The 2016 UK Competition and Markets Authority’s study into the legal services sector

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The UK Competition and Markets Authority (CMA) completed a year-long study into the legal services sector, which is worth around £11–£12 billion a year. It is important to note that criminal legal services were not included in the study, in contrast with topics such as commercial law, employment law, family law, conveyancing, wills and probate.

The CMA published its final report on 15 December 2016.

The main conclusion is probably that competition in legal services for individual consumers and small businesses is not working well. In particular, there is not enough information available on price, quality and service to help those who need legal support choose the best option. Obtaining the right service at good value can therefore be challenging as consumers can face wide variations in the cost of similar services. They can also struggle to find enough information to help them identify their legal need in the first place. In order to address the perceived issue, the CMA has set out a package of measures which challenges providers and regulators to help customers better navigate the market and get value for money:

“A requirement on providers to display information on price, service, redress and regulatory status to help potential customers. This would include publishing pricing information for particular services online (only 17% of firms do so at present).

Revamping and promoting the existing Legal Choices website to be a starting point for customers needing help, information and guidance on how to navigate the market and purchase services.

Facilitating the development of comparison sites and other intermediaries to allow customers to compare providers in one place by making data already collected by regulators available. At present only 22% of people compare the services on offer before appointing a lawyer.

Encouraging legal service providers to engage with feedback and review platforms to ensure that customers can benefit from the experience of others before making their choice.

Recommending that the Ministry of Justice looks at whether to extend protection from existing redress schemes to customers using ‘unauthorised’ providers”.

In addition, as part of the study, the CMA considered the impact of legal services regulation on competition. The CMA found that whilst the current system is not a major barrier, it may not be sustainable in the long term. In particular, the framework is not sufficiently flexible to apply proportionate risk-based regulation which reflects differences across legal services which could harm competition. The CMA is therefore also recommending that the Ministry of Justice reviews the current framework to make it more flexible and targeted at protecting consumers in areas where it is most needed.

The CMA has pledged to re-evaluate progress and the impact of the recommendations in 3 years’ time and intervene further if progress is not satisfactory.

(Altalex, 6 March 2017. Article by Emmanuel Guinchard)

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