LSB: Mandatory price publication may mislead consumers
Transparency important for market competition but too much can lead to higher prices, warns Neil Buckley
The Legal Services Board's (LSB) chief executive has said that increased transparency in the legal services market should be high on the Competition and Markets Authority's (CMA) agenda, but urged caution on mandatory price publication, which could lead to inflated fees.
A former solicitor with Sinclair Roche & Temperley (now part of Stephenson Harwood) and Ofcom director of investigations, Neil Buckley believes that informing consumers about the cost and quality of lawyer's services will drive market competition.
'We've had the CMA initial draft report and that's something we're considering,' he told Solicitors Journal. 'We're hoping that recommendations will come out of that, in particular in relation to transparency, which I think is going to be very, very important to hopefully making the market more competitive.' As to how consumers will be able to access the information they need, Buckley said it would be 'very interesting' to see how other stakeholders responded to the CMA's consultation process.
The report's suggestion that there may have to be a mandatory requirement for legal service providers to engage legal comparison websites has been seized upon by the likes of Matthew Briggs, chief executive officer of the Law Superstore (and the former chief of Yorkshire firms Minster Law and Brilliant Law). 'For law firms who recognise the changing habits of consumers and clients and are smart in how they run and monitor their firms, enabling transparency, accessibility, and choice, this report is great news,' said Briggs earlier this month.
'An open and transparent approach aligns with the CMA's findings about what consumers really want and expect. Clearly progressive and transparent law firms have a land grab opportunity. But for those firms who refuse to be transparent, think clients will simply walk through the front door, charge whatever they want, and do not ask clients for quality feedback, there will be difficult times ahead. The progressive law firm which utilises innovation will win; it's as simple as that.'
Buckley, however, has urged caution: 'Mandatory price publication, if done in a certain way, may not give consumers the right information they need. It may actually give them misleading information about the price of services. Sometimes, in certain markets, you can see when prices are published, you have price following, and perversely that can lead to higher prices rather than lower prices, which is absolutely the opposite of what we want to see.'
Launched days prior to the CMA's interim findings, the latest LSB report analysing the state of the market found consumers were hindered by a shortfall of information on legal services and, given the absence of strong incentives for providers to foster innovation quickly, a lack of competition. However, the super regulator's evaluation of the impact of the Legal Services Act 2007 on the sector was criticised by the chairman of the Bar, Chantal-Aimée Doerries QC, who said the report contained 'mixed messages' and had left 'a gap in its account of the legal services market today'.
Responding to the criticism, Buckley said the report was intended to be an overview of the market, 'in which currently there is insufficient data about all aspects of that market'. The former City lawyer also remains optimistic about the report's findings. 'There are some real positives that came out of the report, particularly in regard to the quality of legal services since the Act came into play. What we have said is that things have not developed sufficiently,' said Buckley. 'The level of unmet legal need remains a challenge and it's one that I hope represents an opportunity for legal services providers as the market changes for people who may no longer be able to rely upon legal aid.'
Buckley challenged the Bar to tackle this unmet need by providing services at an affordable price. 'There are opportunities for the Bar now, through direct access, to make available their services to consumers directly. Young barristers entering the market have an opportunity to be able to provide services to people - some of whom might otherwise not be able to have their legal needs met - at a really representative and affordable rate. We hope they will take advantage of those opportunities.'
With cuts to legal aid increasing the numbers of unrepresented parties in the court system, and both paid and unpaid McKenzie friends becoming more visible across England and Wales, the importance of affordable legal services has perhaps never been so important.
In February, the Judicial Executive Board issued a consultation paper proposing reforms to the existing guidance on McKenzie friends, including a ban on fee charging. While the Bar Council has long supported the idea of banning this controversial practice, the LSB said the case had not been effectively made, a move that has incensed lawyers who fear for members of the public who enlist their services.
'When we put out our view on McKenzie friends, we were very, very clear. There didn't seem to be evidence to support any differential between fee-paid McKenzie friends and non-fee paid McKenzie friends' said Buckley. 'That doesn't mean to say we're necessarily proponents of fee-paid McKenzie friends. All we simply said was we couldn't see the evidence at the time to justify a ban.'
Of course, the LSB's opinions on such matters may soon become moot. The CMA's interim report noted that with nine arm's-length regulators overseen by the LSB, there might be benefits in reducing the number of regulators. Though he has lent his support to a reformed regulatory framework, Buckley admits that, should the number of regulators be cut, questions over the LSB's future existence would be an 'inevitable outcome'.
Nevertheless, the chief exec remains focused on the tasks ahead. 'It would be very surprising if you looked at this particular market, with its multiple regulators, and didn't conclude that it might be beneficial to have a reduced number of regulators and to make the regulatory framework less complex.
'Until we have a further piece of legal services legislation which deals with the complex nature of the regulatory framework, we want to carry on doing what we're doing, which is focusing on reducing regulatory burden, looking to see what measures can be taken to serve unmet legal need, and carrying on with our core functions, whichare in relation to oversight, performance, and standards of the regulators.'