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Empowering legal services buyers ‘an uphill struggle’

Lack of transparency over price of legal services seen as major obstacle

3 January 2013

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Buyers of legal services are unlikely, on their own, to help stimulate competition in the legal services sector, the Consumer Panel has warned in response to the Legal Services Board’s request for advice on ways to empower consumers.

“We caution about relying too heavily on consumers to drive competition,” the panel said in ‘Empowering consumers: possibilities and limitations’, the first of two background reports for the LSB, as it underlined inherent limitations in the role they could play.

The panel said if consumer empowerment were to thrive it required consumers to have the “confidence and willingness to play an active role”, as well as support from relevant institutions.

But “innate behavioural traits” and “inherent features of the legal services market” presented obstacles to effective consumer empowerment policies, it went on.

Purchasers of legal services were “currently not very empowered”, according to research reviewed by the panel, as it warned that “empowering consumers will be an uphill struggle”.

Obstacles included “asymmetries of information” – the difficulty in comparing legal services offerings – and the fact that law was often a distress purchase.

Lack of price transparency was another “deeply engrained” market failure, one of several which the panel said regulators could not address overnight.

A further limitation was the extent to which vulnerable consumers would be able to drive competition, suggesting that empowerment initiatives could “inadvertently widen inequalities”.

Online tools

Several surveys such as that prepared for the Department for Business Innovation and Skills in May 2012 have suggested that one major shortcoming of the market was the ability for consumers to compare prices.

This could change with the rise of online tools, which could allow users to find information not just about legal issues but also about legal services providers.

However research reviewed by the panel indicates that, at present, legal services buyers did not shop around, with many finding it difficult to make comparisons.

In addition, the panel said the internet was not yet a suitable tool to access information about legal advice or lawyers.

Whereas online searching was the second most popular way of finding a lawyer (17 per cent of consumers found a lawyer this way), only 22 per cent of consumers did any shopping around.

In addition, while use of the internet for advice rose to 19 per cent, according to the Civil and Social Justice Survey Panel, LSB research suggested that consumers were confused by legal information available online.

However, the Consumer Panel, went on, there was “much enthusiasm for a reliable, independent and trustworthy one-stop online resource – akin to NHS Direct – providing basic level of information” about the law, enabling consumers to have informed conversations with their lawyers.

In a final warning over the potential of the internet to empower consumers, the panel said online services might be cheaper to deliver but “will not always be the best means of helping people to fix their legal needs.”

“Digital technologies have their place and we encourage their development, but they should be seen as a supplement to traditional advice format, not a substitute for them.”

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