There is a case for greater deregulation in 'commoditised' legal services, a top European Commission official said last month.


Speaking at a conference in Brussels on the economic case for professional services reform, Philip Lowe, director-general of the competition directorate, said that in fields such as conveyancing, there could be greater deregulation 'without worrying so much about high standards'.



The conference, organised by the Finnish presidency, heard the preliminary results of an EU-wide study of conveyancing services regulation, which indicate that the Nordic licensed agent system produces the most efficient results, and the lowest legal costs.



The system, mainly used in Denmark and Finland, involves estate agents providing legal services too, although delegates were told that this caused few problems because standard contracts are used. The model is also characterised by quality control of professionals through exams and licensing, negotiable fees, and a low level of regulation on market structure and conduct.



By contrast, the traditional Latin notary system is highly regulated and the study found a statistical correlation between higher regulation and higher fees.



The total cost of moving house in England is the second lowest in Europe after Scotland, the study found - 3.57% on a ¤250,000 property - while legal fees are also among the lowest. The English conveyancing market is to be the subject of further research as one of four case studies.



Delegates also witnessed disagreement over whether external ownership of law firms is a good thing. Henrik Ballebye Olesen of Copenhagen Economics, which produced a major report on legal services reform in Denmark last year, argued that lawyers should remain in majority ownership of firms, and to allow otherwise would provide only a small benefit but a potential loss of independence. 'The most important aspect in a law firm is human capital, and the best way to motivate lawyers is ownership,' he said.



However, Paul Grout, a professor of political economy at Bristol University, reiterated research he carried out for the Department for Constitutional Affairs (DCA) in 2005 by insisting that there is far more for lawyers to gain from acting dishonestly when they are also an owner than when they are not. The latter would only have his or her own human capital at risk and regulation would therefore 'bite significantly' on their behaviour, he said.



Osama Rahman, chief economist at the DCA, told the conference that 'I don't think economists are prejudiced against lawyers, but lawyers are like everyone else' - specifically, they are 'motivated by incentives'.



Neil Rose