Regulators gave inconsistent litigation guidance ahead of Mazur judgment, Legal Services Board finds

The review was launched following the High Court's judgment in Julia Mazur & Ors v Charles Russell Speechlys LLP, which found that an employee of an authorised firm cannot conduct litigation simply by virtue of their employment, even if supervised by an authorised person.

The Court of Appeal later overturned the decision in March this year, concluding that unauthorised staff may conduct litigation under proper supervision.

The LSB as oversight regulator – also known as a super-regulator – published its findings on Monday (27 July).

Its report found that, while regulators responded constructively and updated guidance following the judgments, previous advice to the profession had varied in clarity, consistency and the level of detail.

It also said that regulators developed differing interpretations of the Legal Services Act 2007 and that there was "insufficient cross-regulator engagement to resolve that inconsistency".

On this point, it highlighted a difference in interpretation between CILEx Regulation (CRL) and the Solicitors Regulation Authority (SRA) that arose in 2022.

"The SRA explained its different interpretation of the Act to CRL and made this clear in its guidance, yet the differing interpretations were not escalated or resolved in a way that brought greater clarity and consistency for the profession," the review said.

Regulatory bodies should refer such inconsistencies to the LSB, the review added. The LSB also resolved to "proactively identify" where there may be differing interpretations between regulators in the future.

Elsewhere, the review noted that several regulators had assessed the levels of non-compliance with the Act to be low or insignificant within their regulated communities.

However, the LSB found that these assessments may have been undermined by limited knowledge of how supervision of unauthorised individuals was operating in practice.

The oversight regulator identified the following actions for the profession's regulatory bodies:

• Provide clear guidance on what adequate supervision looks like in routine and higher-risk cases
• Share draft guidance on reserved legal activities with a wider range of regulators before publication, to support consistency
• Collect better data on the frequency and volume of reserved legal activities within their regulated communities
• Strengthen assurance processes to identify and address regulatory risks more proactively

The LSB also announced plans to conduct a further review of guidance across other reserved legal activities to identify and address any similar inconsistencies. This work will reflect the LSB’s broader shift towards proactive, risk-based oversight to identify issues of this kind before they escalate, it said.

Richard Orpin, Chief Executive at the LSB, said: “To ensure that consumers and the public are well protected, it is critical that guidance to legal professionals is clear, consistent, and underpinned by robust regulatory assurance. I am encouraged by how constructively regulators have engaged since the judgment and by the steps already taken. But there is more to do, and we will work alongside regulators to make sure the actions we’ve identified are delivered.”

Responding to the review, Jennifer Coupland, CEO of CILEX, said: “The fallout from the Mazur judgment exposed longstanding regulatory confusion in a complex area of law. Arguments relating to the conduct of litigation, aired for the first time during the appeal process, demonstrated that while organisations across the sector were acting in good faith, they were working with a framework that lacked clarity and was not fit for purpose.

“While CILEX has always done its best to communicate the latest regulatory guidance available, we know that we have not always got it right. Our members are entitled to clear, consistent and aligned guidance, and we are committed to improving how this is delivered for both our members and the wider profession.

“The LSB’s findings show that there are lessons to be learned, particularly in relation to greater collaboration and alignment. As the Master of the Rolls observed during our appeal, regulators appeared to be operating ‘in their trenches’ and that needs to change. We are committed to strengthening our relationships with both CILEx Regulation and the SRA to improve coordination across the sector.”

Coupland added, however, that CILEX was disappointed with some aspects of the LSB report.

“Firstly, there is insufficient acknowledgement of the LSB's own failings with regard to the oversight of the regulation of litigation. There were multiple opportunities for the LSB to intervene or take action to provide the clarity that the sector clearly needed. Secondly, it is insensitive to the reality of the position following the High Court judgment in concluding that there was no evidence of detrimental impact, without properly acknowledging the human impact on the many lawyers and firms who experienced real negative consequences and significant stress. Finally, it is disappointing that this first substantive LSB output since the publication of Richard Lloyd’s ‘Independent Public Bodies Review of the LSB’ report shows no substantially changed approach to the oversight of regulation going forward.”

Adam Carey