RADICAL reforms to modernise the legal profession and make obtaining legal advice a lot easier were outlined by the Lord Chancellor yesterday.

The Government published details of plans for England and Wales to allow outside companies to own law firms. The Lord Chancellor, Lord Falconer of Thoroton, QC, indicated that companies would be allowed to invest in law firms, with 100 per cent ownership — a proposal under which law firms could be floated on the stock market.

The White Paper published yesterday will also change how complaints by clients against lawyers are handled. A single office for legal complaints will investigate complaints against both barristers and solicitors, with powers to fine them up to £20,000. The average award for complaints in 2004-05 was less than £500.

Lord Falconer said: “People can be confident where they do have a complaint against a lawyer then it will be looked at independently and not by other lawyers. We hope that over time it will change the ethos of the way lawyers operate.”

The change to the complaints procedure is part of a new structure of regulation for the legal professions. A new, lay-dominated legal services board (LSB), costing £4 million to set up, will replace the current “maze” of regulators. The Law Society, the professional body of solicitors, and the Bar Council, of barristers, will remain, provided that they satisfy the LSB. The two bodies will have to split their regulatory and representative functions, which has already begun, and will have to use their powers in a way that “puts the consumer first,” Lord Falconer said.

Although it is proposed that non-lawyers will be allowed to own and run law firms, there will be strict tests to ensure that they are fit to operate. The Bar has expressed concern that criminals could set themselves up as law firm bosses.

The Law Society welcomed the proposals, but said that the new regulatory framework should not lead to disproportionate regulatory burdens on the legal profession. Kevin Martin, president of the society, said that the LSB could reinforce public confidence in the way lawyers are regulated, but that it would be better for regulatory powers to be vested directly in the frontline regulators such as the Law Society and the Bar Council.

Stephen Hockman, QC, the vice-chairman of the Bar Council, welcomed “much that is positive” in the White Paper and its aim to improve the consumer’s experience of the legal profession, but estimated the annual running cost of the new arrangements at £27 million, and said it would be borne by consumers. The Government had declined to contribute, he said.

Lord Falconer also revealed urgent plans to introduce rules on “ambulance-chasing” law firms, also known as claims farmers, as part of a wider crackdown on the compensation culture. A Compensation Bill will be published soon to bring claims farmers under government supervision.

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