Consumer panel: “remarkable innovation” in the market but is deregulation going too far?

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5 December 2014

Elisabeth Davies

Davies: Improving access to justice the “key challenge”

The Legal Services Consumer Panel today expressed concerned that “the recent emphasis on deregulation… is being taken too far”, while also praising the innovation seen to date through alternative business structures (ABSs).

In its third Consumer Impact Report, the consumer panel said a “delicate balancing act” was required between loosening controls to reduce burdens on firms and make the market more attractive to new entrants, and “maintaining proper safeguards”.

The report warned: “There is a danger that well-intentioned measures designed to improve access to justice and greater competition actually reduce protections for consumers too far.

“Each issue has to be treated on its merits, but there have been occasions recently – as with insurance cover and CPD – where the panel has felt the Solicitors Regulation Authority (SRA) has got the balance wrong.”

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The Legal Services Board rejected last month the SRA’s proposals to cut the minimum indemnity cover limit for law firms from £2m to £500,000, citing consumer protection as one of its concerns.

On CPD, where the SRA is in the process of scrapping the traditional hours-based approach, the consumer panel said it “had serious reservations about the SRA’s proposals, in relation to individual accountability, monitoring the quality of work, sanctions and how CPD fitted within the SRA’s wider quality assurance processes.”

The panel was more positive about ABSs; while there has not be “transformative change”, the last two years have seen “significant developments” in new entrants to the market in terms of diversity of supply, technology and investment. “In many ways the level of innovation to date has been quite remarkable considering the relatively short timescale the reforms have been operation.”

Further, “the dire predictions about a collapse in ethics and reduction in access to justice as a result of ABS have not materialised”. The report said: “There have been no major disciplinary failings by ABS firms or unusual levels of complaints in the Legal Ombudsman’s published data.

“Our tracker survey isn’t able to segment between ABS and non-ABS firms, but does show that overall consumer confidence in the quality of work and professionalism of lawyers has held steady since 2011. The data indicates that service satisfaction reduces as the size of the law firm used increases, but this is a function of size rather than ownership structure.”

In general, the consumer panel found in the report that the “technical quality” of legal advice was largely unknown and the evidence gap was a “major concern”.

The panel found that satisfaction with quality, service and professionalism had been “static since 2011”, and the previous decline in trust in lawyers since that date had levelled off.

However, it called on legal regulators to “embed consumer vulnerability throughout their work” through policy-making, through their “regulatory toolbox” and through contact with the public.

Elisabeth Davies, chair of the consumer panel, said consumer experience of using legal services still varied “far too widely depending on social background – poorer consumers trust lawyers less, feel less protected and are less satisfied with the service they receive.”

Ms Davies said: “Improving access to justice is the key challenge facing all of us in legal services and the reforms can’t be considered a success if some sections of society are getting left behind”.

The panel said the legal sector had won praise for its efforts to improve diversity but progression and social mobility “remain areas of weakness where there is much more to do”.

Without repeating calls by the LSB for a single legal regulator, the report concluded that the existing regulatory framework “does not provide a sustainable model in the long-term to protect consumers or support a competitive market place”.

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