There is “much to celebrate” from the first decade of the Legal Services Act but the basic legal needs of many citizens are still not being met, the Legal Services Board (LSB) said today.
The oversight regulator also called on the profession to grasp the opportunities afforded by major policy reviews in areas such as legal aid and criminal justice, and make a “step change” in its approach to improving diversity, saying current initiatives may not be radical enough.
The State of Legal Services 2020 report is to inform the LSB’s new strategy for legal services regulation that aims to set a long-term direction of travel for the sector.
It recorded that the sector has performed strongly in economic terms over the decade, with turnover increasing by 22% and employment by 24%.
“There is much to celebrate and it is easy to forget that the Legal Services Act 2007, while it enjoyed cross-party support, was a controversial piece of legislation,” the report observed.
There were predictions that it would end professional self-regulation and alternative business structures (ABSs) would diminish lawyers’ independence and standards, as well as the jurisdiction’s international standing.
The LSB said: “While the legislation may not yet have led to all the gains its proponents hoped for, it has not precipitated the sorts of problems its opponents had foreseen and has delivered some very real and important successes.
“Following the growth in ABSs, consumers enjoy more choice than 10 years ago. Regulatory reforms have also enabled more legal professionals to set up in business and provide services in broader areas of law. Providers view regulation as much less of a barrier to innovation than in the past.
“Consumer satisfaction has improved, confounding critics of the reforms who predicted a race to the bottom in standards. The corporate sector has powered strong economic growth.”
There are now around 1,400 ABSs, about a tenth of all legal services providers, and the LSB found culture was a more significant impediment to innovation than regulation.
“In fact, there are many examples of cutting-edge, consumer-focused innovation in the sector, although currently largely confined to the peripheries.”
Research estimates that around 7.5m adults and 1.8m small businesses need legal advice every year – but 3.6m people have an unmet legal need each year, while half of small businesses deal with their issue without using a lawyer.
Some 36% have low confidence that they could achieve a fair and positive outcome when faced with a legal problem, while nearly nine in ten people say that “law is a game in which the skilful and resourceful are more likely to get what they want”.
At the same time, people have more choice when it comes to finding legal advice – even though only a minority actually shop around – and satisfaction with services has increased to 84%.
The LSB said the key areas of improvement it aimed to focus on were fairer outcomes – for both clients and those in the profession – stronger confidence in the operation of the legal market, and better services, which meant ensuring consumers and providers could drive stronger competition.
In these areas, the progress could be measured in inches rather than through “great strides”, it found.
LSB chair Dr Helen Phillips said: “Despite the real successes of the last decade, many of the critical challenges facing the legal sector today existed when the Legal Services Act came into force.
“This partly reflects that it continues to be difficult for people to know when they have a legal problem and to engage with the legal services market and shop around. It also reflects policy decisions taken over a long period relating to the publicly funded legal sector.
“However, as our report lays out, there is an opportunity for the sector to reinvent itself and embrace a culture that puts the needs of consumers at its heart.”
On diversity in the profession, the LSB said there was a wide range of initiatives but little evaluation of what actually worked at a time when society’s expectations on diversity were changing.
“Indeed, given the slow rate of progress, we must at least consider the possibility that existing approaches are not working, and new, and perhaps more radical, ones are needed.”
The LSB disagreed with the argument that the legal sector needed a period of stability to recover from the effects of Covid-19.
It said: “We need to seize the opportunities afforded by major policy reviews into legal aid, the criminal justice system and other aspects of public policy… Some stakeholders feel their longstanding concerns about public policy issues are at last being listened to.”
The oversight regulator continues to support the long-term goal of a single regulator for all legal services, and a move to regulating the activities and delivery models, rather than the category of lawyer providing a service.
“Until primary legislation can bring this about, better cross-sector collaboration is needed to deliver effective regulation in the public interest,” it said.
But the LSB concluded by expressing optimism that the long-term challenges could be overcome.
“We live in a transformational environment where changes in practice unthinkable less than a year ago have become the new normal.
“Covid-19 is a challenge no-one wanted, but it might be the challenge the sector needed to reinvent itself and embrace a culture that puts the needs of consumers at its heart.
“With a clear strategy, good leadership and collective effort, there is great potential to build a market that delivers on the three strategic themes we have identified.”