Unsurprising Bar research

There’s an air of disappointment in the Director of the BSB, Vanessa Davies’s foreword to its latest research on the Bar’s attitudes to “delivery models” (that is, the entities in which they practise).

Anyone knowing the Bar won’t be surprised that, overwhelmingly, respondents don’t see any need for change to their delivery models or that there’s a slight air of complacency about their approach.  Even so, you sense slight desperation as Davies enumerates the things that ought to make them less complacent – “The UK leaving the European Union, reform in the Courts and Tribunals service and the issues of unmet legal need and the lack of consumer understanding of the legal services market, which were highlighted in the Competition and Markets Authority’s (CMA) recent study of legal services – published after this survey had taken place – represent challenges for us all to meet.

Offhand, I can’t see what impact Brexit or reform to the courts service will have on delivery models but the comment about unmet legal need is revealing.  One of the great assumptions about ABS was that the additional freedom of who you could work with and the additional investment available would enable the market to address problems of access to justice by providing more competitive and accessible legal services.  I’m not aware of anything that suggests this is actually happening and, insofar as it’s the BSB’s remit to address this question, one can perhaps understand why there’s a sense of “where do we go from here?” in Dr Davies’s words.

The research

Essentially the research shows:

  • The overwhelming majority of barristers deliver their services through chambers – other methods are outliers;
  • Barristers don’t see any need for wholesale immediate change in business models – less than 10% intend anything heavy in the next year or so;
  • Most of them are adapting to client demand and new technology and have a flexible approach to fees;
  • New entities are likely to be more flexible than older ones but there’s not much in it;
  • They have an, understandable, suspicion of outsourcing;
  • ABS is an “enabler” of change but nobody particularly wants to change;
  • They don’t expect to change their marketing strategies any time soon.

No surprises here.  The research base was entirely of existing suppliers and 53% of them had been operating for more than 20 years: you’d expect them to be happy the way they are.

There has never been any doubt that the Chambers business model is a very suitable one for successful barristers – relatively low overheads, they can concentrate on their specialisms with no need to worry about conflicts and they leave the boring stuff to solicitors or the lay client.  There’s never been much demand at the Bar to change it: the arguments for ABS have never come from people actually supplying the services.

Many findings chime with my experience in my current role as a purchaser of barristers’ services.  They are increasingly client focused.  Most Chambers will provide fee arrangements that suit their regular clients, they will be flexible about when and how you meet and how quickly you need advice and, indeed, the sort of work they will do.  According to the report, this would even extend to the “if you need a bunch of paralegals, we’ll get them for you”, which would have been unheard of ten years ago (though one or two of the forward-thinking Chambers fantasised about it).  It shows suppliers in tune with their market.

Unmet legal need?

But it’s a limited market and, while the report talks about “unmet legal need” as a challenge, the discussion, if it can even be called that, is pretty naïve and low level.  There’s a suggestion that SMEs and individuals do not use legal services as much as they could but little in the way of ideas of how that could be addressed.  There’s a nod in the direction of working with accountants (though noting that the BSB doesn’t regulate such entities) and a suggestion that local authorities may be a source of work all of which suggests a very limited understanding by the respondents (and, indeed, the researchers) of the legal services market.   At one point the report has to qualify some comments by pointing out that these were the views of the supplier based, untested on the actual market itself.

So there is nothing to suggest that the Bar recognises unmet legal need as its problem (though a respectable number of them do pro bono work – even if the amount isn’t stated) and, that apart, I see no appetite to make their services more affordable.

Fee transparency?

Transparency of fees is also mentioned in Davies’s foreword and research does suggest that uncertainty about cost is a major factor in people not using lawyers.  Requiring publication of fee rates may not be the answer, particularly if this simply confirms that the fees are more than people want to pay.  And what’s the point of an hourly rate if you don’t know how long the work is going to take?  Moreover, the research here suggests that fixed fee arrangements were problematic because it might lead either to over- or under-charging.  This may be because Chambers simply aren’t used to working out sensible “swings and roundabouts” fixed rates for bulk or standard work, but there is also a good deal of non-standard work at the Bar.

The Bar (and, indeed, solicitors) can be very flexible indeed about pricing when dealing with interesting work and regular clients but most people falling into the “unmet need” category probably don’t have the sophistication to tap into this. So transparency of pricing may be objectively a “good thing” but whether it will actually lead more people to use legal services debatable.

Barristers’ work

There’s little discussion about the extent of the work that barristers do, which I found surprising.  Barristers generally limit themselves to advisory work and advocacy, avoiding the high risk activities and, as a result regulatory and insurance costs are lower.  It also left the boring transactional stuff to solicitors.  There’s now a lot more flexibility about this and it would have been interesting to see whether respondents felt any urge to move into areas more traditionally done by solicitors – if only because it takes them closer to their clients and aren’t at the mercy of solicitors for the instructions they receive. I am pretty sure that we can infer that answer is likely to be that the appetite is limited but it’s interesting that it doesn’t appear to be on the radar.

More work?

So, if it’s expecting the market to respond to unmet legal need, the BSB seems to be looking in the wrong part of it.

However, it seems to me that we need a much more sophisticated debate about unmet legal need and what this means.  I’ve no doubt that there are many situations in life where a bit of legal advice would be appropriate or useful but it may not be the end of the world if you don’t get it.  Most of us have things we would rather do with our money than spend it on lawyers and the LSB’s research tends to show SMEs at least using a number of cheaper options than lawyers.  I don’t blame them for this.

And is it really the BSB’s role to encourage access to justice?  How far can a regulator of commercial entities, in an environment where people are free to choose what work they do, serious expect to solve the problems of ignorance and lack of money that are all part of the problem?

It can’t solve it, but there are two areas where it might want to look.  First, it might want to cross check the suppliers’ assumptions with potential users: not those of us are used to it and work with Chambers, but those people who are intimidated at the thought of using a barrister.  Whether those it regulates will care, is another question.

And might it not also look at people other than the existing supply base?  Each year nearly 2000 people qualify as barristers but less than 500 go on get a pupillage.  Might increased supply reduce price and find more innovative ways of solving the problem?  Possibly, though you would need to  get the infrastructure right to support them and ensure that they have the competence to do the work.  Or would they simply find that there wasn’t the market to make the living they want and go off to do something else?  But it seems to me that a far greater catalyst for change than ABS would be a thorough, open-minded view of the qualification and practising rules.

So the research provides an interesting snapshot of a group of suppliers being successful on their own terms and comfortable with its position in its existing market.  If you’re looking for something which seriously addresses unmet legal need, these aren’t the people who are going to provide it.  The research shows the extent of the task.

Regulation and ethics

The Law Society has just published a consultation with its members on proposals for independent regulation and appears to be seeking views on a situation where an independent regulator would set “minimum standards” while the professional body would be responsible for the ethical or professional standards.

It’s a really interesting debate and it may need some work to decide exactly where the boundary between the two lies.  There doesn’t seem to be a closing date, but solicitors are encouraged to contact their local Law Society regional managers or to send comments to an email address.

Run-off cover debate moves on

The SRA announced on Wednesday that it would not be extending beyond 2020 the existing arrangements for post-six year run-off cover.  Under these, the reserves from the old Solicitors Indemnity Fund (SIF) are used to cover claims against solicitors and firms that have ceased practice, after their six year run-off cover ends.  Those solicitors won’t be covered for claims arising after 2020.

For most firms and solicitors, this decision is of academic interest.  However, it might well cause worry to those people who’ve closed their firms down already and those who are thinking of doing so.

It’s a remote risk. Most claims come in well before the end of the six year period.  But the fact that the SIF still deals with claims arising outside that period suggests that the risk is still there.  After all, the six-year limitation period is anything but a complete defence to a claim coming in later.

Why do something?

The SRA had to do something about this.  The SIF reserves will run out in the early 2020s and it needed to work out what happened next.  None of the options would be that palatable: to levy the profession to continue the protection; to extend the compulsory run-off requirement (for how long?); to let the market sort it out; or to extend the arrangements and risk the SIF money running out.

The decision to stop it now is obviously the easiest, given that the SRA was under pressure to reach a decision quickly and the impetus is to reduce the costs of practice and, indeed, of leaving practice.

However, Paul Philip’s comment was interesting.  He said “We consulted on reducing the amount of run-off cover because many see it as a barrier to closing down, and that’s still something we want to look at. Extending cover through SIF would be contrary to that aim and would be suggesting that six years run off cover is not enough”.

“Not enough” for what?  It may be a pragmatic point at which you can be satisfied that the bulk of claims will be met because of the limitation rules and where it’s disproportionate to require longer cover from a regulatory point of view.  But it’s certainly not enough if (a) you’re a solicitor wanting to sleep easy in your retirement; or (b) a consumer with a claim arising outside the period and the solicitor is not worth suing.  Moreover, the SIF protection did not add to the costs of exiting.

What this arrangement did, as well as ensuring peace of mind for solicitors, was to ensure that consumers did not suffer detriment in the relatively few cases that arose.  You might think it’s surprising that the SRA hasn’t dealt with what will happen here.

What now?


At the moment, there is no product on the market to take firms beyond the compulsory  six year period.  There hasn’t needed to be.  My understanding was that insurers didn’t much like run-off arrangements: the risk is hard to assess and there is nothing that anyone can do to mitigate it.  Equally, there must now be some sort of market for it and it would be astonishing if insurers didn’t produce some product or products to fill the gap.

Whether that will be sufficient to cover the gap is open to question.  Given the Paul Philip’s statement, it seems unlikely that the SRA will make such cover mandatory and insurers themselves might want to cherry-pick the risks.  I wonder if cover will be available or affordable if you’ve had a claim during the run-off period.  And, faced with expensive cover, many solicitors may decide to take the risk.


The SRA is still looking at the question of client protection – though rather quietly.  It’s no secret that it would like to reduce the costs of leaving the market and, even, to reduce the compulsory run-off period.

The problem that they have is that this will inevitably mean that some solicitors will not have insurance in place for claims that come in after the compulsory period ends and may not be worth suing.  This leaves consumers, who would have been in no position to second-guess this, without redress.  Is this an outcome that the SRA wants?

In theory, the Compensation Fund could accept claims where the solicitor wasn’t good for the money.  But doesn’t this end up with the profession paying anyway, though possibly in a smaller number of cases?

Still work to do

Reducing the costs of exiting the market is obviously laudable: a good number of solicitors can’t do so, it is alleged, because of the cost of run-off and because their practices are simply unattractive to sell on.  It might be that those are the very ones most in need of run-off cover beyond the six years.

However, sensible solicitors will want to take out insurance beyond the six years and the likelihood is, that if the market does cover this, the overall costs for them of getting out of the market will increase.

Meanwhile, what happens to what is probably a small number of consumers who may be left high and dry?  The SRA does need to come up with an answer to this, at the very least by 2020 – even if it’s only to wash its hands.

This announcement brings an element of certainty to position, but a number of retired or potentially retiring solicitors will be worried as might some consumers, if they were aware of it.  The SRA’s future review needs to bring some certainty to them.  I suppose they have until 2020 to sort it.

McKenzie Friends – to pay or not to pay?

McKenzie Friends have been a growing problem for judges in recent years, particularly with the decline in the availability of legal and the growth of litigants in person.  They have to deal, for example, with the former bouncer who insults counsel on the other side and, I imagine, for all the help some give, others probably make a case worse.  The fact that a number ask for payment for their services which maybe of worse than dubious quality adds to the disquiet.

And while the Bar has been unhappy for some time about this and the Legal Services Consumer Panel has looked into it and thought, on balance that there wasn’t a problem with paying McKenzie Friend, no-one has shown any great keenness to get involved – and, to be fair, the only people that really could do so are the MoJ and the judiciary themselves.

The consultation

So the Judicial Executive Board’s recent consultation paper on the subject is understandable.  It’s also interesting because the judges seem to be stepping gingerly into the field of regulation.  It almost takes us back to medieval history when they did this through the Inns for barristers and made solicitors Officers of the Court.  There’s no body to regulate McKenzie Friends, so the judges do it themselves.

There are four main proposals:

  1. The courts should take a more formal approach, with rules governing McKenzie Friends part of the Rules of Court rather than, as at present in guidance;
  2. The name should be changed to “court supporter”;
  3. McKenzie Friends who seek permission to act as advocates or conduct litigation should provide the courts with a short CV and undertake to follow a Code of Conduct with respect to their duty to the court; and
  4. The court will not permit McKenzie Friends to appear if they are receiving direct or indirect payment for their services.

The first two seem relatively uncontroversial.  McKenzie Friends seem to be a growing feature of the landscape and it makes sense to have some formal rules governing their relationship with the courts.

As for the title, it’s laudable to have a title that is a bit more intuitive than McKenzie Friend.  Personally, I’m not sure that “court supporter” quite gets it – it sounds as though they’re supporting the court rather than the litigant, which doesn’t give quite the right impression.  But this is the sort of thing which you could argue about for ever.

Regulation by the court

It seems pretty clear to me that the requirements in the draft rules are taking a step towards regulating McKenzie Friends.  If you want to have a McKenzie Friend supporting you, you’ll need to have a statement of truth covering a CV and a statement that the McKenzie Friends understands their duties and obligations of confidentiality.  There’ll be a Code of Conduct and presumably the judges will deal with breaches of it directly.  The rules make it clear that they will have the same obligations as if they were a solicitor.  I wonder what the Law Society thinks about that.

The court will also have the power to revoke the permission (and be required to do so if it emerges that the McKenzie Friend is being paid).

It’s understandable and sensible for courts to want to have this control.  It’s still pretty rough and ready.  I doubt that the judges will have the resources to go behind the CVs and check.  Those CVs, I’m pretty sure, will not include the dodgier parts of any McKenzie Friend’s history.  But it’s a start.

There’s also no mechanism for establishing a consistent approach.  You can imagine different judges taking very different approaches to the same individual and that can’t be good to the system.  There’s nothing in the paper about any mechanism for recording decisions or enabling judges to provide feedback on any problems they encounter.  You can understand why they’d shy away from that, but sooner or later, I suspect, they’ll find that something like that will be necessary.

Should McKenzie Friends be paid?

Perhaps unsurprisingly, the judges have preferred the views of the Bar to those of the consumer panel and decided that McKenzie Friends should not be paid either directly or indirectly by the litigant in person.

There seem to be two main arguments.  First, they suggest that the pro bono facilities in the courts are sufficient to ensure that no one is without some professional support.  Really?

Secondly, they don’t want to create an incentive for a less regulated group of advocates to exist. There are statutory provisions within the Legal Services Act to achieve that and if legislators or regulators want to extend the boundaries, that’s for them to decide, not the judges.  You also sense that the judges would really rather not have to deal with a growing band of McKenzie Friends.  This is intended to discourage them.

How enforceable is it?  I suspect that determined litigants in person and McKenzie Friends could evade this requirement simply by keeping quiet.  But these things have a habit of being found out and a litigant will have a very good hold over the McKenzie Friend if they decide not to pay after all.  I imagine judges will use contempt sanctions fairly heavily if they find out that they’ve been misled.  We’ll see.

And what about litigants in person?

The judges argue that these provisions will help protect the public from unscrupulous McKenzie Friends.  That’s probably right.  However, it’s also going to add a burden for the litigant in person who may well be put off by requirements that they and the McKenzie Friends have to sign statements of truth, look at a Code of Conduct and send in a CV.

It’s also going to reduce the availability of support for litigants in person and reduce choice.  That was the concern of the consumer panel: how do you balance the needs of vulnerable people for decent support with protecting them from the unscrupulous.  Dodgy McKenzie Friends will probably be reduced, but a few very good ones may disappear as well.  I hope the judges are right that there’s enough pro bono support available.

Judiciary consult on McKenzie Friends

The Judicial Executive Board has issued a consultation on how the courts should approach McKenzie Friends.  The main proposals are:

  1. The courts should take a more formal approach, with rules governing McKenzie Friends part of the Rules of Court rather than, as at present in guidance;
  2. The name should be changed to “court supporter”;
  3. McKenzie Friends who seek permission to act as advocates or conduct litigation should provide the courts with a short CV and undertake to follow the normal rules with respect to their duty to the court; and
  4. The court will not permit McKenzie Friends to appear if they are receiving direct or indirect payment for their services.

The consultation follows concerns from the Bar Council and reports by the Legal Services Consumer Panel about paid McKenzie Friends.

The consultation closes on 19th May 2016.

Consumer protection

The CMA has said that it will be looking at the consumer protection available in respect of legal services as part of it market study.  It’s a complex and tricky picture covering complaints, insurance and the protection of client funds and the different professions and providers have very different approaches.


The SRA has been grappling with the issue of consumer protection for a couple of years now and have found it difficult.  It’s one of the few areas where it’s found the Legal Services Board difficult to convince about the effect of reform.  Part of their difficulty is that the protections available to consumers are pretty comprehensive and it is quite difficult to change one aspect of them without causing damage further down the line and risking headlines about widows and orphans left penniless because the protections aren’t good enough.


Solicitors are required to be insured under the minimum terms and conditions (MTC) set out by the SRA.  Those require a minimum level of cover of £2m and for the insurers to be bound by a number of conditions which would not apply in normal insurance contracts (for example, firms are covered even if there has been non-disclosure, a partner has been dishonest and there are strict rules about aggregating claims).

All this has had an impact on smaller firms who find the cost of insurance a major cost of doing business and, indeed, during the hard market of 2010-2012 many firms found both obtaining and paying for insurance a struggle.  There was a perception that it was insurers, rather than the SRA who were actually dictating who was an was not in practice.

In 2014, the SRA proposed a number of changes to the market – a reduction in the minimum cover and some other changes aimed at making insurance more affordable.  They were very heavily criticised and the SRA are now considering the position and likely to consult further in 2016.

Client accounts

Several hundred billion pounds probably go through solicitors’ client accounts each year.  And the costs to the profession of policing them go into tens of millions.  This is partly through the payments to the Compensation Fund, partly through the costs of the SRA for monitoring and investigating dishonesty and partly the costs of compliance with outdated rules.

These arrangements, however, provide pretty much guaranteed protection for consumers if there’s any dishonesty and an important last resort.

The LSB is interested in this.  It notes the risks and the costs and that there are alternative ways of holding money which may not create such risks.  It’s also, perhaps an issue that the solicitors’ arrangements are so gold-plated that they represented a very difficult goal for new entrants to meet.

Equally, the solicitors’ arrangements tend to meet the needs of clients.  I wonder how many would hold client money if it were not a particular important feature of what they do.


Self-employed barristers are required to be insured by the Bar Mutual Indemnity Fund – a mutual that operates on similar terms to the solicitors’ MTCs, though with a lower minimum level.

Barristers are simply not permitted to handle client money – therefore there is no need for accounts rules or a Compensation Fund.  This hampers them in undertaking work on a direct access basis – if a client needs evidence gathered or experts instructed, he or she has to pay directly.  In recent years, the Bar Council has developed a model called BarCo which provides a third party escrow account to deal with such transactions.  It’s not clear whether this would be suitable for the wider needs of solicitors.

Licensed Conveyancers

Licensed conveyancers have a Compensation Fund and  must be insured either with the Master Fund operated by the CLC or be insured in a scheme with similar levels of protection.

Legal Executives

CILEx Regulation has provided insurance rules and compensation fund arrangements for entities that it will authorise.  There are no formal requirements for individual CILEx members because they are usually employed in solicitors’ firms.

Unregulated providers

There’s no requirement for unregulated providers to hold insurance or have compensation arrangements.  Many, of course, will be insured but it’s hard to see how they could readily mimic the SRA’s compensation fund.  It’s an issue that could well interest the CMA.


The Legal Ombudsman took over from the various professional bodies’ arrangements to deal with complaints of poor service.  It will also award compensation for poor service and there’s  a fine line between that and compensation for negligence.

LeO has its problems at the moment.  It’s notable that it decided not to become an approved ADR body for the purposes of the EU ADR Directive – some in the profession might ask why they pay £17m a year in order to support a body that can’t manage to achieve that.

It has two other issues to look at: how far it can go in looking at the unregulated sector; and whether it should look at complaints from people other than the client.

I’ll be looking at all of these topics as they arise.C

The CMA Market Study: What might it look at?

Very shortly after the Government’s announcement of its review of regulatory barriers for ABS firms and independent regulators last year, the CMA has announced a market study into the legal services market.  Should lawyers worry about it?

This is a market study, so an early stage. It could lead to a clean bill of health, informal encouragement for the industry bodies to improve the quality of information etc, recommendations to Government to change policy or formal action. In the absence of significant evidence of a cartel, a formal referral seems unlikely.

The CMA will be looking at:
• whether customers can drive effective competition by making informed purchasing decisions
• whether customers are adequately protected from potential harm or can obtain satisfactory redress if legal services go wrong
• how regulation and the regulatory framework impact on competition for the supply of legal services.

Supporters of the Legal Services Act 2007 hoped that independent regulation would abolish rules restricting the market and that ABS firms would enable lots of innovative new businesses to flourish. As a result, empowered consumers could make informed choices between a range of suppliers, prices would fall and access to legal services improve.

Most of us would be hard pressed to find any access to justice benefits flowing from the reforms. So will the CMA’s study address this?

Consumers making informed purchases

Consumers rarely use lawyers. This doesn’t help them judge whether they’ve got the lawyer they need, are getting a decent service at the right price or a good outcome. And there is very little information to help them.

The LSB consumer panel’s tracker survey, cited by the CMA as a prompt for the review, suggests that few consumers shop around for their legal services and their methods for choosing lawyers don’t go much beyond “phone a friend”. Many aren’t aware of the difference between regulated and unregulated providers and probably assume that one provider is pretty much the same as the other. That doesn’t suggest that they’re exactly driving change.

Regulators and LeO can provide basic regulatory information but don’t run to the sort of qualitative information consumers need to make a rational judgement, let alone “drive effective competition”. So far, an effective Trip Advisor-type site hasn’t materialised (assuming this would help) – partly because of cost and partly because there’s absolutely no enthusiasm in the industry for the risk of bad reviews. And, lawyers, unlike, say, cars are profoundly unsexy: I don’t see a monthly glossy entitled What Lawyer? appearing any time soon.

So I suspect that the CMA may be pressing for the professions to do more to provide information. Whether this can be achieved in a way that consumers will trust or find useful is another question.

Consumer protection and redress

Most lawyers will be surprised at the CMA raising this. It points to that tracker research indicating that 10% of users felt that the services were poor value for money. Given that this is an inherently complex area where consumer satisfaction is influenced by the outcome, 10% dissatisfaction looks quite respectable to me.

LeO may have its problems, but nobody seems to be saying that it’s not providing suitable redress. There’s better protection in the event of solicitor dishonesty than if a bank collapses. It’s even arguable that these protections are a barrier to competition or, at least, a disproportionate burden on business (LeO costs around £19m and a similar amount goes into the Compensation Fund). How will the CMA grapple with this basic tension between competition and consumer protection?

If, however, the CMA were to look at the unregulated sector, that would raise some really interesting questions. It’s reported that it’s going to be studying will-writing in particular. So maybe that debate will be reopened. I would expect them to raise the question of whether LeO should have jurisdiction over the unregulated sector.

There could be an interesting debate between the “no more burdens” group and the consumer protectors over whether there should be greater regulation of the unregulated sector. This isn’t necessarily something for the profession to feel confident about. The last time the question of regulating will-writing was raised, solicitor will-writers didn’t come brilliantly out of the comparison.

Regulation and competition

The CMA refers to LSB research suggesting that only 13% of small business users thought that lawyers were a cost-effective way of resolving disputes while 50% said they regarded using lawyers as a last resort.

More worryingly, under 25% of businesses thought they could access affordable legal services if they needed them. Even where the respondents had actually used lawyers only just over 50% felt they could access affordable services.

The figures for consumers would probably be even higher. Aside from those areas where there’s a steady flow of reasonably commoditisable work, often where there’s a lot of someone else’s money involved (conveyancing, wills and probate, some employment and (subject to further fall-out) personal injury), significant legal action is out of the reach of most of us.

Is this because of regulation? The default position of the competition authorities has been that failure of markets to develop is down to professional rules inhibiting competition, rules made by those professions. How long can that position run?

Regulatory and representational functions have been separated. It’s very hard to argue that the Law Society exercises any influence over the SRA. The CMA might dislike the fact that BSB is taking a fairly conservative approach to ABS licensing, but that’s as likely to be a result of a realistic assessment of its organisational abilities as of any undue influence from the Bar Council.

A good many restrictive practices have been abolished in the last thirty years. Barristers can accept work direct from the public. Very few do: is this because the permitted business models aren’t apt for this or because most barristers would have become solicitors if they’d wanted to work directly with consumers? Solicitors can exercise higher rights but, except in crime, this doesn’t seem to have seriously dented the Bar’s hold on this market.

ABS firms are now permitted. But, my impression is that firms adopt new models to improve the running of their business, to compete better in existing markets or to make a quick buck for the owners. Few have targeted areas where access to justice is a real problem.

The SRA’s processes for authorising them have been criticised but if there had been a real business opportunity there, I suspect businesses would have lived with those. Indeed, might not traditional law firms have moved in there?

It feels rather like a horse being led to water but refusing to drink because it has a perfectly decent source back home.

Small business and consumer research

Looking more closely at the LSB’s research and at earlier research on consumer behaviour by Pascoe Pleasance and Nigel Balmer, you have the impression that businesses and consumers positively don’t want to use lawyers. Businesses try to resolve the problems themselves first, then talk to contacts and then their accountants or other professional advisers – and apparently 73%(!) of disputes were resolved satisfactorily. These look like pretty rational business decisions to me.

Consumers, faced with legal problems, again, usually find other ways of dealing with them – either because they’re not important enough or because they can be sorted out without lawyers.

Culture rather than regulation?

So lawyers are called in irregularly, don’t get a relationship with the client and are less able to do interesting things with prices.
So this looks like a problem which has become cultural and which goes beyond regulation: consumers don’t want to use lawyers unless they have to; lawyers have developed models which work for them and which compete against each other but don’t seem good at creating appealing models for consumers to use; and consumers don’t have the power to alter this. Outside investors can see money in helping firms compete in some existing markets but not, apparently, in developing new ones.

What might the CMA look at?

This isn’t to say that there aren’t things for the CMA market study to look at. The fact that there are large numbers of part-qualified barristers and solicitors out there at a time when using lawyers is out of the reach of most consumers and small businesses, must raise questions about whether something can be done about the supply side – particularly given that it’s the existing members of the profession who control whether an individual qualifies or not. There isn’t a cartel here but might it not inhibit innovation and competition if you can only qualify by being part of an existing business model?

Is it appropriate for there to be a single dominant qualification covering ever-expanding number of branches of law – particularly when the regulatory model doesn’t assess competence in the overwhelming majority of them? Would a single regulator, authorising activities rather than granting titles be a better answer and provide greater opportunities for innovation in the market?

That LSB research might prompt questions about the extent to which people who aren’t primarily trained as lawyers (accountants etc) in practice provide legal advice and about the relationship between regulated and unregulated legal services. Does the concept of reserved work have any relevance at all?

There are lots of other aspects: to do with maintaining professional standards and the reputation of the profession abroad. You might also ask whether, in fact, changing regulation will work when there are profound cultural and financial questions here: if there’s no money in providing legal advice on, say, housing repairs, there won’t be much commercial supply of that advice.

Effect on the profession

So will it affect the profession? Probably no more and no less than the reforms arising out of the previous enquiries, commissions and legislation. However, if I were a managing partner I might well muse about the finding in the LSB’s research that small businesses are more likely to go to an accountant for legal help than to a solicitor and more than 5 times more likely to have an accountant than as a solicitor as their main external adviser. A