Mayson: Disappointing analysis
Professor Stephen Mayson has hit back at a report by the Boston Consulting Group questioning the impact of the Legal Services Act 2007.
The author of last year’s independent review of legal services regulation said the analysis risked misconstruing his and others’ call for further reform as an acknowledgment that the changes were not justified in the first place.
The report, commissioned by three Scandinavian Bar associations, said the 2007 Act [1] has only delivered “a few of the benefits typically associated with deregulation”.
Professor Mayson described the analysis and conclusions as “to put it at its best, disappointing”.
He questioned the assertion that the Act was intended to be deregulatory – the creation of the Legal Services Board and independent frontline regulators, as well as the Legal Ombudsman, were clearly not deregulation, while liberalising ownership restrictions “was about extending regulation rather than removing it”.
The academic went on to argue that the tests BCG applied did not reflect the reasons the Act came about and instead related to broad market outcomes, such as lower prices and more providers, “that are determined by many factors other than regulation”.
“Second, the BCG report acknowledges that the legal services sector does not comprise a single market but a set of sub-markets. But it then seeks to evaluate the success of reform by reference either to data that relate to the entire sector or to only a sub-market (the largest 100 law firms).
“It is at least questionable to evaluate the success of important aspects of the 2007 Act (such as its effects on relative profitability, scale and alternative business structures in the consumer market) by using data from a sub-market to which the fundamental purpose of the 2007 reforms has always been of marginal interest or concern.”
The conclusion that the reforms have not achieved their objectives, and that the arguments for regulatory reform were either not supported or the evidence unclear, “will, of course, be music to the ears of those who wish to advocate for service monopoly and self-regulation”.
Professor Mayson continued: “But it is a big leap for anyone to jump from ‘further reform is needed’ to ‘therefore reform isn’t justified’. The former statement is not an acknowledgement or assertion that reform hasn’t worked, but that more – and definitely not less – is needed.”
In the circumstances, he said, “it cannot be a surprise if the conclusions reached are thought to lack credence or transferable insight”.
He concluded: “If you want to understand the effects of reform – or even to resist it – be sure to choose valid criteria (rather than assumed or imputed intentions) and then use appropriate evidence.”
See also Alison Hook’s blog [2] on the BCG report