People and small businesses needs
People want affordable and relevant legal services. But their needs are not being met. Only one in ten people use a solicitor when they have a legal problem. This is despite the fact that one in two adults had a legal need in the last three years. It is a similar problem for small businesses. According to research published by the Legal Services Board, legal problems are estimated to cause them almost £10 billion of losses, yet only one in ten view legal services as cost effective.
Legal services are simply unaffordable for the majority of the public and the small businesses that form the backbone of our economy. And the public purse does not have the resources to close that price gap.
The implications for individuals who need legal services are obvious – we cannot have a two tier society where we write off most of the population from enforcing or defending their rights.
And there are serious implications for small businesses, which make up more than 99% of British businesses and turned over £1.8 trillion last year. Legal services can help them succeed – enable them to take on their first employee, their first lease, complete their first online sale, export, or bring in foreign investment.
Accessible legal services support our economy – but only if businesses can afford them.
Better consumer information
So what can we, the Solicitors Regulation Authority, do to help tackle this problem and improve access to legal services? Firstly we have to make sure there is better information out there for consumers and potential consumers.
Many consumers find the sector opaque and confusing. Only around one in four are shopping around when they are looking for legal services. It is difficult for people to find clear, helpful information. This dampens competition and the drive towards lower prices and better services.
We can play our role. We have already started publishing more information about the firms we regulate. But we aim to do more to help consumers make choices by publishing information such as enforcement action, complaints and claims data – things that I would want to know when choosing a solicitor.
And we want the information to be available to all data re-publishers, not just those in the legal sector, as the market is best placed to develop services like comparison websites, that can help consumers to make well informed choices.
People outside the sector would be surprised at how contentious something so commonplace in financial, business, hospitality and professional services is proving for legal service providers. We think making information work for consumers would be a big step, fundamental to a well functioning market and making access to legal services much easier.
Yet better information is not all we are doing to help create a market that serves people’s needs better. Unnecessary bureaucracy constrains services and costs firms money, costs that are passed on to their customers. So we are reducing superfluous bureaucracy – with well over 40 examples so far and many more to come.
We are moving away from complex and confusing rules to concentrate on principles we can all agree with – ‘thou shalt not steal’ is of course unarguable. But we have 130 pages of accounts rules saying exactly that.
Reducing bureaucracy and focusing on high professional standards – standards like independence, confidentiality and integrity – reduces the cost of compliance, which can be an industry in itself. We want to move away from compliance management to a focus on what really matters to the public – high professional standards and holding solicitors to account against those standards.
Creating a more dynamic market
We also want to help create a more dynamic, innovative market. We are already removing barriers to entry. In the past, there were strict rules about who could provide certain legal services. For instance, firms had to be owned by a lawyer. That has now changed. By allowing ABSs (Alternative Business Structures), which can be owned by non-lawyers, into the market, we are seeing greater competition and more innovation. Research shows that an ABS is more likely to innovate. This innovation is crucial if we are to see new, affordable services.
Being more open to new business models has also seen firms enter the market offering packages of services – multi-disciplinary practices. So a small business can access the services they need – for instance accountancy and legal services – in one place, rather than having to deal with professions operating in silos.
And we are also looking to open up opportunities for solicitors to freely deliver services outside of regulated firms. Currently there is an expanding unregulated legal services market providing everything from will writing to advice on social welfare, employment or tax. However, the current rules restrict where and how solicitors can work. Our proposed changes would make it easier for solicitors, who are well placed to provide high quality services, to work in this expanding market. This could help push standards up while driving costs down.
Public protection not protectionism
Of course, we must balance an open and developing market with proper public protection. But that should not be mistaken for old fashioned protectionism. That is all about preserving a closed market, ensuring supply is always outstripped by demand so prices remain high.. Restricting access to legal services to those who can afford traditional services provided in a traditional way is a recipe for stagnation. It would mean legal services that can only be accessed by those with enough money, and that offers little to small businesses. And in this post Brexit world, it’s never been more important to make sure we are open for business.
That is why we will continue our work to create an open, competitive, innovative legal services sector, where consumers have the right information to make good choices. That will be good news for the public; small and large businesses; the many not the few.
Paul Philip is the SRA Chief Executive.