This is a conference* about ‘trust in the market’ and building confidence within the sphere of legal services regulation. I shall therefore open with the observation (or reminder) that regulation is a public intervention in otherwise private transactions and free markets. It must therefore stem from a political judgement that we should not have complete trust and confidence, and must instead rely on the intervention in the market. issue of how confidence in regulation develops and is then sustained is a fascinating one. It begs preliminary questions of what we mean by ‘confidence’, and from whose standpoint we are assessing it.
The Competition & Markets Authority (CMA) published the final report of its market study into legal services in December 2016. At 285 pages (and a further 233 pages of appendices), it is not a light read! Nevertheless, it is worthwhile – though for those with less time or stamina, the executive summary on pages 4-19 will give a flavour of the review’s scope, conclusions and recommendations. It should also be emphasised that the scope of the study was intentionally limited to the experiences of individual consumers and small businesses, and that criminal legal services were excluded. The study is not therefore a review of the whole legal services sector.
The headline conclusion from the review is that the legal services sector is not working well for individual consumers and small businesses, largely because those consumers lack the experience and information they need to understand their needs, to make informed choices, and to engage confidently with providers of legal services. The CMA also concluded that these challenges are likely to increase over time and make the current regulatory framework unsustainable in the long run (especially since, in the CMA’s judgement, that framework also does not meet the principle of targeted regulation).
(An edited version of this post first appeared in The Times‘s The Brief on 8 January 2016)
As 2015 slides inexorably into 2016, we can ponder what differences this might bring to the world of legal services. The sands are definitely shifting, and the foundations of ‘old law’ continue to crumble as ‘new law’ takes greater hold. Let me explore three themes: demand, supply, and independence.