Draft legislation that paves the way for insurance companies to buy law firms has been published today.
The draft Legal Services Bill sets out the government's plans to allow law firms and non-law firms to form legal partnerships and companies.
Described colloquially as ‘Tesco law' as in theory supermarkets would be allowed to provide legal services, the Bill will allow insurance companies, loss adjusters and brokers to buy law firms.
The Bill also proposes the creation of an “independent oversight” regulator, the Legal Services Board. This will authorise approved regulators such as the Law Society and the Bar Council.
It is likely to also oversee the body that will regulate claims management companies under the Compensation Bill. The identity of this body is due to be revealed shortly.
The draft Legal Services Bill will be subject to pre-legislative scrutiny by a Joint Committee, which will report by July 2006.
The Lord Chancellor Lord Falconer said: “This timeframe provides an opportunity for Parliament to take evidence and consider the detail of the proposals and make recommendations through the Joint Committee's final report.”
The draft Bill follows a review by Sir David Clementi in 2004 on the regulation of legal services. His report concluded that current regulator model was “inflexible, outdated and over-complex”.
In 2005, the government published a White Paper setting out proposals for a new regulatory framework.
