The imminent liberalisation of the legal services market has resulted in issues relating to reserved legal activities receiving close scrutiny. Organisations that provide legal services are only regulated under the Legal Services Act if they undertake one or more reserved activities (litigation and advocacy, probate services and conveyancing).
If they provide only unreserved legal activities, such as will-writing, mediation services and legal advice, they are able to do so on an unregulated basis and with no client protection in place, other than that provided by the general law.
Given the widespread confusion among consumers about what legal services are regulated and what, if any, protections are in place, the case for expanding the list of reserved activities, to include work such as will-writing and general legal advice, is being made on good grounds.
This is an issue that has concerned the SRA board for some time. We believe that the present list of reserved activities, and the boundaries between regulated and unregulated legal services, badly need modernising and we welcome the Legal Services Board’s current review.
When we conducted research into consumer attitudes towards the purchase of legal services the results were predictable. The research found that consumers are generally surprised and concerned to learn that many legal services can be, and are, provided by organisations that are not regulated.
Consumers assume they are protected if something goes wrong with their legal service purchase, as they would be in other consumer sectors, and are unaware of the consequences of receiving services from an unregulated provider.
More recently, the Legal Services Board published research, co-sponsored by the SRA and the Office for Fair Trading, into the quality of will-writing. The findings highlighted significant problems experienced by consumers when purchasing a will and demonstrated that too many wills, written by both solicitors and unregulated will writers, did not reflect what the client intended and contained basic errors. This underlines the need for effective regulatory scrutiny, and consumer clarity.
The introduction of alternative business structures will undoubtedly bring benefits to consumers through greater competition and innovation in the market. Services such as banking, insurance and supermarkets now offer a more diverse range of services than their traditional mainstay and many may start to offer reserved legal services. However, while this opens up the market, it creates an imperative for consumers to understand which services are regulated and which are not.
The current set-up, therefore, concerns us. There is clearly need for more protection, and more clarity, for consumers. As we move into a new era of legal services, we cannot assume there is a sophisticated understanding of regulated and unregulated legal activity. We need a new statutory regime that is more focused on the interests of consumers and reflects the legal services market as it develops.
All the research in this area supports the case that the definition of reserved legal activities be extended to cover all ‘solicitor activities’. We believe this is necessary to secure consistent consumer protection in what is a rapidly changing legal services market. This would ensure that consumers could be confident about the services they receive from anyone who provides a legal service, in the knowledge that it is done by people with the right skills and qualifications and who are properly regulated.
Activities such as will-writing are hugely important, and if they are not done properly the repercussions can be considerable.
We do not believe it is in the interests of consumers for key legal services to be provided by unregulated firms. Our ultimate concern is the fragmentation of the legal services market into unregulated firms which provide poor standards of service and put client money at risk, and high-quality, professionally run and regulated firms providing reserved and other legal services.
The Legal Services Act 2007 aims to liberalise the legal services market and bring huge benefits for consumers. For competition to thrive we need to ensure that there is a level playing field in the legal services market. We also need to ensure that access to justice and innovation in the market is underpinned by adequate consumer protection.
Whatever decision is taken must ensure the right protections are in place to uphold confidence in the legal services market.
Charles Plant is chair of the board of the Solicitors Regulation Authority