Law Society response to CMA interim report
In responding to the Competition and Markets Authority's (CMA) interim report on the legal sector, the Law Society of England and Wales again welcomed the news that they are not planning to recommend a formal market investigation into the legal sector.
Law Society chief executive Catherine Dixon said:
'Well-functioning legal markets are in the best interests of clients and promote a strong and vibrant legal sector. They also underpin fair competition and access to legal services.
'Where possible, solutions driven by the market are preferable to those driven by regulation and we believe that our legal services market is competitive and will continue to evolve and innovate to meet the needs of clients ever more effectively. We therefore welcome the CMA's conclusion that no formal market investigation is needed.'
The Law Society shares the CMA's desire to continuously improve the way the legal services markets function. If remedies proposed by the CMA are imposed, this must be done on the basis of strong evidence, with any impact on the affected markets fully thought through to avoid the unintended consequences of change.
Catherine Dixon continued:
'Stability and certainty of regulation is vital to the healthy and continuous functioning of the legal services markets, especially during a time of intensified change as the legal sector responds to rapid advances in technology, globalisation, increased competition and changes to the way people buy their legal services. The legal sector contributes £25.7bn to the UK economy. This has grown over the last few years and this is good for business and jobs.
'As in any ecosystem, the balance can be easily disrupted. The imposition of burdens - regulation and changes to regulation on the legal sector outside the three areas studied by the CMA - could have significant impact on employment, economic output and on the standing of England and Wales as a jurisdiction of choice.
'Some of the effects of a disruption to the market are measurable. Our research indicates that a decrease in the legal sector's value of 1 per cent would lead to a loss of £307 million in the sector’s gross value added and the loss of over 5,500 jobs across the economy in the first year. Whereas for every 100 jobs created in the legal sector, a further 67 are created in the wider economy.'
The Law Society also sounded a note of caution regarding consumer protection.
Catherine Dixon said:
'We believe that it is premature to say that there is no significant harm to those clients who use unregulated firms. This market study only examined a limited part of the legal services sector, and as such it should not be assumed that evidence from these services is reflective of practice in other areas.
The CMA made specific recommendations relating to the provision of useful information on price and quality in the legal services sector. The Law Society acknowledges that this is an area where there are always opportunities to improve, but notes that there is limited evidence that this is a significant problem for clients of legal service providers.
The Legal Ombudsman's own report shows that complaints about costs were limited. On this issue Catherine Dixon said:
'The Law Society supports the objective of providing ever more useful information for clients on price and quality of legal services. The legal sector is making good progress and we believe that by working together with the profession to support best practice we will continue to drive innovation that will provide more information to clients to facilitate them making informed choices about the legal services they buy.
'Greater public education in identifying legal problems - legal literacy - could also play a significant role in empowering people to make the right choices about when to seek legal advice. The Law Society continues to expand its programme of public legal education, while remaining committed to ensuring the balance between client protection and fair, proportionate regulation which promotes competition within a strong and vibrant legal sector.'
Read the full response
The CMA interim report
Notes to editors
The Law Society believes that there are five broad roles which society and parliament expect legal services to deliver. Each of which places demands on the system that need to be carefully considered to avoid unintended consequences of change. There are tensions between some of these roles. For instance, promoting competition can sometimes be achieved by removing regulation but this can be at the expense of protecting the consumer.
Legal services should:
- protect and promote the interests of consumers
- support the rule of law with a stable legal regime, in the interests of the wider public good and the economy as a whole
- ensure independence of the legal system, providing confidence in the regime, both domestically and abroad
- improve access to justice
- promote competition within the legal services sector with proportionate regulation
About the Law Society
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