In a move welcomed by industry groups, the Competition and Markets Authority (CMA) has launched an investigation into the legal services market over concerns about the affordability and standards of legal services.
The move comes as the government consults on a regulatory shake up that will encourage further competition through alternative legal providers.
It has been 15 years since competition in the legal profession was reviewed by the CMA’s predecessor the Office of Fair Trading, in a report that eventually led to the Legal Services Act 2007.
Announced today (13 January), the CMA will focus on small businesses and private individuals as clients in a review that excludes major corporates and criminal law.
In particular, the CMA is looking to do case studies on will writing and probate services to individual consumers and employment law services to individuals and small businesses.
It is also considering commercial law services as a third study, including advice relating to commercial contracts.
The CMA said it wants to know if there is effective competition and if consumers are getting satisfactory redress should things go wrong. It will also review how regulation affects competition for the supply of legal services.
CMA senior director Rachel Merelie said: ‘Whether it’s buying a property, resolving disputes or getting expert advice on financial and employment matters, it’s vitally important that consumers and small businesses can access the legal advice and representation they need. They also need to secure value for money and quality when purchasing these services.’
The Law Society welcomed the probe, with chief executive Catherine Dixon saying it was unfair that heavily regulated solicitors are competing with unregulated providers.
‘Regulation is there to protect the public and we believe that for the market to work effectively, regulation has to be applied equally to all providers. This review is a good opportunity to reduce the regulatory burden on those solicitors who are having to compete with unregulated providers. Moving away from overly burdensome regulation, that does not service the public or meet business need, by placing greater reliance on solicitors taking responsibility for and driving their own professional standards is key.’
Solicitors Regulation Authority chief executive Paul Philip said: ‘It is crucial that the legal services market works in the public interest and serves all consumers. We welcome all and any efforts to promote that goal and that is why we are pleased the CMA is conducting this study and will offer our help as they do so.’
Meanwhile, the Legal Services Board chief executive Neil Buckley commented it was a problem that a large proportion of the population and small businesses cannot afford legal services.
‘The functioning of the legal services market has without doubt improved since the introduction of the Legal Services Act but it still has a long way to go before it can be said that it is an effective market,’ he said.
The authority is inviting views on the study to be made by 3 February 2016.
Bevan Brittan head of regulation Iain Miller said barriers to entry to the legal market should be dealt with using insurance or other funding.
‘There clearly is a problem that legal services aren’t accessible but the more difficult question is whether that is a result of competition or there is another way of addressing it.’
Miller added that while the CMA is concerned with small businesses and not with the clients of larger firms, any changes as a result of the review will impact them.
‘You can’t change the legal services framework without changing the lot, what happened with the Legal Services Act was that consumers were dissatisfied with the Law Society which was not to do with big firms but it impacted the entire market.’
Read the statement of scope for the review here.