Introduction to legal services and regulation - Overview of ...

Learning Outcomes

This article outlines legal services regulation in England and Wales under the Legal Services Act 2007 and the activity‑based model, including:

• The statutory framework created by the Legal Services Act 2007 (LSA 2007) and the operation of activity‑based regulation
• The distinction between reserved and non‑reserved legal activities and lawful providers for each
• Roles of the Legal Services Board (oversight regulator) and frontline approved regulators (including the SRA, BSB, CLC, CILEx Regulation, IPReg, CLSB, Head of the Faculties and ICAEW), and regulatory overlap between individual and entity regulation
• Authorisation requirements for individuals and firms: practising certificates, entity authorisation, and licensing of Alternative Business Structures (ABS)
• Exemptions for unauthorised persons, consequences of unauthorised practice (criminal liability and contempt of court), and court‑granted rights of audience
• Complaints jurisdiction of the Legal Ombudsman: eligible complainants, time limits, available remedies, and distinction between service issues and professional misconduct for referral to regulators
• Impact of general law duties beyond sector regulation (equality, data protection, financial services, anti‑money laundering) on the delivery of legal services

SQE1 Syllabus

For SQE1, you are required to understand legal services regulation in England and Wales under the Legal Services Act 2007, with a focus on the following syllabus points:

• the Legal Services Act 2007 and its regulatory objectives
• the meaning and scope of reserved legal activities
• the distinction between authorised and unauthorised legal service providers
• the roles of the Legal Services Board, Solicitors Regulation Authority, and other approved regulators
• the requirements for authorisation to carry out reserved legal activities
• the consequences of unauthorised practice and the role of the Legal Ombudsman

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. What are the six reserved legal activities under the Legal Services Act 2007?
2. Who is permitted to carry out reserved legal activities in England and Wales?
3. What is the main function of the Legal Services Board?
4. What is the consequence of carrying out a reserved legal activity without authorisation?

Introduction

Legal services in England and Wales are subject to a statutory regulatory framework designed to protect the public, uphold the rule of law, and ensure high professional standards. The Legal Services Act 2007 (LSA 2007) is the central piece of legislation, introducing key concepts such as reserved legal activities, authorised persons, and a system of oversight and frontline regulators. Understanding this framework is essential for anyone preparing for the SQE1 exam.

The Legal Services Act 2007: Purpose and Structure

The LSA 2007 was enacted to modernise the regulation of legal services, encourage competition, and improve consumer protection. It sets out eight regulatory objectives, including protecting the public interest, supporting the rule of law, improving access to justice, and promoting competition.

The Act adopts an activity-based model. Only specified “reserved legal activities” require authorisation, while non‑reserved legal activities (such as most will‑writing, many forms of general legal advice or negotiation) may lawfully be performed by unregulated providers. However, once an individual or firm is authorised, their regulator’s standards apply to all legal services they deliver, not just to the reserved activities. The Act also separates functions: the Legal Services Board (LSB) oversees approved regulators, while frontline regulators (for example, the SRA and BSB) authorise and supervise practitioners and entities. Consumer redress is strengthened by the establishment of the independent Legal Ombudsman scheme for service complaints.

Key Term: Legal Services Act 2007
The main statute regulating legal services in England and Wales, establishing the regulatory framework, reserved legal activities, and oversight bodies.

Regulatory Objectives

The Act lists the following regulatory objectives:

• Protecting and promoting the public interest
• Supporting the constitutional principle of the rule of law
• Improving access to justice
• Protecting and promoting the interests of consumers
• Promoting competition in legal services
• Encouraging an independent, strong, diverse, and effective legal profession
• Increasing public understanding of legal rights and duties
• Promoting adherence to professional principles (independence, integrity, proper standards, acting in clients’ best interests, duty to the court, and confidentiality)

Frontline regulators and the LSB must act compatibly with these objectives. In practice they are balancing and aspirational, requiring judgment in application and sometimes trade‑offs (for example, between competition and consumer protection).

Reserved Legal Activities

Only authorised persons or entities can carry out certain activities defined as "reserved legal activities." These are:

1. The exercise of a right of audience (appearing before and addressing a court)
2. The conduct of litigation (issuing and managing court proceedings)
3. Reserved instrument activities (preparing and lodging certain legal documents, e.g., for land registration)
4. Probate activities (preparing papers for grants of probate or letters of administration)
5. Notarial activities (certifying and authenticating documents)
6. The administration of oaths (administering oaths and statutory declarations)

The scope of each category is defined in the Act and supporting legislation. For example, reserved instrument activities relate to preparing or lodging instruments affecting the disposition or charging of land or documents for court proceedings; wills and powers of attorney are expressly excluded from this category. “Probate activities” focus on preparing the legal papers to obtain a grant (or to oppose a grant) rather than broader estate administration work, much of which can be undertaken by unregulated providers. “Conduct of litigation” includes commencing proceedings and performing ancillary functions (such as acknowledging service), and the courts have treated the laying of an information in a magistrates’ court as commencing proceedings.

Key Term: reserved legal activities
Specific legal tasks that, by law, can only be performed by authorised persons or entities.

Authorised Persons and Approved Regulators

To carry out reserved legal activities, a person or entity must be authorised by an approved regulator. The main approved regulators and their regulated professions are:

• Solicitors Regulation Authority (SRA): solicitors and SRA-regulated firms
• Bar Standards Board (BSB): barristers
• CILEx Regulation: chartered legal executives
• Council for Licensed Conveyancers (CLC): licensed conveyancers
• Intellectual Property Regulation Board (IPReg): patent and trade mark attorneys
• Costs Lawyer Standards Board: costs lawyers
• Dean of the Faculties (Head of the Faculties): notaries
• Institute of Chartered Accountants in England and Wales (ICAEW): probate activities

Authorisation can be individual (for example, admission to the roll and a practising certificate for a solicitor) and/or entity-based (for example, SRA authorisation of a firm). Authorised individuals are subject to their regulator’s standards for all legal services they provide, and authorised entities are responsible for systems and controls to ensure compliance. Given modern multi‑disciplinary practice, regulatory overlap can arise; for example, a barrister employed by an SRA‑authorised firm is regulated by the BSB as an individual advocate, while the firm itself is regulated by the SRA as the entity.

Key Term: authorised person
An individual or entity authorised by an approved regulator to carry out one or more reserved legal activities.

Key Term: approved regulator
A regulatory body recognised under the Legal Services Act 2007 as responsible for authorising and supervising a specific legal profession.

The Legal Services Board and Oversight

The Legal Services Board (LSB) is the oversight regulator. It supervises the approved regulators, ensuring they meet the regulatory objectives and maintain effective regulation. The LSB approves rule changes, can direct regulators to take (or refrain from) specified steps, and may ultimately recommend the removal or limitation of a regulator’s designation. It maintains a statutory Consumer Panel to represent consumer interests and inform its decisions.

Key Term: Legal Services Board
The statutory oversight regulator responsible for supervising approved regulators and promoting the regulatory objectives.

The Solicitors Regulation Authority

The SRA is the largest frontline regulator, responsible for regulating solicitors and SRA-authorised firms. It sets professional standards, authorises individuals and firms, enforces compliance, and oversees education and training. Admission to the roll, character and suitability assessment, and holding a current practising certificate are prerequisites for practising as a solicitor. Acting as a solicitor without a practising certificate is a criminal offence under the Solicitors Act 1974. Entity regulation is central: SRA‑authorised firms must ensure appropriate governance, financial stability, and risk management, and must appoint compliance officers for legal practice (COLP) and for finance and administration (COFA) where required. Authorised individuals and firms are accountable for all legal services they deliver, including non‑reserved work.

Alternative Business Structures (ABS)

The Act allows for Alternative Business Structures (ABS), enabling non-lawyers to own or manage law firms, subject to licensing and suitability checks. ABSs must be licensed by an approved regulator with licensing authority (e.g., SRA, CLC, IPReg, ICAEW). Licensing regimes consider non‑lawyer owners’ fitness and propriety, the firm’s governance arrangements, and safeguards for clients. ABSs broaden consumer choice and facilitate multi‑disciplinary practice (for example, legal and accountancy services provided together), but remain fully subject to professional standards and client protection rules, including client money rules and professional indemnity insurance where applicable.

Key Term: Alternative Business Structure (ABS)
A law firm or entity that allows non-lawyers to have ownership or management roles, subject to licensing and regulation.

Unauthorised and Exempt Providers

Legal service providers who are not authorised may only carry out non-reserved legal activities (e.g., general legal advice, will writing, some employment law advice). Carrying out a reserved legal activity without authorisation is a criminal offence.

Some exemptions exist, such as:

• Acting as a litigant in person (representing oneself)
• Courts granting a right of audience or right to conduct litigation in a particular case under specific enactments or with permission (e.g., certain lay representatives in small claims)
• Acting under the supervision of an authorised person in specified circumstances
• Certain non‑commercial or not‑for‑profit organisations providing advice in limited, prescribed ways

The boundary between reserved and non‑reserved work is therefore critically important. In‑house solicitors may carry out reserved activities for their employer (including group companies if permitted), but not for the general public; rights for lay persons to address a court are tightly confined to specific statutory schemes or court permission.

The Legal Ombudsman

The Legal Ombudsman provides an independent complaints service for consumers dissatisfied with the service received from a regulated legal professional or firm. It operates a two‑stage framework: clients must ordinarily exhaust the firm’s internal complaints procedure first, and then may refer the matter to the Ombudsman within the scheme time limits (generally within six years of the act/omission or three years from reasonable knowledge, and within six months of the firm’s final response). Eligible complainants include individuals, micro‑enterprises, small charities and trustees within defined thresholds, and personal representatives or beneficiaries in relation to estate services.

The Ombudsman focuses on service quality rather than disciplinary issues. It can direct apologies, remedial work, fee reductions or refunds, and compensation for distress/inconvenience and loss up to a monetary cap (currently £50,000), and may award interest. Determinations accepted by the complainant are final and binding, enforceable as court judgments. Where alleged misconduct emerges, the Ombudsman will refer the matter to the relevant regulator (e.g., SRA).

Key Term: Legal Ombudsman
The independent body handling complaints about the service provided by regulated legal professionals and firms.

Worked Example 1.1

A paralegal in an unregulated will-writing company is asked by a client to prepare and submit a land transfer document for registration at the Land Registry. Can the paralegal lawfully do this?

Answer:
No. Preparing and lodging a land transfer document for registration is a reserved instrument activity. Only an authorised person or entity can carry out this reserved legal activity. The paralegal and the company would be committing a criminal offence if they proceed.

Worked Example 1.2

A solicitor is employed by a company as an in-house lawyer. The company asks the solicitor to represent a customer in court proceedings. Is this permitted?

Answer:
No. An in-house solicitor may only carry out reserved legal activities for their employer, not for external clients or customers. Representing a third party in court would require authorisation as a law firm.

Worked Example 1.3

A chartered accountancy practice (not otherwise authorised) wishes to start offering probate services to its clients by preparing the papers for grants of probate. Can it do so without any legal services authorisation?

Answer:
Not for reserved probate activities. Preparing the papers to obtain a grant is a reserved legal activity. The practice would need to be authorised by an approved regulator with probate licensing powers (for example, ICAEW) and comply with that regulator’s rules. It may, however, continue to provide non‑reserved estate administration tasks that fall outside the statutory definition.

Worked Example 1.4

A friend wants to speak on behalf of a party in a small claims hearing. The party will attend in person. Is this ever allowed for an unqualified person?

Answer:
Yes, in limited circumstances. Rights of audience are reserved, but certain enactments and court rules allow a lay representative to address the court on a small claim if the party is present and consents, subject to the court’s control. This is a specific exemption; it does not confer a general right of audience outside the scope of the relevant scheme.

Exam Warning

Carrying out a reserved legal activity without authorisation is a criminal offence under the Legal Services Act 2007. This includes holding out as authorised when not entitled. For SQE1, be able to identify reserved activities and who may lawfully perform them. In the context of rights of audience and conduct of litigation, unauthorised acts can also amount to contempt of court.

Revision Tip

When revising, focus on the distinction between reserved and non-reserved activities, and which regulators authorise which professions. Be able to identify the consequences of unauthorised practice.

Summary

Key Point Checklist

This article has covered the following key knowledge points:

• The Legal Services Act 2007 sets the regulatory framework for legal services in England and Wales.
• Regulation is activity-based: only reserved legal activities require authorisation; non‑reserved legal services may be delivered by unregulated providers.
• Reserved legal activities can only be carried out by authorised persons or entities.
• Authorised persons must be authorised by an approved regulator and are subject to regulation for all legal services they provide.
• The Legal Services Board oversees approved regulators and promotes regulatory objectives.
• The SRA regulates solicitors and SRA-authorised firms, focusing on both individual and entity compliance.
• Alternative Business Structures allow non-lawyers to own or manage law firms, subject to licensing.
• Carrying out reserved legal activities without authorisation is a criminal offence and can also lead to contempt findings in litigation contexts.
• The Legal Ombudsman handles service complaints about regulated legal professionals and firms, with powers to award redress.
• Some legal service areas are regulated outside the LSA (e.g., claims management by the FCA; immigration advice by OISC; insolvency practice), and general legal obligations (equality, data protection, anti‑money laundering) apply across the sector.

Key Terms and Concepts

• Legal Services Act 2007
• reserved legal activities
• authorised person
• approved regulator
• Legal Services Board
• Alternative Business Structure (ABS)
• Legal Ombudsman