Competition – press release

Legal services study launched by CMA

The CMA has launched a market study into legal services in England and Wales to see if they are working well for consumers and small businesses.

The Competition and Markets Authority (CMA) will examine long-standing concerns about the affordability of legal services and standards of service. Concerns have also been raised about the complexity of the current regulatory framework.

In light of these concerns, the CMA’s market study plans to examine 3 key issues:

  • whether customers can drive effective competition by making informed purchasing decisions
  • whether customers are adequately protected from potential harm or can obtain satisfactory redress if legal services go wrong
  • how regulation and the regulatory framework impact on competition for the supply of legal services

Senior Director, Rachel Merelie said:

Whether it’s buying a property, resolving disputes or getting expert advice on financial and employment matters, it’s vitally important that consumers and small businesses can access the legal advice and representation they need. They also need to secure value for money and quality when purchasing these services. These are all areas that can have a major impact - both personally and financially - on the lives of individuals and on the success of small businesses.

We would be concerned if customers are not getting a good deal, either because they do not know what to expect when purchasing a legal service, or because they are not seeking appropriate legal support in the first place.

Not being equipped with the necessary knowledge stops customers exercising choice and prevents competition working effectively. We want to see if some customers end up paying more than they expected or receive a poor service. We also think there may be questions over the redress available if this does happen.

As well as carrying out our own research, we want to hear from all those involved about the issues they experience in using legal services and, in due course, how to tackle any problems we might identify.

The legal services sector is a significant part of the UK economy with an estimated turnover of around £30 billion. Legal services vary from the provision of advice or assistance to being represented in a court of law, covering a broad range of services such as commercial law, employment law, family law, conveyancing, immigration, wills and probate and personal injury.

According to recent surveys (see notes to editors) around one in ten users of legal services in England and Wales have said that the overall service and advice provided to them was poor value for money whilst, amongst small businesses, only 13% said they viewed lawyers as cost-effective and around half agreed that they used legal service providers as a last resort to solve business problems.

Market studies look into whether markets are working well and can lead to a range of outcomes (see notes to editors). The CMA must announce within 6 months whether it intends to refer the market for a more in-depth (‘phase 2’) investigation and must publish its report within 12 months, setting out its findings and the actions (if any) it proposes to take.

As well as analysing existing research and gathering evidence from interested parties, the CMA will carry out surveys of consumers and small businesses and also plans to conduct a number of case studies into specific legal service areas. The study will focus on the market in England and Wales, recognising that Scotland and Northern Ireland have different legal systems, and that regulatory reform is at a different stage in these jurisdictions. However, the CMA plans to use the outcome of this market study to inform any future consideration of similar issues in these countries. Criminal legal services will not be included due to differences in the provision of such services - for example legal advice and representation are guaranteed for defendants in criminal proceedings.

The CMA will work closely with government departments (particularly as the government is planning to carry out its own consultation on aspects of the legal services market - see notes to editors), regulatory and other representative bodies as well as consumer groups.

The CMA is inviting views on the study. These should be made in writing by no later than 5pm on 3 February 2016. Please email: legal.services@cma.gsi.gov.uk or write to:

Maria Rican-Sevitz
Assistant Project Director
Legal services market study
Competition and Markets Authority
Victoria House
Southampton Row
London
WC1B 4AD

Further information relating to the study will be available on the case page.

Notes for editors

  1. The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law.
  2. Market studies may lead to a range of outcomes, including:
    • a clean bill of health
    • actions which improve the quality and accessibility of information to consumers
    • encouraging businesses in the market to self-regulate
    • making recommendations to the government to change regulations or public policy
    • taking competition or consumer law enforcement action, and
    • making a reference for a more in-depth (‘phase 2’) market investigation, or accepting formal undertakings in lieu of a reference
  3. The Legal Services Consumer Panel’s Tracker Survey 2015 - data tables for recent users and a report prepared for the Legal Services Board by Robert Blackburn, John Kitching and George Saridakis, Small Business Research Centre, Kingston University: The legal needs of small businesses. An analysis of small businesses’ experience of legal problems, capacity and attitudes (2015)
  4. The government announced on November 30 2015 that it will launch a consultation by spring 2016 on removing barriers to entry for alternative business models in legal services, and on making legal service regulators independent from their representative bodies. It said: “This will create a fairer, more balanced regulatory regime for England and Wales that encourages competition, making it easier for businesses such as supermarkets and estate agents among others, to offer legal services like conveyancing, probate and litigation.”
  5. Enquiries should be directed to Rory Taylor (rory.taylor@cma.gsi.gov.uk, 020 3738 6798).
  6. For information on the CMA see our homepage, or follow us on Twitter @CMAgovuk, Flickr and LinkedIn. Sign up to our email alerts to receive updates on markets cases.