In my last column I talked about what the future held for the legal profession and how the government was looking to open up the perceived monopoly of lawyers to create a more competitive edge and easier access to legal services.
The government has now produced a draft bill – nattily called the Legal Services Bill – and we can therefore now see what the government is intending to do to allow ownership of legal entities.
The Bill also deals with how the government intends to regulate the legal professions in the future and deal with the ongoing issues of complaints. Let me first touch on this.
Complaints handling
As you will know from me, if not through your own resources, the legal profession has not been good at dealing with complaints, and when it does do so it is a very costly exercise. At the present time the Law Society, through its complaints arm, deals with roughly 20,000 cases a year at a cost of about £28m – this is not good value for money. The Financial Ombudsman Service (FOS) compares favourably with running costs budgeted for the coming year of £58m to deal with 125,000 complaints and, having threatened for years to do something about it, the government has finally decided to take over regulation of the professions by creating an overarching body – the Legal Services Board – which will impose the regulatory climate on the Law Society and the Bar Council (and Council for Licensed Conveyancers).
The effect of this legislation will be that in approximately two years time, it is hoped there will be communality running through the continuing regulation of the professions and that complaints from clients, etc, will be dealt with more economically and more efficiently.
I, for one, welcome this change – I believe taking regulation away from the profession and its own self-interests is likely to be a good thing and will ultimately provide consistency of approach to rule-making which has been sadly lacking.
Alternative business structures
Okay, having got that out of the way, another important section of the Legal Services Bill deals with the principle of Alternative Business Structures (great name – where do they get them from?)
This is the peculiar sounding new structure which, in the words of the Lord Chancellor, will ‘facilitate alternative business structures which would enable different kinds of lawyers and non-lawyers to work together on an equal footing. These structures will allow legal services to be delivered in new ways, promoting greater competition and innovation and enabling firms to better respond to the demands of the consumer’.
That is lawyer-speak for saying the government is going to allow legal firms to be bought, sold and invested in just like other commercial companies. The government believes that by doing so it will enable law firms to organise themselves in more efficient ways, resulting in new, more efficient market structures and a new ‘vector of market-derived prices’ – I think that means cheaper.
Of course the government is absolutely right. The only way in which to break the traditional hold on the legal services market by lawyers is to blow open the market entirely and let the likes of Tesco or Virgin come into the market with their money and their marketing brands and do what the cottage industry of the legal profession cannot do – resource up for the future while improving quality and competing on price all the same time.
Winners and losers
There is going to be a blood bath at the OK Legal Coral and there are going to be winners and losers. But ultimately, the public will win out – and that, at the end of the day, will benefit us all
