved the rule. It should be noted that the SRA indicated that it was important to have a level playing field for public protection and reputation. If HIPs do not proceed, the amendment will be repealed. When asked if the SRA would provide guidance, Peter Williamson indicated that the need for guidance will be kept constantly under review but it is not part of the modern regulatory regime to give more guidance than necessary.

Report of the Chair of the LCS Board

In the absence of Professor Saggar, the report was given by the Chief Executive Deborah Evans.

Ms Evans reported that there had been internal restructuring and there were now three separate groups of strategic, operational and managerial divisions. She reported that the LCS is taking risk management seriously in case another situation such as the miner compensation cropped up. She reported the implementation of a new process for casew