LSB and CMA legal sector reviews: Yes to comparison sites but questions over adequacy of digital services regulation
Two high level professional legal services reviews unveiled in January will ask what barriers there are to prevent further innovation within the sector and how technology can help the consumer to better understand what is available – but also if digital services such as automation are adequately regulated.
The Legal Services Board’s (LSB’s) consultation on its draft business plan for 2016/17 was published on 20 January, just a week after the Competition and Markets Authority (CMA) launched its own study into the £30bn a year legal services market, to see if it is working well for consumers and small businesses.
The LSB will look at whether the needs of consumers are being met and how it can unlock growth, increase productivity and address unmet demand. One of its many stated objectives is to encourage legal comparison websites to facilitate consumer choice. The report says: “In 2016/17 we will encourage market entry by comparison websites by unlocking regulatory data and helping consumers choose and use legal services.”
The report adds: “In 2016/17, we will work with market intermediaries to understand whether there are barriers, regulatory or otherwise, preventing them from entering the legal services sector. Based on advice from the LSCP [Legal Services Consumer Panel], we will challenge regulators to unlock additional regulatory data to improve the choice environment for consumers.”
However, the LSB report also questions whether regulators are set up to supervise and manage technologically evolved services such as automated documents and online dispute resolutions services, and announced new research into consumer and provider attitudes to digital legal services. It says: “The legal services market is evolving. More commercially minded providers and new forms of service delivery and pricing options are emerging. Consumers are increasingly looking for ways to meet their legal needs alone or with only minimal support from a lawyer. Technological innovation is often a driver, with developments such as automated document services, question and answer portals and online dispute resolution services. These can all help bridge the advice gap by meeting consumer needs at a lower cost.
“As the legal services market develops, so too does the potential for new forms of consumer risk, for example, around quality and misuse of personal information. For regulators more used to regulating professional misconduct rather than trading behaviour they will need to consider carefully whether their existing supervision and enforcement mechanisms are sufficiently agile to deal with these emerging risks.”
The LSB will work with regulators to consider the changing risks and ensure they are capable of addressing them and said: “To inform this work, we will research consumer and provider attitudes to the digital delivery of legal services.”
The LSB’s proposal to encourage comparison websites will be certain to ruffle feathers but Matthew Briggs, founder of The Law Superstore told Legal IT Insider: “By the year 2020, it is estimated that 50% of the global workforce will be millennials – digital natives who will know no other way of operating – so the LSB report needs to examine ways in which the profession can respond appropriately to these changing demands.
“Comparison sites will undoubtedly form a part of this response and The Law Superstore has been built to help legal service providers meet the demands of consumers and its functionality and specifications align with the 20 point recommendations outlined in the Legal Services Consumer Panel (LSCP) White Paper – Comparison Websites 2012.”
The CMA’s study, meanwhile, will focus on the experiences of individuals or small businesses accessing legal services. In a move that may also be good news for comparison websites, the CMA said: “Competition is also enhanced when consumers are empowered to shop around through access to readily available and accurate information about the products and services they are seeking and the various offers available in the market. Consumers who are empowered are also able, through their purchasing decisions, to discipline providers and drive competition in the market. Furthermore, consumers who are able to make informed choices are better able to achieve value for money.”
Professor Stephen Mayson, who is working with the LSB on its vision of how to review the Legal Services Act, said: “There are certainly mixed feelings about the use of comparison sites in the legal profession, but with news that the CMA is to study the legal services market amid criticism that consumers often lack sufficient information to make informed decisions, there seems an ever greater need for a platform that demonstrates transparency and choice. This is why, at a time of intense scrutiny, I am urging the profession to see the benefits comparison sites such as The Law Superstore could bring to both the client and legal provider.”
The CMA’s study is also good news for newlaw providers and alternative business structures (ABSs), with the report saying: “Given that around 600 ABSs have now been licensed, the CMA considers that this is an appropriate time to look again at their impact.”
The CMA is asking for information from the market on the following points:
• What information do consumers use to judge the quality of legal services and/or legal services providers? What price information is made available to consumers? Do consumers find it easy or difficult to compare the quality and prices of legal services?
• How do providers of legal services compete with each other in seeking to win new business? Do they face any difficulties in winning new business?
• Do intermediaries (such as estate agents, insurers and accountants) play a role in helping consumers to choose legal services providers?
The CMA must announce within six months whether it intends to refer the market for a more in-depth investigation and must publish its report within 12-months, setting out its findings and the actions it proposes to take.
The Government announced on 30 November that it will launch its own consultation in Spring 2016 into removing barriers to entry for alternative business models and making legal service regulators independent from their representative bodies to encourage competition, better enabling, for example business such as supermarkets and estate agents to offer legal services such as conveyancing, probate and litigation.
The Lord Chancellor has also confirmed to the Justice Select Committee that his department will review the Legal Services Act during the lifetime of this Parliament.
The LSB is welcoming views and comments on all aspects of its draft Business Plan by 6pm on Friday 19 February 2015. Responses should be sent to email@example.com or in writing
Submissions to the CMA should be made by 5 pm on 3 February by email or in writing to Maria Rican-Sevitz – firstname.lastname@example.org