Helen Groom and Katy Dowell report on the industry's reaction to the long-awaited Clementi review of the legal profession

Sir David Clementi's long-awaited review of the legal profession and the restrictive business practices surrounding it, has opened up a number of opportunities for the insurance industry.

The report, published on 15 December, will limit the ability of insurers to own and run their own legal practices. But it has presented a number of opportunities to make the claims handling process more efficient. And for brokers to buy stakes in legal firms.

Despite much positive feedback from the insurance industry, the report has been criticised for missing an opportunity of cracking down on claims management companies (CMCs).

Speaking at the launch of the report, Clementi, who was appointed by Lord Falconer in July 2003 to review the regulation of legal services in England and Wales, claimed that regulation of CMCs had not been addressed as they were outside the scope of the review.

Clementi said the issue of CMCs was very complex. But he added that the proposed framework would allow the easy regulation of CMCs should the government choose to take that route. There would be no need for primary legislation to do this, he added.

But the Association of Personal Injury Lawyers (Apil) criticised the report for overlooking the issue of claims management firms, a position Forum of Insurance Lawyers president Andrew Underwood supported.

Apil said it was "bitterly disappointed" that CMCs were not included in the review. Apil president Colin Ettinger said: "The government has dithered for years over this issue and Clementi has now failed to deal with it."

David Vine, business development manager for Allianz Cornhill Legal Protection, said there was a general disappointment within the industry that CMCs had not been included in the review.

Lord Hunt of Wirral, senior partner of Beachcroft Wansbroughs welcomed the report. He said: "What I want to see is the legal profession providing business solutions for their clients, so that lawyers become trusted business advisers." The recommendations in the Clementi review, if they become law, "would present tremendous opportunities", he added.

Lord Falconer said the government would publish a White Paper on the proposals "as soon as possible next year, followed by legislation as soon as parliamentary time allows".

Clementi's recommendations

Recommendation: An independent oversight regulator, the Legal Services Board, devolving regulatory functions to front-line bodies (eg Law Society) subject to appropriate competence and governance arrangements. The board should have statutory objectives and strong regulatory powers.

Benefits: A clear and accountable framework with statutory objectives to promote the consumer and public interest and increase accountability.

Recommendation: A single independent Office for Legal Complaints, subject to oversight by the Legal Services Board.

Benefits: A complaints system which is easy to access and independent in dealing with consumer complaints.

Recommendation: Legal Disciplinary Practices, which permit non-lawyers to be involved in management and ownership. Under these practices lawyers from different professional bodies should work together on an equal footing.

Benefits: Practices should encourage new capital and ideas in promoting cost-effective consumer friendly legal services.