CMA launches legal services market study for England & Wales
A market study into legal services in England & Wales has been launched by the Competition & Markets Authority (CMA).
Despite the regulatory reforms south of the border that were intended to increase the range of providers of legal services, concerns remain about the affordability of legal services and standards of service, as well as the complexity of the current regulatory framework.
According to recent surveys, around one in 10 users of legal services in England & Wales have said that the overall service and advice provided to them was poor value for money whilst, amongst small businesses, only 13% said they viewed lawyers as cost-effective and around half agreed that they used legal service providers as a last resort to solve business problems.
In light of the concerns expressed, the CMA’s study plans to examine three key issues:
- whether customers can drive effective competition by making informed purchasing decisions;
- whether customers are adequately protected from potential harm or can obtain satisfactory redress if legal services go wrong;
- how regulation and the regulatory framework impact on competition for the supply of legal services.
While the study will focus on the market in England & Wales, the CMA plans to use the outcome to inform any future consideration of similar issues in Scotland and Northern Ireland. Criminal legal services will not be included, due to differences in the provision of such services – for example, legal advice and representation are guaranteed for accused persons.
The UK Government is also due to launch a consultation on removing barriers to entry for alternative business structures, and achieving a full separation of legal services regulators from representative bodies.
CMA senior director Rachel Merelie commented: "We would be concerned if customers are not getting a good deal, either because they do not know what to expect when purchasing a legal service, or because they are not seeking appropriate legal support in the first place.
"Not being equipped with the necessary knowledge stops customers exercising choice and prevents competition working effectively. We want to see if some customers end up paying more than they expected or receive a poor service. We also think there may be questions over the redress available if this does happen."
Outcomes
Outcomes from a market study can include actions to improve the quality and accessibility of information to consumers; encouraging self regulation in the market; making recommendations to the Government to change regulations or public policy; taking competition or consumer law enforcement action; and
making a reference for a more in-depth ("phase 2") market investigation, or accepting formal undertakings in lieu of a reference.
Initial comments on the study are invited by 3 February. An interim report is scheduled for July, with the final report targeted for December, ahead of the 12 month deadline for completion.
Welcoming the study, Neil Buckley, chief executive of the Legal Services Board, commented: "A major problem in legal services is that a large proportion of the population and small businesses cannot afford such critical 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.
"This study offers a clear opportunity to assess where the legal services market stands today. It offers an opening to understand better what should be done to unlock growth, increase productivity and address the significant unmet need that exits in this particularly important segment of the UK’s economy."