‘Shared cultural norms’ among legal professionals have the effect of weakening competition between providers of services, the legal sector’s oversight regulator said today.
In its response to the Competition and Markets Authority’s (CMA) interim report on the sector, the Legal Services Board says ‘the pace of change needs to increase’ to achieve the intended benefits of the Legal Services Act 2007.
It agrees with the CMA that there is a need for more transparency of price and service quality.
‘The absence of such indicators inhibits consumer choice, reducing the incentives for providers to compete on price, quality and innovation,’ the response states.
Noting other features of the legal services market that affect competition, the response says consumers tend to purchase legal services infrequently and at times of distress.
In addition, there is a legacy of ‘strong professional identities’ that may impact upon competition. The LSB says that in 2015 solicitors had 58% of the UK legal sector market by turnover while barristers had 9%.
‘These professional groups by their nature have a tendency towards shared cultural norms which can have some benefits, but which also lead to behaviours that mute competition between providers.’
An example of such ‘behaviours’ is the prevalence of the term ‘solicitor’ over individual firm branding, the response states.
Neil Buckley (pictured), chief executive of the LSB, said: ‘We believe that transparency can be improved and consumers empowered.
‘However, we believe there are other inherent features of legal services which make it challenging to rely on consumers alone to actively shape the market.
‘Well-designed market transparency measures need to be advanced in tandem with regulatory reform of the legislative framework as this could contribute directly to increasing competition in this sector.’
Meanwhile the board has asked the Legal Services Consumer Panel to give its perspective on whether existing ‘information remedies’ are working well for consumers.
A letter to the panel states that information remedies are most commonly set in codes of conduct and can either take the form of broad principles or prescriptive requirements. The panel has been asked to report by the end of the year. Buckley says in the letter that the panel’s advice is ‘particularly timely since information remedies are a central feature of both the Competition and Market Authority legal services market study and proposed changes to the SRA Handbook.'