Demonstrating competence

5.2     Regulation has sought to signal competence, primarily to end-users, through regulated titles; and the impacts of the LSA 2007 on this system are discussed. International recognition is also considered, as it too provides important signals about standards.

Regulation by title, activity and entity

5.3     As noted in Chapter 3, the majority of legal services providers have conventionally been regulated by title (barrister, Chartered Legal Executive, licensed conveyancer, solicitor, etc). Titles, however, are double-edged. Regulated titles involve an element of occupational closure: by definition they restrict access to a field of work and thus potentially restrict competition; at the same time occupational closure (with its attendant reliance on titles) may also serve to set and maintain standards of work (cf Friedson, 2001:201-4). Titles in theory can thus provide value by offering some assurance of quality. However, this is not guaranteed; without appropriate quality tools, titles by themselves may be a limited proxy for competence, as suggested by the poor quality of will writing across regulated and unregulated providers (LSCP, 2011). The risk associated with a reliance on titles is that they may create a perception, for consumers, regulators and professionals, that standards are assured when in fact assurance mechanisms are relatively weak:

[O]ur research shows that consumers assume lawyers are technically competent, [and] the truth is that regulators make similar assumptions since they are only now beginning to deploy tools, such as mystery shopping, to enable competence assessments in individual practice areas.

LSCP submission

[R]egulating by title, although helpful – barrister, solicitor, registered trade mark attorney and so on – can produce a sense of security… which actually is false.

IP attorney representative

5.4     This concern does not necessarily require a move away from the use of titles. As Black (2012) has observed, ‘regulation by activity and regulation by title are not antithetical alternatives’. Different approaches to regulation can be combined and disaggregated in various ways, according to the objectives to be achieved.

5.5     Critically, the LSA 2007 has shifted the emphasis of regulation so that it is no longer concerned solely with the regulation of a particular title, but also addresses the regulation of ‘entities’ (recognised bodies and alternative business structures), and opens up the entitlement to undertake reserved legal activities. The implications of developing both activity and entity-based regulation for LSET need to be considered. This section therefore explores the competence issues raised by each of them in turn.

Activity-based authorisation

5.6     The work of some authorised persons is already defined, wholly or largely, by reference to an activity-based specialisation. IP attorneys are a good example, while the core work of licensed conveyancers and notaries is delineated by the relevant reserved legal activities. The CILEx qualification structure also comes close to an activity-based qualification route, by building a degree of specialisation on top of a relatively broad-based foundation. Another approach is illustrated by QASA, which requires advocates to demonstrate, post-qualification, specific competencies in the field of criminal advocacy. A number of parts of the legal sector are also voluntarily committing to additional specialist, activity-based, training, as seen in accreditation schemes run by the Law Society or specialist bodies like the Association of Personal Injury Lawyers (APIL).

5.7     In principle, activity-based authorisation offers a number of potential benefits to consumers, regulators and trainees including:

• ensuring authorisation is linked more closely to demonstrable competence in a field of practice;
• aligning authorisation decisions more closely with an evidence-based analysis of risks to consumers, and with the regulatory objectives;
• aligning training more closely to the needs of employers and consumers;
• better ensuring that training or work supervision is conducted by a competent person (assuming the supervisor is also required to have a qualification or ‘endorsement’ in respect of the activity);
• providing practitioners with a demonstrable basis for claiming specialisation in an activity;
• providing a way for regulators to group and target risks that require similar regulatory oversight or intervention.

5.8      Although these can be identified as potential benefits, the actual risks and benefits of activity-based authorisation ultimately depend on the nature and range of activities so defined.[1] If a broad legal qualification is not a sufficient condition for authorisation, where should the line be drawn? As Moorhead (2012) succinctly puts it:

A key question will always be: how many activities? There will come a point quite quickly when someone will urge the regulator: go on then, count them up. The LSCP is aware of the problem… but the solution to the problem is less clear.

It should also be recognised that a wholesale shift to activity-based authorisation across the sector would involve a major step-change in regulation and training. This was considered by research participants to be a disproportionate response to risks of incompetence as well as creating a plethora of regulators with clashing responsibilities.

5.9     The LSCP itself acknowledged in its submission, ‘the difficult balance to get right is to tailor the competency requirements to the risks without creating a confusing and bureaucratic mess’.

5.10     There are also important boundary questions regarding the necessary scope of an ‘activity’. ‘Activity-based’ authorisation, though a useful shorthand, needs to be considered more as a ‘field of competence’.[2] This is because the competencies required will often extend beyond the immediate (apparent) bounds of the activity. This is evident with will writing, for example. A simple will may require quite limited knowledge and skills, but for those with sophisticated financial arrangements, or complex family ties and responsibilities, competent will writing becomes a far more sophisticated task, requiring a good understanding of quite specialised elements of land law, trusts, tax and family law. If it is to be meaningful in providing protection to consumers, authorisation may need to reflect different ‘levels’ of competence, which may add to the complexity as those levels need to be clearly task- or outcome-defined.[3]

5.11     If a wholesale move to activity-based authorisation is potentially over-complex, two more limited options offer themselves. The first would be to limit activity-based authorisation to the reserved legal activities; the second would be to take a purely risk-based approach, requiring activity-based authorisation only in those areas where there is a clear and discernible risk of consumer detriment.

5.12     The reserved activities are reserved by law to certain occupations, and currently provide the legal basis for authorisation. They are reasonably clearly defined[4] and understood, and, as noted already, are closely aligned to a number of occupational groups in the sector.

5.13     However, they do raise a particular challenge for LSET, notably in the context of the solicitors’ profession, as well as the developing work of barristers.[5] The reserved activities tend to constitute only a limited part of the work actually undertaken by many members of the profession. They are marginal to the work of a majority of transactional lawyers – and trainees – working in the City and commercial practice more generally. This dissonance between the reserved activities and the work of trainee-recruiting firms has led to tensions in the LPC, where the share of teaching and assessment dedicated to certain of the reserved activities – notably advocacy and wills and probate – is such as to raise significant doubts about its adequacy.[6]

5.14     The LSI ( 2010, 2012) has made a compelling case for the separation of the reserved activities from the common core of vocational training for solicitors, arguing:

the training and qualification process should be focused on the legal activities undertaken by the majority of solicitors, with additional training covering specialist roles, and post-qualification endorsement to the practising certificate being required for any reserved legal activity.[7]

Legal Services Institute (2010:11)

5.15     A logical outcome of this would be to create additional flexibility within the LPC curriculum. It would be possible, as the University of Law has proposed,[8] to remove much of the distinction between core and optional content, enabling training providers to go further in creating modular programmes geared to the needs of specific employers and consumers. This could benefit not just the commercial sector, but also those undertaking private client work, and particularly legal aid, who feel that the existing structure fails sufficiently to meet their needs.[9]

5.16     The University of Law proposals would also have implications for the training contract, since the ‘three seat’ requirement also exists, in part, to satisfy authorisation. This causes difficulty in some transactional firms in delivering or simulating a litigation and advocacy seat, and in some niche litigation firms. It also causes difficulty for the CPS who have to send trainees into private practice to get experience of reserved, non-contentious work that they will never encounter within the CPS. Similar difficulties have impacted attempts to liberalise the training structure. The SRA work-based learning pilot reports noted the experiences of some trainees in satisfying the need for both contentious and non-contentious work and the particular challenges for some trainees of finding advocacy opportunities:

[M]any organisations taking part found their day-to-day activities did not offer the candidates opportunities to demonstrate their competency in key areas (eg, advocacy). In several instances tutors and employers worked with the SRA to identify how competencies could be made more flexible to enable candidates to demonstrate their competence.

BMG Research (2012:38)

5.17     A move to a more activity-based authorisation could permit training to be more focused on the needs of the activities of the firm and its clients.

5.18     The third alternative, as the LSCP suggests in its submission, lies in identifying those activities where there are high risks to the consumer. In terms of regulatory policy, the case for activity-based authorisation is strongest where there are demonstrable risks to clients and consumers. These risks may reflect innate features of the market – such as high information asymmetry between lawyers and clients, and the potential severity of harm, including harm to clients in vulnerable circumstances. There are many areas, particularly of transactional work, where there is little evidence of risk to clients who are knowledgeable, or where the risks are mediated by knowledgeable intermediaries, such as in-house counsel.

5.19     Defining areas of high risk may not be straightforward and could depend on changing market conditions, which would not be appropriate  determinant for regulatory intervention. More obvious risk areas include those where liberty is at stake (crime, immigration), perhaps where there is a significant risk of distress purchasing ( crime, immigration, divorce, (public) child care, domestic abuse, repossession) or where services relate to proportionately high value items in terms of most consumers’ net worth (wills, conveyancing[10]). However, this does not address the extent to which complexity and risk may vary within an activity.[11]

5.20     A move to activity-based authorisation would raise other important considerations, including:

• Co-ordination of standards/competencies: the public should be entitled to expect a consistent threshold level of competence. Consequently, if qualifications awarded by different approved regulators entitle individuals to practise the same activity, then logically the baseline standard of competence for each activity should be common. This does not mean that learning processes must be identical, but they must have at least an equivalent outcome. It would not preclude an awarding body from setting the actual standard above the threshold, eg, as a quality mark,[12] but it would add, at least in the short term, to the complexity of assuring standards across the sector.

• Activity-based authorisation may force early specialisation, at a point at which it may be difficult for prospective trainees to make fully informed choices about career pathways.[13]

• If the costs of changing direction mid-career increased significantly they would be likely to impact more on women than men.

• How to determine the basis on which established practitioners may be passported onto activity-based authorisation.

• A need to limit the impact on consumers, by controlling the complexity of any final scheme, and providing clear information on the nature and effect of limited authorisation. Excessive narrowing of training or over-specialisation could have negative consequences for competence, and cause reputational damage to UK law.[14]

5.21     While these factors should not override public interest grounds for moving to activity-based authorisation, any public interest benefits may be outweighed by detriments and could be achieved by other mechanisms, such as a strengthened system of CPD and/or specialisation.

5.22     It is also difficult to ignore the cultural weight associated with professional titles. A ‘title’ conveys a strong sense of professional identity and professional ethics. The LSA 2007 has preserved a position whereby authorisation and award of title remain largely synonymous. Evidence from both the focus groups and the LETR symposium indicates significant ideological support for titles,[15] and resistance to activity-based authorisation, including from regulators who might see such a move as infringing their regulatory autonomy under the LSA 2007.

5.23     The available evidence does not make a strong case for an across the board move to activity-based authorisation, though certain areas of activity such as advocacy, will writing and probate, where there is evidence of variable standards and clear potential for consumer detriment, may benefit from this approach. There is no published research on the use of activity-based authorisation in legal settings, or in the financial services market where the model is becoming quite well-developed. The health professions, which through their systems of specialisation perhaps come close to an activity-based approach, operate in a differently constructed training and practice environment, and the general practice qualification for doctors still precedes different areas and levels of specialisation.

Entity regulation

5.24     The CLC and SRA have moved to a system of regulating ‘entities’ – firms, ABSs or other organisations – as well as individuals, and other regulators intend to move in the same direction. Under ss. 184 and 185, LSA 2007, IPReg also includes registered bodies on the patent and registered trade mark attorney registers (IPReg, n.d.). Entity regulation changes the balance of regulatory responsibility from individuals to their employing organisations and also changes the relationship between individual professionals and their regulator.

5.25     ‘Entity regulation’ is relatively untested and little data have emerged on its potential role. There was some confusion among respondents as to the nature of entity regulation: whether it implied ‘light touch’ regulation, and a concern that entity regulation implied a lighter touch to regulating ABSs than to recognised bodies such as firms of solicitors.[16]

5.26     Entity regulation fits well in the current environment. New technologies, sub-contracting to providers in other jurisdictions, splitting of services[17] and more than one lawyer handling each matter all mean that clients are likely to experience their legal services as emanating from an entity rather than a specific individual. With a growing ratio of non-admitted to admitted fee earners, in some areas of work frontline contact is increasingly likely to be delegated to paralegal and support staff, rather than to an authorised person.

5.27     Entity regulation acknowledges that organisational infrastructures, processes and cultures are significant in influencing the competent and ethical behaviour of employees or members (see, eg, Scott, 2001; Chambliss, 2004; Moorhead et al, 2012). Entities are responsible for ensuring the continuing competence of their workforce under the SRA[18] and CLC[19] codes of conduct and, as ‘regulated persons’, under the IPReg rules of conduct.[20]

5.28     Entity regulation also acknowledges that regulated entities should have a high degree of freedom to recruit and train a workforce that meets their needs and those of their clients.

5.29     Regulators delegating to regulated entities could result in  a particular impact on four key areas of training:

• the oversight of outcomes for initial workplace training of authorised persons (discussed in Chapter 4);
• quality assurance of training for the entity’s workforce as a whole (considered below);
• the determination of CPD standards and outcomes for authorised persons (considered below), and
• standard-setting for the training and development of paralegals (if appropriate – see further Chapter 6).

Summary

5.30     The novelty of the regulatory changes enacted by the LSA 2007 makes it difficult to draw conclusions about the value of title, entity and activity-based regulation as means of signalling competence in the new regulatory regime. However, it is clear that the connection between LSET and authorisation signals competence, and plays a role in assuring competence. Title-based authorisation, where the connection between title and activity is too loose or too remote, may not fulfil that assurance function. It is still questionable whether activity- or entity-based approaches can better perform that purpose, though the potential role of entities is certainly worthy of greater exploration. There are risks that the complexity of the current regulatory structure, in which different regulators:

• have a high degree of autonomy over their own LSET and authorisation systems; and
• share overlapping jurisdiction over reserved activities,

may also create challenges to co-ordination and progress.[21]

International qualifications

5.31     England and Wales are both importers and exporters of legal talent, reflecting their  significance in international and global legal practice. It matters both that foreign-trained lawyers working within the jurisdiction are at an appropriate level of competence and that domestic qualifications are of a standard to compete internationally. This section looks at each of these in turn.

Assuring the quality of entrants[22]

5.32     Entry to the barristers’ and solicitors’ professions for those otherwise professionally qualified is controlled by formal transfer tests: the BTT and the QLTS: SRA, 2013b. Both of these courses enable overseas lawyers to demonstrate competence equivalent to a QLD or GDL/CPE and the BPTC or LPC respectively.[23] Both are assessment rather than training-led. There are no required training courses for the QLTS, though three organisations currently provide preparation courses: BPP, Central Law Training, and QLTS School. The BTT has one required training element, which is a three-day intensive advocacy training programme delivered by BPP. BPP also offers the only preparation course for the BTT. Both the BTT and QLTS take an outcomes-focused approach to assessment. The QLTS in particular is distinctive in introducing practical assessment tasks with standardised clients[24] into a high stakes, qualifying assessment process (see Fry et al, 2012; Barton et al, 2006).

5.33     Each course has been subject to recent review. A BSB Working Party was convened in 2012 to review the regulations, procedures and guidance related to the BTT.[25] Following its report a further paper was published in June 2012, for consultation. The outcomes of that consultation are pending. The QLTS was introduced following a critical assessment of the former Qualified Lawyers Transfer Test (QLTT) in the Global Competitiveness Report. This called for a more flexible system that allowed lawyers holding overseas qualifications to have access to proportionate and reasonable transfer arrangements. The general perception of the QLTS is that it is a more demanding assessment than the QLTT. Recent research into the QLTS conducted for the SRA has also pointed to the robust and innovative assessment approach, (ICF GHK, 2012).

5.34     The QLTS does not require candidates subsequently to undertake a period of supervised practice, and so to that extent does not mirror requirements for domestic trainees.[26] The suggestion that this might weaken the case for retaining a period of workplace training for such trainees was expressly rejected by the CLLS:

Our support for that requalification route is not at odds with our support for the continued retention of a period of work based learning for domestic entrants to the profession. The design of the QLTS assessments is based on the assumption that the applicants will need to have had prior practical experience.

CLLS  first submission

5.35     That ‘assumption’ may be less well-founded than assumed, since some foreign qualifications do not involve any prior experience, and no additional experience is required to do the QLTS.[27]

5.36     Both tests appear proportionate in terms of ensuring that those transferring have knowledge and skills equivalent to those attained by candidates through the domestic pathways.

US legal education and the New York State Bar Examination

5.37     The United States is widely recognised as the primary competitor to England and Wales in the global legal services market. It is perhaps unsurprising therefore that the structures of legal professional education in the USA were mentioned during the research in a number of contexts. The international trends to adopt US-style ‘JD’ postgraduate law degrees in jurisdictions as diverse as Australia and Japan raised important issues about quality, and the status of undergraduate Anglo-Welsh legal education, but also concerns about cost barriers implicit in any move to make law wholly postgraduate. For others, the impact of the New York State Bar Examination (NYBE) as an ‘international’ or competing qualification was significant. For a third group, the fact that qualification in the USA does not require a period of initial supervised practice provided an example of a possible solution to the bottleneck created by the requirement for a training contract or pupillage.

5.38     The US JD system, with its strong ‘signature pedagogy’ of the case method is acknowledged for building strong analytical skills. At the same time it has been roundly criticised for its failure to integrate practical skills with doctrinal courses, for a continuing failure to contribute significantly to professional integrity and responsibility, and a growing gap between the worlds of academia and practice (Sullivan et al, 2007; see also Grossman, 2010). Because the US system does not formalise vocational training or periods of supervised practice, the debate about the appropriate place of practical, skills based or clinical material in LSET is more polarised in the US context (see Lande, 2013). The American Bar Association Task Force on Legal Education (2012), which mirrors much of the LETR research remit, suggested in December 2012 that ‘The legal education community should recognize, at a minimum, two models for law schools: (a) a research-oriented law school, which makes significant investment in faculty research; and (b) a practice-oriented law school, which makes less investment in faculty research’.

5.39     High tuition fees, low employment rates and a growing student debt problem have exacerbated debate about the US system’s ‘fitness for purpose’ (see, eg, Tamanaha, 2012). [28] Suggestions have thus been made for substantial restructuring of the JD, including reduction from three to two years (eg Estreicher, 2012). A number of law firms are also reportedly using the downturn to ‘reverse-engineer’ more supervision and training into the start of practice (Furlong, 2010; Westfahl, 2010). In this context, Flood’s (2011) conclusion that ‘the undergraduate legal degree combined with apprenticeship is losing attraction in the world’ should not necessarily be read as a prediction of the Anglo-Welsh model’s demise or unsuitability.

5.40     Chapter 2 noted the concerns of some City and other firms of solicitors involved in international practice that a US LLM and the NYBE is the preferred method for many foreign lawyers to re-qualify for the international market:

That’s a huge competitive disadvantage to UK PLC and to the profession as a whole and to our ability to practise, to grow our firm around the world because, you know, once those people have gone to America and trained as American lawyers they either may stay with American firms or some of them may join us but a lot of them will go home and for the rest of their careers, for another thirty years, their bias will be to the American system, American law firms, American way of doing things. And so each one of those that happens is a tiny little, you know, loss to the UK and English law.

Solicitor

5.41     Although Silver (2011), in an analysis of German and Chinese LLM students in the US, found that law firms did not significantly differentiate between US or UK LLMs in terms of quality, they were aware of the opportunity for US LLM students to take the NYBE whereas the English LLM did not provide access to professional qualifications in the same way. Existing structures and visa requirements for a further year of practice undoubtedly make it difficult for the UK to compete directly in this market.[29]

5.42     Numbers of foreign lawyers taking the NYBE increased from under 1,000 at the start of the last decade to 4,500 in 2009 (Flood, 2011) but had declined to 2,988 in July 2012.[30] The recession has led to pressure for regulatory reform with the New York Court of Appeals introducing stricter requirements for foreign students taking LLMs, which came into force for the 2012-13 Bar Examination year. The changes increase the credit hours required; limit the extent to which (international) summer programmes can count and require all course work to be completed within two years. Although the American Bar Association does not regulate the LLM directly as it does the JD, it has begun to take a greater interest in ways of setting conditions or prescription that could make the US LLM a less attractive option in the future, eg by requiring more training in core US law, thereby reducing the number of commercial and international courses that can be taken (see Flood, 2011).

5.43     On the other hand, the virtues of the English system were also extolled in the LETR research. It was pointed out that the QLTS means that:

It is not necessary, as in New York, to obtain an LLM prior to taking the exams and there is no formal training course. It is possible, through previous practice experience and textbook learning, to show the necessary skills and knowledge. In this way it is arguable that it is less expensive and more accessible to re-qualify here, than via the New York Bar.

Law Society response to Discussion Paper 01/2012

5.44     In summary it is fair to say that systems for ensuring the competence of non-UK entrants are robust, and that, while the UK may be losing ground against the US in quantitative terms, there is no clear evidence that this reflects a quality judgment against LSET in England and Wales. Concerns about the impact of the NYBE were not widely reflected in responses even from the commercial sector, and it was not of significance to many respondents. Nonetheless, there may certainly be a case for developing the information resources which are recommended in the next chapter to include fuller information to overseas lawyers on UK training options and their comparators.[31]