Mayson: Legal regulation failing to prevent consumer harm

Mayson: Legal well-being

Legal regulation is not protecting consumers from harm – both in their inability to access services and when things go wrong – meaning structural reform is more urgent than ever, Professor Stephen Mayson says today.

In a follow-up to his Independent Review of Legal Services Regulation, Professor Mayson said bringing unregulated providers within the scope of regulation and promoting the concept of “legal well-being” would reduce unmet need and improve competition.

The findings in Consumer harm and legal services: From fig leaf to legal well-being are consistent with the first report, published in June 2020, which said all providers of legal services, whether legally qualified or not, should be registered and regulated by a single regulator.

The honorary professor of law at University College, London explained that since then, a significant issue that arose in discussing his findings was the nature of the consumer harm that regulation was supposed to be protecting against.

The supplementary report looks specifically at this question and the extent to which the current regulatory framework can deal with it.

Professor Mayson identified two significant types of consumer harm in legal services. The first was structural and arose from millions of people not being able or willing to access legal advice, documents and representation when they have a legal need.

This was driving people either to do nothing or into the arms of unregulated providers.

The second arose when people do access legal services and then suffered harm because, for example, of the provider’s dishonesty, incompetence, over-charging or poor service.

The report argued that, whether harm arose from the regulated or the unregulated, neither the sector-specific remedies under the Legal Services Act 2007 nor the general consumer law were designed to offer much meaningful redress directly to the client who suffered harm – as opposed to a regulator taking action against the provider.

Professor Mayson described a potentially vicious and escalating “circle of harm” from both the impact of dealing with legal needs, such as stress and ill-health, and the aspects of life – like poor health, bereavement and family breakdown – that could lead to legal needs that had to be dealt with at times of great stress and vulnerability.

The result, Professor Mayson said, was a significant number of consumers who were disengaged or excluded from the benefit of regulated legal services.

He argued that regulation should move from the avoidance of consumer harm to ensuring a positive state of “legal well-being”.

“On closer examination, the ‘protections’ of the current framework for the regulation of legal services turn out to be little more than a fig leaf.

“The main force of regulation is applied to preventing harm and to dealing with delinquent providers rather than for the direct benefit of consumers who have actually suffered harm.”

The recommendation to deal with the structural problem was to extend the scope of regulation to non-lawyers and unregulated services, in line with the 2020 report.

This would be combined with a “single point of entry for regulation, registration and complaints” about legal services and a system of compulsory dispute resolution for complaints.

“Our investments to date in training and regulating lawyers, in legal aid, in pro bono advice, in public legal education, and in sandboxed innovation – welcome as they all are – have not been anywhere near sufficient to close the gap in unmet legal need.

“The conclusion of this report is that even further investment in these various forms of provision will not close it, either.

“It is time for more radical change that will increase the number of regulated providers, supported by an environment of fair competition and targeted regulation.”

Professor Mayson said this was “not about creating an uncontrolled free-for-all” but a “structural, regulated and protected approach”.

It was time to recognise that non-lawyers who were regulated would be “better than nothing and better than unregulated providers”.

Professor Mayson said the belief that lawyers were more effective was “for the most part, an assumption advanced by those who have a clear professional and economic interest in doing so”.

He said there were many voluntarily regulated individuals, such as paralegals, will-writers and mediators, as well as staff in law firms, who were “not necessarily legally qualified but whose competence and practical experience in legal matters is often at least as good as – and sometimes better than – that of their fully qualified counterparts or colleagues.”

Access to a greater number of regulated providers would close the gap on unmet need and drive up competition too – although the report was clear that competition alone could not protect consumers from all of the harms it identified.

Regulatory policy for legal services needed to “invert” many of its “foundational assumptions”, he went on.

This included moving from “the position that some consumers might be vulnerable to a presumption that all consumers are” and the potential for consumer harm was the same whether providers were regulated or unregulated.

The principle of caveat emptor “should play no role” and instead legal services providers should be subject to a positive duty of fair dealing.

While courts might remain the “final arbiter” of consumer harm and redress, dispute resolution would be the “most common” arbiter.

Professor Mayson said regulatory focus should be shifted or extended from protection from harm to the promotion of well-being.

“This would offer the possibility of assurance, peace of mind, effectiveness of service, empathy, and a greater prospect of multidisciplinary provision.

“Promoting legal well-being would also shift the burden for consumers from direct self-sufficiency to indirect reassurance.

“This should still not present guarantees at all costs and in all circumstances; but it would recognise that the world has changed and continues to do so.”

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