The announcements are out, and the work has started! I’m honoured to be leading a fundamental review of the current regulatory framework for legal services in England & Wales through the Centre for Ethics & Law in the Faculty of Laws at University College London. Full details are available here.
The independent review is intended to explore the longer-term and related issues raised by the Competition and Markets Authority (CMA) market study in 2016, which concluded that the legal services sector is not working well for individual consumers and small businesses, and thatthe current regulatory framework is unsustainable in the long run. It called for a review of that framework to make it more flexible as well as targeted at areas of highest risk where regulation is most needed.
The time for the review is right. In the light of Brexit, ‘taking back control’ presumes full confidence in our domestic rule of law and legal institutions, as well as maintaining our performance and competitive position in the global economy. The provision of effective and properly regulated legal services is critical to maintaining the rule of law, and the effective and efficient administration of justice. It is also necessary for sustaining the UK’s position and reputation as a world-leading jurisdiction for the governing law of international transactions and for the resolution of disputes (though this already appears to be under some pressure as a result of Brexit).
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).