An interim report into the legal services market by the Competition and Markets Authority (CMA) has found that competition is not working as well as it might, largely thanks to the fact that few service providers publish their prices online and there is a lack of digital comparison tools.
The report published last week, found that while there have been some positive developments in the provision of legal services, such as an increased use of fixed fees for more commoditised services, information is often not available to consumers in order to allow them to compare “offers” and choose the one that most suits their needs.
As a result, only a minority of individual consumers compare providers before choosing one, with the interim report suggesting that “this may reduce the incentives for providers of legal services to compete.” It adds: “This lack of competition may mean some providers are able to charge higher prices when substantially cheaper prices are available for comparable services.”
The services covered by the market study include areas such as commercial law, employment law, family law, conveyancing, immigration, wills and probate and personal injury and represent an estimated annual turnover of around £11 to £12 billion. In carrying out its market study so far, the CMA has surveyed individual and small business customers, analysed existing data and research and heard from a wide range of interested parties.
Senior director for the legal services market study, Rachel Merelie, said: “Consumers in this market are often not equipped with the right information before they make important purchasing decisions – which often come at critical points in their lives.
“As a result, they tend to rely on recommendations from family or friends in choosing providers without checking for themselves what the market has to offer. This is unlikely to drive effective competition.
“The lack of competition may remove a crucial incentive for such firms to compete on price and quality as well as innovate and may help to explain why there have been long-standing concerns over the affordability and accessibility of legal services.”
The CMA’s focus now will be on how it can drive competition by improving the information that providers make available to consumers both before they buy – in order to help them shop around. It will also look at measures to improve the existing independent information channels that are available for customers.
The CMA is now seeking views on its interim findings and must publish its final report by 12 January 2017. Comments should be made in writing by 19 August 2016. You can email: email@example.com