Draft Legal Services Act 2007 (Chartered Institute of Legal Executives) (Appeals from Licensing Authority Decisions) Order 2020

Alex Chalk Excerpts

Monday 24th February 2020 General Committees

[The Chair]

Thank you. I call the Minister to move the motion.

[The Parliamentary Under-Secretary of State for Justice (Alex Chalk)]

I beg to move,

That the Committee has considered the draft Legal Services Act 2007 (Chartered Institute of Legal Executives) (Appeals from Licensing Authority Decisions) Order 2020.

The order is straightforward and, I hope, uncontroversial. It relates to the functions of the Chartered Institute of Legal Executives—CILEx. In summary, the order enables the first-tier tribunal to hear and determine appeals against CILEx in its role as a licensing authority.

As the Committee is aware, the Legal Services Act 2007 defines six reserved legal activities that only individuals and firms regulated by one of 11 approved regulators can provide to the public. CILEx is an experienced regulator under that Act and authorises and regulates individuals and firms in respect to five of the six reserved legal activities: conduct of litigation, right of audience, reserved instrument activities, probate activities and administration of oaths.

In February last year, statutory instrument 2019/166, the Legal Services Act 2007 (Designation as a Licensing Authority) Order 2019, designated CILEx as a licensing authority as well as an approved regulator, which means that, as well as regulating individuals and firms, it can license alternative business structures—legal firms that are owned or operated by non-lawyers. They were introduced by the 2007 Act to encourage competition by allowing, for the first time, lawyers to join with non-lawyers, such as accountants, engineers and social workers, and raise external capital. Notable alternative business structures include the Co-op Legal Services and the big four accountancy firms.

Alternative business structures have been permitted by the 2007 Act since October 2011, and there are now more than 1,300 in England and Wales. Most of the other legal services regulators, including the Law Society and the Bar Council, are already licensing authorities. The Act stipulates that there must be an independent body to determine appeals against decisions of licensing authorities. The order enables the general regulatory chamber of the first-tier tribunal to fulfil that role.

In the 12 months since CILEx became a licensing authority, an interim appeals procedure, agreed by the Legal Services Board, has been in place. It is more appropriate, however, that the first-tier tribunal determines any appeals against CILEx in its role as a licensing authority. The first-tier tribunal has judges with experience of considering regulatory appeals. Furthermore, similar orders have been made in respect of appeals against the decisions of the Bar Standards Board, the Council for Licensed Conveyancers, the Chartered Institute of Patent Attorneys, the Chartered Institute of Trade Mark Attorneys and the Institute of Chartered Accountants in England and Wales when each was designated as a licensing authority.

I reassure the Committee that, although Her Majesty’s Courts and Tribunals Service will face additional costs associated with the potential increase in cases to be determined by the first-tier tribunal, CILEx will meet the set-up and operating costs, so there will be no net financial impact on the sector. On that basis, I commend the order to the Committee.