This year will see the Government kick off another consultation on how the legal sector is regulated, with the aim of promoting ‘open and competitive markets’ and ‘delivering choice and quality at lower prices’.

The Competition and Markets Authority will set the agenda with the announcement of a new study to address what it is claimed are “longstanding concerns” about the affordability of legal services and standards of services.

Iain Miller, partner, Bevan Brittan
Iain Miller, partner, Bevan Brittan

We could see measures to make legal services regulators independent from their representative bodies, and the further lowering of barriers to entry for non-legal businesses – such as supermarkets and estate agents – into the market, all in the interests of protecting consumers and businesses.

But the Government may be missing a key point: that this is already a competitive market of substantial benefit to the UK economy. Tactical and piecemeal reform will put at risk its future success, and its ability to grow in the interests of consumers and justice.

The opportunity

A big part of the UK’s economic success is based on its strong position in key sectors. We are world leaders in legal services, with turnover of more than £31bn a year. We have 20 per cent of the European legal market, and 7 per cent of the market globally.

England and Wales have the advantage of leading the world in the way we regulate lawyers. Our framework is one of the most open, and one of few that permits external ownership. This has encouraged innovative firms to set up and grow, and has attracted forward-thinking legal providers from other jurisdictions.

In the rest of Europe it is unsustainable that legal services are mostly controlled by lawyers. The free movement of services across the EU will eventually enable externally owned UK firms to sell their services in other member states.

Consequently, lawyers and the legal market are no longer the same thing, and lawyers in other countries will not be able to hold back the competition. How could they hope to do so when so much law will be delivered via websites or through innovative technology-led providers?

Some law firms have transformed their operating models by investing in IT and artificial intelligence systems, as clients demand better analytics and management information to support decision-making and manage risk.

The UK dominates the legal sector because we have created a better environment than other countries when it comes to allowing firms to grow and compete worldwide. If we want to change this environment we need to think very carefully.

Future regulation

There is still a mishmash of historic boundaries controlling who can offer which service, and it is right that there should be more clarity on which legal services should be reserved to authorised individuals, and on which types of organisations should be regulated.

A new regulatory framework is likely to bring proposals to separate legal regulators from their representative bodies, making it easier to own
law firms.

Other professional services firms, such as accountants, will be able to employ solicitors to provide legal advice. In-house legal teams will be able to sell their services more widely and some are doing so already. The SRA is doing its bit by making it easier for solicitors to be flexible in the way they do business.

But it will also be important to consider a wider range of measures. Alternative models could feature a single regulator or fewer regulators. Is the scope of regulation right?

Only by looking at these issues together – and assessing their impacts and benefits – can we ­decide what is best. It is critical to avoid a period of regulatory inertia resulting in the opportunity for the UK legal sector to ‘seize the moment’
being lost.

Building on strength

Of course consumer protection is important. But so is a cohesive approach that can strengthen what is a growing British success story.

We now have a huge opportunity for UK firms with the brand potential and capability to dominate the world legal market for years to come.

By all means let’s have a regulatory review, but let’s not put at risk what has been achieved by tinkering for the sake of it.