Reinventing The Legal Services Market

2013-09-06 22:36:49

The starting point for the U.K. reinventing legal services market in a 21st century context is to recognize that the practice of law is actually just one component of a legal services continuum. The rationale was succinctly summarized in the opening statement of the 2005 legislative report with the ominous title The Future of Legal Services: Putting Consumers First.

The professional competence of lawyers is not in doubt. The caliber of many of our legal professionals is among the best in the world. But despite this, too many consumers are finding that they are not receiving a good or fair deal. 1.

The primary thrust of the recommendations and subsequent Legal Services Act (LSA) enacted in 2007 is to abolish the duopoly over the practice of law by solicitors and barristers and to extend the reach of self-regulation to other classes of legal services providers. Unlike Canada, the terms of reference for the historic duopoly over the practice of law by barristers and solicitors was defined on the basis of “reserved activities”, not a monopoly over all aspects of the practice of law. Whatever legal activities weren’t legislatively specified as being “reserved” could be and were delivered by unregulated service providers such as banks and trust companies or by persons, the latter who in some instances labeled themselves as lawyers. Under the new legislative scheme once a group has been designated as a self-regulated legal services provider they will be granted reserved activity status and no other group or persons, unless they also have reserved status, can engage in that activity.

The legislative strategy is to, wherever possible, have more than one class of legal service provider available to enable the consumer to make choices. Competition will favour consumers who can make informed decisions about the most appropriate service provider to respond to their need. For example, real estate conveyancing is a reserved activity restricted to solicitors and licensed conveyancers (self-regulated independent paralegals). Consumers are quite able to determine when they require the services of a licensed conveyancer for routine residential real estate transactions and solicitors for complex real estate deals.

The end result is to encourage service providers to identify a legal services market niche, determine the competencies required to serve it and obtain self-regulated status to offer it as a reserved activity to the exclusion of all organizations or individuals. Unregulated service providers in a niche will see the advantage of becoming organized and being granted self-regulated provider status with reserved activity rights. There will be a significant increase in the number self-regulated professional legal services providers with demonstrated competencies for best practices capability, which is in the public interest.

In instances where the complexity of the service need impedes the ability of the consumer to make an informed choice and the public interest is best served by a self -regulated monopoly only licensed one class of licensed service provider will be granted reserved activity status. For example, it is expected that barristers will continue to retain the monopoly for high – end litigation before superior courts. However, solicitors are now permitted to represent clients in routine litigation matters in lower courts, which will make access to courts more accessible and affordable.

The government has established a Legal Services Board (LSB) .with a legislative mandate to assess applications, make competency determinations, dictate the terms of reference, and grant self -regulatory status for reserved activities. Although all self-regulated legal service providers will have self -governing status, they are subject to oversight by the LSB, the ultimate arbiter of the public interest. The LSB board of directors are appointed through a consultation process between the Lord Chancellor and Chief Justice and the majority of members must be lay- persons.

The LSB has granted self-regulatory status to seven approved regulators to date. Grand parented in are solicitors, barristers, licensed conveyancers, patent attorneys and notaries. The Institute or Legal Executives (ILEX) has been elevated beyond law clerk/legal assistant status and been granted “limited” self-regulatory status. The “new kid” on the self-regulatory block is the Association of Cost Lawyers . Think of cost lawyers as a combination of certified general accountant (CGA) and litigation lawyer. Allegedly unwarranted legal bills are foremost among consumer complaints. It’s been granted reserved activity status to render an independent accounting of legal bills, negotiate settlements and, if necessary, and take other legal services providers to court.

The LSB has set high standards for granting a group self-regulatory status which explains why there isn’t a “bakers’ dozen” of providers to date. An aspirant group needs to demonstrate there is a market niche and consumer need for a reserved activity provider, that they are in a position to develop an educational program that will produce competent professionals and have the requisite competencies to function as a self-regulated provider. However, a number of prospective applications are in the pipeline. At the legal technician niche level several groups are jockeying among one another and sounding out the LSB about submitting an application for reserved activity status as self-regulated “will writers”, a niche neigbourhood legal technician. The shocker for the legal profession is an application by the Institute of Chartered Accountants of England and Wales (ICAEW) to become a self-regulated legal services provider for reserved probate work to be undertaken by accountants who take a professional development course in the law of probate. They are poised to become a direct competitor to solicitors with whom they’ve been sharing work through a voluntary umbrella association of the Society of Trusts and Estates Practitioners (STEP).

1. The Future of Legal Services: Putting Consumers First, Presented to Parliament by the Secretary of State for Constitutional Affairs and Lord Chancellor by Command of Her Majesty, October 2005 at P7.