By mid-January next year, a raft of law firms will find themselves under a new regulatory regime. The Financial Services Authority (FSA) is to extend its regulatory arm beyond its current scope, in the light of European Union (EU) legislation which has prompted a general re-think of how professional services firms are regulated. High street firms across the country may now find themselves under the FSA spotlight, while major firms that may also be affected include insurance heavyweights Irwin Mitchell, Russell Jones & Walker, Leigh Day & Co, Thompsons and Underwoods.
The move is likely to add significantly to the small number of law firms already under the FSA’s supervision – those with investment arms have been regulated by the FSA as well as the Law Society since 2001. Claimant insurance firms have arguably found themselves under the regulation spotlight because of publicity generated by the collapse of Claims Direct and The Accident Group. Recent changes to litigation funding, including the wider use of after the event insurance and conditional fee arrangements, have ultimately improved claimants’ access to justice, but they have also caused claimant firms a massive headache in getting to grips with the complex changes. Firms faced massive challenges in the courts in firming up the details of conditional fee arrangements (CFAs), and are fearful of further change. As well as adding an extra layer of regulation, the change is likely to bring extra costs.
