The Legal Services Act 2007 (Designation as a Licensing Authority) (No. 2) Order 2011

Explanatory Note

(This note is not part of the Order)

Article 2 of this Order designates the Law Society (“the Society”) as a licensing authority for the purposes of Part 5 of the Legal Services Act 2007 (c. 29) (“the 2007 Act”). The Society is designated in relation to the exercise of a right of audience; the conduct of litigation; reserved instrument activities; probate activities and the administration of oaths. The Society is already an approved regulator in relation to these reserved legal activities by virtue of Part 1 of Schedule 4 to the 2007 Act. Designation will allow the Society to license firms (“licensed bodies”) which are wholly or partly owned or controlled by non-lawyers to provide legal services, or a mixture of legal and other services, to the public.

Article 3 makes provision for accountants to report certain matters to the Society when preparing reports under the Society's licensing rules, mirroring the provision in section 34 of the Solicitors Act 1974 (c. 47) (“the 1974 Act”) which makes similar provision for solicitors, and by virtue of section 9 of and paragraph 5 of Schedule 2 to the Administration of Justice Act 1985 (c. 61) (“the 1985 Act”) also applies to legal services bodies recognised by the Society.

Article 4 makes provision to prevent a bank or building society being required to enquire, in relation to an account held with it by a licensed body, as to the beneficial ownership of the funds in the account to any greater extent than it would if the account was kept by the person entitled to the funds in it. It also prevents the bank or building society from having recourse to any money in such an account in respect of a liability of the licensed body to the bank or building society, other than in relation to a liability arising in connection with the account. This is similar to the provision made by section 85 of the 1974 Act in relation to accounts held by solicitors, and extended to apply to accounts held by legal services bodies recognised by the Society by paragraph 31 of Schedule 2 to the 1985 Act.

Article 5 makes provision for the Society, on application to the High Court, to obtain information and documents for the purpose of allowing it to ascertain whether the terms of a licensed body's licence are being or have been complied with. This is similar to the provision which is made by section 44BB of the 1974 Act in relation to the provision of information relating to solicitors and legal services bodies recognised by the Society.

Article 6 makes provision for the Solicitors Disciplinary Tribunal to order solicitors practising in licensed bodies to be prevented from providing representation funded by the Legal Services Commission where another solicitor practising in that licensed body has been excluded from providing such representation. This is similar to the provision made in section 47(2B) of the 1974 Act in relation to a solicitor who is a member of a firm of solicitors, and by paragraph 20 of Schedule 2 to the 1985 Act in relation to a solicitor who is a manager or employee of a legal services body recognised by the Society.

Article 7 and Schedule 1 apply provisions in Part 3 of the 1974 Act (Remuneration of Solicitors) to licensed bodies in relation to their provision of legal services. Similar provision is made in respect of legal services bodies recognised by the Society by paragraphs 22 to 29 of Schedule 2 to the 1985 Act.

Article 8 and Schedules 2 and 3 make provision for existing legislation that has effect in relation to solicitors to have effect in relation to licensed bodies, with modifications where necessary. The legislation listed in those Schedules already has effect in relation to legal services bodies recognised by the Society either as drafted or by virtue of the Solicitors' Recognised Bodies Order 1991 (S.I. 1991/2684).

A full regulatory impact assessment has not been produced for this instrument as no impact on the private and voluntary sectors is foreseen.