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Regulator cries foul after membership body for Chartered Legal Executives opens formal talks with Solicitors Regulation Authority

The independent regulator for chartered legal executive lawyers, CILEX Regulation, has warned of possible legal action after CILEX, the membership body for 20,000 legal practitioners, said it had initiated formal talks with the Solicitors Regulation Authority (SRA) to explore a possible proposal to transfer the regulation of its members.

CILEX said the aim of the talks with the SRA was to ensure that the regulation of its members "continues to be both independent and financially sustainable”.

It argued that the number and variety of models involved in the regulation of legal services could be confusing for consumers and professionals alike, and regulation needed to help build understanding and confidence as to the choice of legal professionals available. “Further, independent regulation must be able to operate at sufficient scale to deliver efficient and effective regulation at a cost that is affordable for consumers and the profession.”

CILEX said it believed that the SRA had “the scale and reach to provide effective regulation. It already sets clear standards for those that it regulates and all who work in SRA-regulated firms – which around 70% of CILEX practitioners do. Dealing with only one regulator has the potential to make life easier for employers too.”

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The proposed talks with the SRA follow CILEX’s Case for Change, a document independently reviewed by Chris Kenny, former Chair of the Legal Services Board (LSB), as a basis for CILEX to move forward with a review of the delegation arrangements. “He concurs on the need for early action to address the issues raised," CILEX said.

Professor Chris Bones, the chair of CILEX, said: “As a first step, we have asked the SRA to explore the viability of an alternative model. If having explored the proposal, we consider it to be able to offer the enhanced public interest benefits outlined in the Case for Change and to continue to provide effective regulation for CILEX members, we will run a consultation on the impact and implications of the proposed change. 

"We believe that bringing the regulation of CILEX members into the SRA could give clients and others real clarity and confidence that regardless of who does the work, the outcomes will be of the same high quality."

CILEX said any new model would need to preserve the distinct identity of CILEX Lawyers, CILEX Paralegals and CILEX Advanced Paralegals and retain the CILEX route to qualification. “Importantly, there would be no cross-subsidy between CILEX practitioners and solicitors on the cost of regulation.”

Both solicitors and CILEX members would continue to have their own representative bodies.

Professor Bones added: "Our decision to explore the possibility of a new model of regulation with the SRA is driven by our desire to ensure independent regulation is sustainable and that consumer needs are met. We will only pursue a change of regulation if we are satisfied that such a change achieves both."

In a statement the SRA said: “We have been approached by CILEx with an invitation to enter into formal discussions on a proposal to transfer the regulation of their members to us while retaining their distinct identity as CILEx practitioners and their route to qualification. We have agreed to those discussions.”

However, CILEx Regulation (CRL) said that it regretted that CILEX had announced that it intended to review the arrangements for the regulation of its members.

The regulator said: “In CRL’s view, CILEX’s actions are not compliant with the requirements of the Legal Services Act 2007 and the relevant delegated legislation. Its objectives are those of a representative body. CRL rejects the opinions expressed in CILEX’s Kenny Review. There is no basis to suggest, as it does, that CRL has ‘viability challenges’ and will have a higher unit cost than other regulators. The cost to those CILEX represents is, in any event, only one element of the public interest for which CRL is responsible.

“CRL’s financial position remains robust. Our last audited accounts show our highest ever levels of reserves, and we intend to hold the PCF at its current rate for this year, notwithstanding inflationary pressures. In order to preserve our strong financial position, we have notified CILEX of our intention to hold our reserves independently following the identification of CILEX’s rapidly deteriorating financial position.”

It claimed that throughout its attempts to advance its chosen approach CILEX had “failed to engage in meaningful consultation either with us or the regulated community. We agree that there is merit in considering changes to the current regulatory arrangements and based on 10 years’ experience we have previously announced that we will be moving shortly to consult on properly considered proposals. It is also a shame that Mr Kenny made no serious attempt to engage with us as the independent regulator in his review and it is not surprising, therefore, that his report contains several unsubstantiated assertions, and is in places just wrong.”

CRL Chair, Jonathan Rees, said: “We regret the announcement by CILEX to open negotiations on a transfer of regulatory responsibility to the SRA. Our position is that CILEX does not have the power to undertake this action. It is our role as regulatory body to decide independently of CILEX whether changes to the existing regulatory arrangements are needed.

“The course on which the CILEX Board has embarked is an unhelpful and costly distraction from tackling the real issues facing CILEX Fellows and consumers. We have done all we can to avoid a public dispute which we believe causes concern to those we regulate and disrupts our work. We have a positive agenda to improve regulation, and reduce costs, and will be bringing forward proposals after the summer.

“In the meantime, we will continue to do our job whilst we consider a further response, including possible legal action, to CILEX’s announcement.”

Any changes to the delegation of the discharge of CILEX’s regulatory functions would require approval from the LSB in accordance with the statutory processes set out in the Legal Services Act 2007, following public consultation.

CILEX and CILEX Regulation both stressed that the review of the CILEX regulatory delegation does not affect the existing regulatory arrangements, including the need to comply with CRL’s Code of Conduct and rules which remain in full effect.

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