Bonfire Night Fireworks To Continue After 5th November: Government to review fitness of legal services regulation

21 hours ago

4 min read

On Tuesday the Ministry of Justice published its response to Richard Lloyd's review of the Legal Services Board, and accepted every recommendation in it.

The headline is a comprehensive review of legal services regulation: where the boundaries sit, how complicated the system has become, and what AI is doing to it.

The detail, which matters more, is that it will not commit to a deadline.

What the government actually said

Strip out the language and the position is narrow.

The finding was that the LSB "has lost its way". The government agrees significant change is needed.
All ten recommendations accepted, with deadlines from immediate to a year.
On a new framework by 2029: accepted in substance, but "the government cannot fully commit to the proposed timeline at this stage."
On duplication, complexity and unclear accountability - nothing is disputed.

Two of those recommendations matter more than the structural question.

The first is the shared risk framework, due in six to nine months. The LSB, the MoJ and the frontline regulators must agree what risk looks like, publish a statement of risk tolerance, and assess the key risks annually, with named owners.

The second is an expert review of the LSB's supervisory approach, including whether the Regulatory Performance Assessment catches the things that actually go wrong.

Why this reaches your file

You will not notice most of this. That is the point, and the risk.

What will reach you is the direction of travel. Proportionate regulation means fewer routine reporting exercises for firms demonstrably in control, and more time spent on firms that are not. The LSB has already started: a dedicated oversight directorate, three senior appointments last week, and intensified scrutiny of the SRA after the Axiom Ince and SSB Law collapses.

The SRA's scrutiny of you tends to follow the LSB's scrutiny of the SRA. Sharper oversight at the top means a sharper file review at your end.

The LSB has also stopped doing things: it closed its policy work on professional ethics and the rule of law, and dropped the proposed statement of policy on diversity. Whatever you make of those, they show the one behaviour the review asked for - subtraction, not just new priorities.

Three things worth doing before January

Be able to prove you are in control.
The bargain of proportionate regulation is that low-risk firms get left alone. Those firms are the ones that can prove it quickly, without a fortnight of reconstruction. Evidence of supervision, file review and decisions, recorded as you go.
Know which risk you actually carry.
A conveyancing firm and a probate firm do not share a risk profile, and the new framework will be written around categories. If you cannot say in one sentence where your firm's harm would come from, you cannot tell whether it reaches you.
Read the LSB's 2027-30 strategy when it lands in the Spring.
It is the only public document that will show whether "fewer routine requirements" is real. Read the budget alongside it. A strategy with new priorities and an unchanged cost base is a rebrand.

What this does not mean

It does not mean regulation is being loosened. Nothing in the response removes an obligation or changes a rule.
It does not mean the structure question is settled. The Consumer Panel wants a single regulator; the Bar Council wants minimum disruption. That argument has been deferred, not decided.
Nor should a 2029 date be read as a promise. It is explicitly not one.

The bigger risk is waiting for it

The honest danger for a small firm here is not the review. It is standing still until the review reports.

"Regulatory maze" is the phrase in the report. It is also the phrase Sir David Clementi used in 2004. The Legal Services Act 2007 followed, the CMA asked for the Act to be reviewed in 2016 and again in 2020, and in 2026 a government review has found a regulatory maze.

Twenty-two years is a long time to keep finding the same thing. It is a fair bet that the structure will look broadly similar in 2029. It is close to a certainty that your next file review will not wait that long.

Nothing changed. Your obligations did not need to.

Start with a conversation

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The contact page is an enquiry form. Put "complimentary health check" in the subject and I will pick it up straight away.

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Ashley Barwick is a Fellow of the Chartered Institute of Legal Executives and a Law Society accredited Lexcel Consultant. This post is general information and does not constitute legal advice. Fraxinus Business Associates is not authorised to provide legal advice.