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CILEx fears mandatory price publication will disadvantage new firms

Overburdening start-ups could harm their progress, says CEO

23 August 2016

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Forcing new entrants to the legal services market to publish their prices could disadvantage lawyers, the Chartered Institute of Legal Executives (CILEx) has said.

Responding to the Competition and Markets Authority's (CMA) interim report on the sector, CILEx said it supports measures to increase market competition but wants reforms to be outcomes focused - not mandated - to protect its members.

The representative body has asked for consideration to be given to new market entrants that may lack the experience to publish appropriate fixed cost offers.

CILEx's chief operating officer, Linda Ford, said: 'Proposals to tackle price transparency, enabling online comparison, and improving information for clients, are targeted at what are perceived as shortcomings from established legal businesses.

'However it's important that start-ups and market entrants are not overburdened if additional expectations are to be placed on legal service providers. It is still relatively recently that chartered legal executives have gained the ability to establish their own law firms delivering reserved legal activities, and right-touch regulation is needed to see them thrive.'

In July, the Legal Services Board's (LSB) chief executive, Neil Buckley, warned of the risks of 'misleading' mandatory price publication, which could drive prices up. However, the LSB stopped short of advocating any remedies when publishing its own response to the CMA last week.

In its interim report, the CMA discovered that limited price transparency was harming the ability of individual and small business customers to drive competition, despite the increased prevalence of fixed fees.

While 'open to more fundamental change' of the regulatory framework, the competitions watchdog warned of the risks of increased regulation, a concern shared by CILEx.

CILEx recommended that reform of the regulatory landscape should be considered holistically, and that encouraging an independent and diverse legal profession, supporting the rule of law, and improving access to justice, are just as important in protecting the interests of consumers as promoting competition.

In its response to the report, the Law Society voiced concerns over the imposition of further regulatory requirements which, without 'strong evidence', could harm the market.

The deadline for comments on the interim report has now passed. The CMA must its final report by 12 January 2017.

Matthew Rogers is a legal reporter at Solicitors Journal @sportslawmatt matthew.rogers@solicitorsjournal.co.uk