Foreign firms competing with world-class City practices will be delighted the LSB is seeking to degrade our quality mark.
Now that the Competition and Markets Authority’s (CMA) interim report on its Legal Services Market Study has been published, together with responses from the Legal Services Board and the Law Society, it is good to take stock of where we are.
There are a number of interesting conclusions from the report. The first is that – after all that fuss – there will be no market investigation reference. The CMA states that there were no representations made to it that there should be such a reference – presumably not even by the LSB which claimed at the time it was delighted that the CMA had announced its possible intentions, since the LSB did not have the power to do much itself.
The second interesting conclusion is that the CMA’s interim report, and its approach, are not based on the whole legal services market. It specifically excludes important parts – for instance, City firms and criminal lawyers. There is no reason given for excluding City firms, although the CMA does not quite define the exclusion that way. Rather, it says that the report focuses on the experiences of individual and small business clients (where small businesses are defined broadly as up to 10 employees). Not many in that group use City firms. Criminal lawyers are excluded on the ground that their market conditions are different: sometimes advice and representation are guaranteed in the criminal courts, and the legal aid provision is also structured differently.
The fact that the report focuses on just a section of the legal profession deserves highlighting. It is important that whatever steps are taken in the future must not impact on the excluded sectors (such as the City and criminal). These are significant areas of the profession, though for different reasons. And such areas should not be affected by changes to the rest of the profession without a proper analysis of how it would affect them.
Or, as the Law Society puts it more formally in its response: ‘Market features in one market are not necessarily reflective of all other markets. Therefore it is vital that any analysis of market detriment and potential remedies takes account of differences and is cautious in extrapolating beyond the evidence that exists in the markets reviewed.’
The City is the equivalent of our Olympic gold medallists, world-beaters who should be promoted heavily, particularly post-Brexit. And criminal lawyers are the sector recognised by all as the backbone of the legal profession’s contribution to the rule of law and the fair administration of justice.
A good example of where care was not taken comes from the LSB’s response to the CMA interim report, and in particular its statement that: ‘The legacy of strong professional identities in the sector fosters collective norms and behaviours within professional groups that can mute competition between providers.’ It repeats such assertions elsewhere, in an undisguised attack on the importance of professional titles and the responsibilities that they carry.
I think that City firms’ competitors abroad will be laughing to see how the LSB is trying to degrade the quality mark that has for decades served City firms so well in selling their services overseas, bringing great financial benefit to the UK. And I assume that even the LSB is not suggesting that unregulated providers, unburdened by a strong professional identity, should be offering criminal defence services in our courts.
The legal profession is one unit – the duty solicitor called out on low legal aid rates at the weekend is tied to the City solicitor advising foreign companies on multi-million-pound deals, and they are in turn tied to the high street firm advising on wills and conveyancing. The same person can move in their career through all three branches. The solicitors involved use the same title and are bound by the same ethics and responsibilities. An attack on one part of the profession will almost certainly impact on the others – and this should not be undertaken in a cavalier fashion, without proper analysis.
My final comment on the CMA report is that it does not find serious competitive problems in the legal profession. After all the huffing and puffing from the LSB over the years, there is to be no market investigation reference. The CMA believes that the necessary changes – and there are always improvements in competition, they never end – can be achieved by it actively engaging with government, regulators and industry bodies.
But I thought that that was the LSB’s job? I return to what I said at the outset of the CMA exercise, that the CMA’s involvement, particularly now that there will be no market investigation reference but merely active engagement with stakeholders, is a poor reflection on the LSB’s performance in the area of competition to date.