Last month, a Government source set the scene for the Office of Fair Trading's (OFT) report into competition in the professions with some suitably strong words. “They are one of the last bastions of restrictive practices,” the unnamed spokesman thundered to The Times. “They have a choice – introduce these reforms themselves or be reformed.” Margaret Bloom is the director of competition policy at the OFT and, as such, was responsible for the Government's probe into the murky world of the law. So was it really the “cosy, insulated world” that the unnamed source claimed? “I think it's competing in many ways,” Bloom says in measured tones. “But on the other hand, there are clearly restrictions which exist in the profession, either stemming from the rules, the Government or custom and practice, and they haven't got their equivalent anywhere else.” Top of her list of anti-competitive behaviour are the restrictions that prevent multidisciplinary partnerships (MDPs) and access to the bar, as well the QC system.
The report follows a review of competition in the legal, accountancy and architecture professions. The director general of the OFT John Vickers is clearly wasting no time. In his report, he has given the professional bodies one year to make their own progress on reforms. He warns: “We will take action after this grace period if necessary, or earlier if there is no evidence of willingness to make changes.”
Now it is up to the members of the bar and solicitors to persuade the Government that restrictive practices should stay. “The question is, are these restrictions really necessary?” says Bloom. “If they don't return benefits, either in terms of economic efficiency or for the consumer, then they shouldn't stay.”
In the meantime, the Government is honing its own powers to finish the job. Only two days after the report's publication, the Secretary of State for Trade and Industry Stephen Byers implemented the first OFT recommendation by announcing that the professions should be fully subject to competition law. Schedule 4 of the Competition Act 1998 allowed professional rules to be excluded from the scope of the legislation.
Despite the report being aggressively hyped in the press as the opening shot in the Government's war on “fat cats”, there is little for solicitors to fear. Indeed, many lawyers will applaud the OFT for pushing the Law Society on MDPs. However, the bar is seething at the assault upon the way its members practise. In an article he wrote for The Lawyer (12 March), Bar Council chairman Roy Amlot QC damned the watchdog's work as “glib” and “dogged in its ignorance of how the interests of justice plays a role in the issues at stake”. But Bloom says that the OFT has heard from many barristers, including a number of QCs, who have applauded their recommendations.
But what about the specific criticism that the report ignored the public interest? Bloom flatly rejects the charge. “It may be a confusion, but the report does very much take account of the public interest,” she says. “Our concern is benefiting the consumers and, in doing that, the public interest is of course an important part of it.”
In answer to the criticism, Vickers will be writing to the Bar Council to set out where the public interest is covered in the report. But it is hard to imagine that the letter will offer much comfort to those practitioners opposed to the reforms.
Amlot argues that public interest embraces more than just giving consumers a better deal. He says that it also involves a consideration of the importance of a strong framework for justice, which includes an independent legal profession.
At the moment, the Government is consulting on the future of the rank of QC. According to Vickers, the value of the rank to consumers is “questionable”. Bloom says that there is no reason why quality marks should not be used, but she says that there is a problem with how silks are chosen. One criteria for drawing up a proper quality mark would be an entry examination. The report points out that the introduction of exams was an ignored recommendation of Sir Leonard Peach's inquiry into judicial appointments last year. According to Bloom, the argument for a quality mark is persuasive if it assists those who are less able to assess the quality of a barrister. She argues that if there was direct access to the bar then that argument might be far more compelling.
Bloom is quick to point out that the report was not about hunting down fat cats, as was frequently suggested in the press. She says there was no evidence in the report to suggest that the high fees of partners at magic circle firms could be seen as anti-competitive behaviour.
As for MDPs, the Law Society says that the OFT's endorsement is very helpful. Law Society president Michael Napier is on the record as saying that Legal Practice Plus, the society's model MDP, will be off the blocks by the end of this year.
So is the society ahead of the game? Bloom says the OFT welcomes the fact that the society is moving in the right direction, but adds: “It was back in 1986 when one of the previous director generals published the Entities report and recommended that the restrictions should go, so it's a somewhat slow-moving game.”
Bloom says that the society's model is a step along the way, without going so far as enabling full MDPs. Legal Practice Plus envisages non-solicitors joining firms as partners and entering into a contract with the Law Society in which they agree to be bound by its professional rules. There is considerable demand for MDPs within the profession, which is coming from the smaller, traditional firms as much as from City firms. Bloom believes that it is in the field of property services, where solicitors can team up with surveyors and estate agents, that the logic seems most compelling. “It's in the high street where they need to deliver something to respond to the needs of the consumers,” she says.
Another fundamental tenet of the law – legal professional privilege – is up for review. According to Bloom, accountants feel at a competitive disadvantage when advising on tax issues compared with the lawyers who have the benefit of privilege. She asks: “Should this mean that privilege is extended to include the work done by the accountants, or should it be abandoned for the lawyers?” The OFT has left that question open for debate.
The various professional bodies have until Easter to digest the report's 143 pages and defend perceived restrictive practices, and it seems likely that the Bar Council will refuse to play ball. But Bloom remains hopeful. She says: “I hope they look seriously at our case for considering changes to their professional rules and have a constructive debate.”