After nearly a decade, the jury is still out on whether the Legal Services Act 2007 has achieved what the government set out to do, a major study by the sector’s super-regulator concludes today.
The Legal Service Board’s evaluation of changes in the market between 2007 and 2015 says that the goals of increasing competition and making access to justice more affordable have not been achieved and that more reform is needed.
The board’s chair, Sir Michael Pitt (pictured), said that, while the quality of legal services has 'improved on most measures’ since the reforms, the study reveals that 'progress has been slow towards delivering better market outcomes and access to justice for all’.
As the current government considers introducing further legislation to reform legal regulation in England and Wales, Pitt says: 'The LSB believes that the market needs to change further and the pace of change needs to increase. We need to break down regulatory barriers to competition, innovation and growth.’
Among the findings of the 190-page report are:
- That the turnover of the UK legal sector is now at an all-time high, £32bn in 2015, despite shrinking by 8% to £26.9bn in 2009. The majority of this growth has come from domestic markets. Meanwhile spending on legal aid has fallen by 22% since the act, amounting to 7% of the sector’s turnover in 2015 compared with 9% in 2007;
- New forms of ownership and the opening up of practice rights under the act have failed to increase competition. Only a quarter of alternative business structures regulated by the SRA were set up by new entrants to the market and just 1.4% of chartered legal executives have taken advantage of additional practising rights. 'There is little evidence of change in market outcomes - price, quality and access - associated with changes in competition’;
- Overall the level of innovation is 'broadly unchanged’ since before the LSA reforms were introduced;
- Private litigation remains 'relatively unaffordable for the average adult living in England & Wales’;
- In technology, the biggest change has been the growth in the use of social media, almost unheard of at the time of the 2007 act;
- The solicitors’ market has consolidated, reflected in the higher average turnover of solicitors’ firms, from £2m in 2011 to £2.4m in 2015. Fewer firms are entering the market: in 2010, 2.3 firms opened for every one that closed; in 2015 only one did. However the study reports a ‘significant increase’ in the use of solicitors for conveyancing between 2012 and 2015.
Law Society chief executive Catherine Dixon said: 'We agree with the LSB that broadly speaking the legal regulatory system is working effectively. The system is relatively new and changes are still being embedded.
'We do have a vision for the future of legal services regulation and if there were to be a whole-scale and thoughtful review, we think that there is an opportunity for simpler and better regulation.
'Currently we think the definition of regulation is too broad and should not include professional standards, legal education and training and entry into the profession and awarding the professional title of solicitor, which we think should sit with the profession that knows what good looks like and can drive higher standards.
'This would leave the regulator to get on with setting independent regulatory rules that consistently apply to the legal services market. Simpler and better regulation would reduce costs while providing more consistent protection for consumers.'
She added that the solicitors’ profession 'has a great track record of innovation and creativity in a changing market’.
Bar chairman Chantal-Aimée Doerries QC, said the report 'contains some mixed messages’.
While the LSB has identified innovations, the rise in ‘DIY justice’ is a concern. She also said that the report ‘fails to highlight the difference between barristers and other legal service providers, such as solicitors. Given the high volume of work carried out by barristers through the referral model, the report leaves a gap in its account of the legal services market today’.
Paul Philip, chief executive of the Solicitors Regulation Authority, said that the report showed ‘there is still a long way to go, particularly to improve choice and deal with the problem of unmet legal need. We believe that our reforms will increase access to high quality, affordable legal services by getting rid of unnecessary bureaucracy and further promoting competition’.