COLP Insider – 29th September 2017

This all stems from the Competition and Markets Authority’s 2016 report that there is a massive ‘unmet need’ for legal service, i.e. people do not access legal help when they need it. The CMA concluded that a lack of accessible information about prices and service levels was a barrier to a functioning market.

The SRA jumped on this report enthusiastically, as it plays into the regulator’s own narrative about competition, innovation and access to legal services.

Whether or not you take the conclusions at face value (we would certainly like to see some more robust evidence, please!), there is a trend at SRA policy level to make sweeping assumptions about cause and effect. “If we tinker with X, Y will surely follow!”. Worryingly, they don’t seem to be able to see past their own policy agenda, or acknowledge that there are likely to be unintended consequences in meddling in markets.

So let’s take the three areas that the SRA has highlighted: conveyancing, wills and personal injury. Will published pricing make the slightest difference to buying behaviour? The SRA assumes so, but what of reputation and recommendation – surely these are stronger influences, and much more difficult to manipulate. Will we see some firms trying to appear to be cheaper by quoting a ‘best case’ scenario? You betcha.

For PI, it just seems non-sensical. Thanks to CFAs, no-one pays anything except the deduction at the end for successful claims. But you can’t readily compare the deduction percentage without knowing what the award is. In simple terms, a client will be better off financially instructing a firm with a higher win rate or higher than average settlements, compared to a lower quality firm advertising low deductions.

As for publishing complaints, unless there are proposals to also publish positive feedback (we am not aware of any), it is impossible to think of a situation where the information can be meaningful. If the SRA wants to turn the profession into Amazon, they simply do not collect the right data. You need both positive and negative reviews in order to make an informed buying decision. If the regulator thinks that complaints data is a reliable marker of quality, that is a simplistic and unrealistic assumption for many reasons. Oh, and solicitors can’t defend themselves in a public forum either, because of ummmm…professionalism.

These proposals need a lot more thought before they become workable.

As put by the president of the Law Society, Joe Egan, ‘Publishing a raft of information without proper context may cause confusion and not actually help consumers understand legal services’ . Indeed.

The second important consultation involves Phase two of the SRA’s Handbook reform. This will see the rulebook slashed to 130 pages or so, down from the current 400+ page tome. Outcomes focused regulation (which has now confusingly been ditched) never addressed anything but the Code of Conduct, itself only a small part of the overall Handbook. The upshot is that, along with a shorter (non-OFR) Code and Accounts Rules, the rest of the rules are going to be re-written. On the face of it this is good news – the current Handbook suffers from a large a dose of regulatory gobbledygook (a technical compliance term).

But this is not just an exercise in simplification. The SRA is using the reform to drive through some fundamental practising changes. We already know that the plan is to allow solicitors to practise in unregulated firms, without PII etc. Now it is becoming clear that they won’t stop there. Want to set up a firm the day after you qualify? No problem. (As I said on Twitter this week: what could possibly go wrong?) Want to become a freelancer, undertaking reserved work but not as a sole practitioner or in a firm? Go ahead!

The SRA, rather cringingly, refer to their proposals as the “Uberisation” of legal services. A rather unwise alignment, but I think I know what they mean.

The profession is going through fundamental regulatory change that will alter how we all practise – if not directly, then in response to those competing against us. Now, some of the SRA’s proposals are quite sensible (e.g. scrapping the need for law students to go through the suitability assessment). Others are, in my measured opinion, quite barmy.

You’ll need to set aside some time to go through all of the draft rules. Responding to consultations is a pain, but if you have any strong views on any of this please do let the SRA know.

We feel more than a little sympathy for the barrister who was instructed to argue this point. Hasn’t it always been the case that litigation is adversarial by nature? Not pointing out a mistake is fair game, and clients have access to redress through negligence.

The situation would probably have been different if the Claimant was a litigant in person though….

We will also take action where we see any lack of integrity in your dealings with HMRC, either on behalf of clients or directly.”

As you know, we’ve been tracking some interesting enforcement decisions coming out of the ICO in recent months. Take the case of Nilesh Morar, a former Leicester City Council worker, who was prosecuted for emailing personal data from his work account to use when setting up his new business. Not dissimilar to the case of James Pickles, a paralegal who was prosecuted and given a section 43 order by the SRA for emailing template documents containing personal information to his personal email account in order to use in his new employment.

And outbound marketers remain in the ICO’s cross hairs. See recent decisions against Your Money Rights Ltd (£350k fine for making 146 million nuisance calls), and Easyleads Limited (£260k fine for 16 million illegal calls).

Lord Chancellor David Lidington said ‘It is my conclusion that there is a material distinction between the tax work which accountancy firms may currently undertake and the additional reserved legal activities they seek to undertake’. There were also serious concerns about the accountancy regulator’s dual representative and regulatory functions.

Duncan Wiggetts, ICAEW’s executive director of professional standards criticised the decision and said that it ‘cut across the recommendation of the Competition and Market Authority‘. It’s unlikely we have heard the end of this saga.