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UK Competition and Markets Authority to research Scottish legal services market

The Competition and Markets Authority has issued the following press release regarding its impending research into certain aspects of the Scottish legal services market to support the Scottish Government’s response to the Roberton Review.


The following release was published 17 June 2019.

This work has been prompted by the Roberton Review, an Independent Review of Legal Services Regulation in Scotland, and will provide evidence to assist the Scottish Government in determining how to take forward the recommendations made by that report. Led by Esther Roberton, that Review made a number of recommendations, including that there should be a single independent body to regulate the legal profession, set standards and handle complaints.

Building on work already done as part of the Competition and Market Authority’s (CMA) market study into the supply of legal services in England and Wales, this work will examine whether there is evidence of a lack of competition among legal services providers in Scotland, as was the case in England and Wales.

The research will also focus on:

  • the benefits of independent regulation of legal services in Scotland and whether the current institutional arrangement – where the bodies regulating the professions are also those representing and lobbying for them – dampens competition
  • the impact of the current legal services regulatory framework in Scotland on competition, particularly on innovation and the entry of new business models to the market

It is the CMA’s first Scotland-specific project since the expansion of its Edinburgh office last year to help the organisation better identify and resolve issues that harm Scottish consumers.

The CMA has today also published a document setting out its views on the Roberton Review’s recommendations. The CMA welcomes the review, which has sparked a debate about how to ensure the regulation of Scottish legal service providers delivers value for money and choice for consumers, as well as benefitting businesses and the economy.

The CMA intends to publish its findings in early 2020. More information can be found through the CMA here.

Notes to editors

  1. The Independent Review of the Regulation of Legal Services, led by Esther Roberton, was invited by the Scottish Government to review the regulation of legal services in Scotland. It reported in October 2018
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Solicitors Regulation Authority publishes Residential Conveyancing thematic review

A review about the service provided by solicitors to the public

Executive summary

Buying and selling a property is often the most expensive and important financial commitment a person makes in their life. Having access to reliable and good quality legal support really matters. It not only reduces stress and uncertainty, but potentially directly impacts on whether a purchase is completed, and what the long-term financial implications may be for all involved.

While most property transactions are completed relatively seamlessly, figures from the Legal Ombudsman (LeO) show that residential conveyancing accounted for nearly a quarter of all complaints it handled over the past three years.

Our own research of consumers, conducted in 2018, also identified that up to a quarter of recent home buyers were dissatisfied with some element of the service they received from their solicitor. One common area of concern was an apparent failure to fully explain the detail and implications of contractual commitments.

What we did

We carried out this thematic review to better understand how firms are delivering residential conveyancing services, and whether they are fulfilling their obligations to their clients.

We visited a sample of 40 law firms offering residential conveyancing services and conducted a detailed review of 80 case files.

What we found

We found that most firms were fulfilling their obligations. In particular, we found that:

  • all firms proactively communicated with clients at all key stages of a purchase, with the majority meeting them face-to-face at least once
  • all firms provided clients with clear information on their complaints procedures
  • firms are increasingly embracing technology, especially regarding how they communicate with clients.

However, we did identify areas for improvement. The two most significant and widespread were:

  • inaccurate initial cost estimates – 34% of firms failed to include all the services/fees a matter could reasonably expect to attract in their initial quotes
  • not being open about the real cost of third-party disbursement and their firm’s mark-up on these – specifically telegraphic transfers. In 37% of cases firms failed to do this, with some charging up to 10 times the actual bank charge for processing the transfer.

Other areas where we identified potential concerns included:

  • not processing paperwork efficiently – especially in relation to requisitions raised by HM Land Registry
  • not explaining the difference between freehold and leasehold ownership
  • failing to double-check that a client understands the long-term implications of contractual obligations and fees.

Conclusions

This review clearly found that in the majority of cases, conveyancing firms actively engage with their clients and fulfil their obligations to them. Property deals progress in a timely and efficient manner and clients feel informed and supported throughout.

But sadly, this is not always the case.

Whether its providing unrealistic or incomplete quotes, or failing to make sure contractual information has been fully understood, solicitors are potentially leaving their clients exposed to significant risk or potential financial hardship.

Next steps

This thematic review took place during 2018. In December the same year, we introduced new transparency rules which require firms offering conveyancing services to publish detailed price and services information, and their complaints procedures online.

The requirement to provide clear pricing information was not new. However, these rules, and associated guidance, now provide the profession with absolute clarity on our expectations for how they should be publishing price information.

These requirements include:

  • outlining all known and potential costs a transaction may attract from the outset
  • specifying all charges being added to the actual cost of any third-party disbursements.

As part of our ongoing work, we will continue to review compliance with these rules and will consider further action where necessary to make sure they are being followed.

On the specific subject of making sure solicitors explain contractual details to clients, especially in relation to leaseholds, we urge all firms to make sure that their clients understand their obligations. If we find evidence that people were not made aware of onerous clauses in their leasehold contracts, such as the regular doubling of ground rents, we will take robust action.

Following this review, we referred six firms onto our internal disciplinary processes. Five of these referrals included concerns about failing to declare that the stated telegraphic transfers fees included an additional charge/mark-up.

Read the full report here

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Independent Review of UK Legal Services Regulation Launched

The Centre for Ethics and Law in the UCL Faculty of Laws is undertaking a fundamental review of the current regulatory framework for legal services, led by Honorary Professor Stephen Mayson.

The independent review is intended to explore the longer-term and related issues raised by the 2016 Competition and Markets Authority (CMA) market study, which concluded that the legal services sector is not working well for individual consumers and small businesses, and that the current regulatory framework is unsustainable in the long run.  It called for a review of that framework to make it more flexible as well as targeted at areas of highest risk where regulation is most needed.

The review’s objectives will be to consider how the regulatory framework can best:

  • promote and preserve the public interest in the rule of law and the administration of justice;
  • maintain the attractiveness of the law of England & Wales for the governance of relationships and transactions and of our courts in the resolution of disputes;
  • enhance the global competitiveness of our lawyers and other providers of legal services;
  • reflect and respond flexibly to fast-changing market conditions being driven by innovation and advances in technology;
  • protect and promote consumers’ interests, particularly in access to effective, ethical, innovative and affordable legal services and to justice; and
  • lead the world in proportionate, risk-based and cost-effective regulation of legal services, consistent with the better regulation principles.

The review will reflect these objectives and consider how we can best ensure that our legal services remain of high quality and are effective, and that their regulation is proportionate and fit for purpose.  It will also need to re-examine how to give the public much-needed transparency about the legal providers they use and the services they pay for, and ensure that they understand their options and the consequences of their choices.

The first two working papers are already published.  Each of the working papers will address the issues and challenges raised by the four fundamental questions of the review:

  • Why should we regulate legal services? (Rationale)
  • What are the legal services that should be regulated? (Scope)
  • Who should be regulated for the provision of legal services? (Focus)
  • How should we regulate legal services? (Structure)

In pursuing its work, the review will seek to engage with a wide range of stakeholders and interested parties, including the CMA, the Legal Services Board, approved regulators, front-line regulators, representative bodies, consumers, the judiciary, practitioners, and providers of legal education and training.

It is now open for submissions in response to the working papers, and for meetings and discussions to explore the issues: to follow up, contact Professor Stephen Mayson.

Read more at the University College London Independent Review of Legal Services Regulation page.

Colorado Lawyer Self-Assessment Program yields analytical insights

Colorado Supreme Court Office of Attorney Regulation Counsel started developing its lawyer self-assessment program more than two years ago, immediately after a seminal workshop on proactive, risk-based regulation at the 41st ABA National Conference of Professional Responsibility in May 2015. The new resource is a leading facet of a larger shift toward proactive management-based regulation, which aims to help lawyers practice ethically and soundly in the first place, rather than just reactively imposing discipline after lawyers make mistakes.

The new system provides the regulatory team with real time stats on lawyer engagement and self-assessed professional performance. It highlights the professional objectives scoring the highest and lowest across all respondents, providing the team with evidence to support further educational program development. The platform also has the ability to create customized lists of continuing legal education (CLE) resources based on each respondent’s own personal benchmarks and areas of need. These lists make yearly CLE planning fast and easy for lawyers, and keeps them focused on the most effective resources for their needs.

Jon White, staff attorney at the regulator, writes “The practice of law will always be challenging. The “ounce of prevention is worth a pound of cure” approach of the proactive practice program seeks to reduce some of that stress. The self-assessments give lawyers the blueprint to build an ethical infrastructure. Lawyers, in turn, benefit from enhanced peace of mind. Clients benefit from exceptional service. It is a win-win for all.” The insights generated by the program’s data is informing the regulator where practitioners need more assistance, and where there may be weaker points in the sector as a whole. Staying ahead of this issues protects the public and strengthens the jurisdiction as a whole.

Read more about Colorado’s Lawyer Self-Assessment Program Here

 

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Transparency lies at the heart of Consumer Satisfaction

In January, the Legal Services Board (LSB) of England & Wales released its “Regulatory Performance: Transitional Assessment Review” looking at the transitional assessment of each legal services regulatory body against the LSB’s regulatory performance standards. The report found that it had “sufficient assurance that the regulatory bodies have met the minimum required level of performance against the majority of expected outcomes”.

Transparency across the legal services market lies at the heart of consumer satisfaction. Recent Competition and Market Authority statistics found that before choosing their legal service provider 85% of consumers want better access to information, 53% want information about price, and 37% of consumers what to know about the quality of the service they would receive. In response, the Solicitors Regulation Authority released new price transparency rules, which requires regulated firms to publish price and service information on their websites.

Since 6 December 2018, all solicitors firms had to publish cost information in relation to conveyancing, probate, debt, employment and immigration. The new rules dictate that firms must provide a total cost or an average or range of costs, as well as explain the basis of these charges, including any hourly rate or fixed fees. Firms also must be clear on whether VAT is included, while also highlighting likely disbursements, and their costs. Any conditional or damages-based fees must be fully explained to clients who may have to make payments.

In addition to price transparency, firms are also required to ensure consumers under stand the services they require and are receiving. The rules demand firms

  • Explain what services are included for the quoted price
  • Highlight any services not included within the price, which a client may reasonably expect to be
  • Include information on key stages and typical timescales of these, and
  • Publish the qualifications and experience of anyone carrying out the work and of their supervisors.

SRA’s ‘Looking to the Future’ programme is based on a sound argument that law firms must become more transparent if they are to survive. Paul Philip, SRA Chief Executive, said: “Publishing information on price, services and protections will not only benefit the public, but will also help law firms win new business. Research shows that people struggle to find clear information about the services firms offer and think using a solicitor is more expensive than it actually is. We are providing guidance and support for firms to help them meet the new requirements and make the most of the opportunities they bring.”

The SRA has taken consumer protection and transparency a step further, introducing a new Digital Badge. Provided via software which will make sure only regulated firms can display it, the badge will show online visitors which firms are regulated and provide them with a link to information on the protections this provides. Displaying the badge will help firms differentiate themselves from unregulated providers. Use of the badge is initially voluntary but will become a mandatory requirement during 2019.

Challenges of Transparency

Due to the business structures of many law firms, publishing fees is no straightforward matter, leading to some to use a confusing blend of charts, costs schedules, calculators and costs estimates. It is the unknown factors of pursuing legal cases which can alter costs. Russell Conway, senior partner at Oliver Fisher, notes, “It’s the wiggle room issue which is going to be the bellwether as to how successful this project is”.

Price transparency undoubtedly remains vital to consumer protection and satisfaction. However, there are concerns that some consumers may be heavily influenced by price, rather than by skill and expertise. David Kirwan questions if, in a new transparent pricing environment, consumers will truly stop and weigh skills and expertise, rather than revert to low costs. These concerns are not isolated to the UK market, as globally practitioners have expressed concerns about an eventual ‘race to the bottom’. Kirwan notes that “How we as an industry respond, and the way in which we convince consumers that it’s worth potentially paying more to receive a high-quality service, will be crucial if we are to retain the high standards for which this country’s legal sector has become known”.

Complaints Transparency

In considering the question of quality of legal services, greater transparency and public access to disciplinary records is also needed. One of the key findings of the LSB report highlighted that regulators must continue to maintain records of disciplinary sanctions in their official registers. The SRA has issued guidance to help firms clearly understand their obligations under Rule 2.1 of the SRA Transparency Rules to publish complaints. This guidance includes information on complaints handling procedure details, how and when a complaint can be made to the Legal Ombudsman, and details about how and when a complaint can be made to the SRA. Sarah Chambers, chair of the Legal Services Consumer Panel (LSCP) stated that “Making enforcement data available to consumers is an area that will particularly benefit from consistency in approach”.

Ultimately, providing the public with as much clarity and information as possible when it comes to the legal services they require can benefit not only the consumer, but promote and ensure quality and competence of the industry as a whole. The new transparency rules promulgated by the SRA in December 2018 will improve public access to legal services, ensuring such information on legal service providers is readily available to consumers.


Interested in transparency and enforcement? Contact us and share what is happening in your jurisdiction. There are also opportunities to get involved with the topic at the annual conference. Contact Jim McKay (jamesmckay@lawscot.org.uk) to become involved as a speaker or session moderator.

Call for Publications: Journal for the Professional Lawyer

The American Bar Association Center for Professional Responsibility Publications Board is seeking submissions for publication in Journal of the Professional Lawyer, a peer-reviewed annual publication which typically features longer articles than the Center’s magazine, covering topics in greater depth, in law review format.

The deadline for articles for the 2018 edition of Journal of the Professional Lawyer is November 14, 2018.

Please submit articles to Mary McDermott, Senior Counsel, and staff to the Center Publications Board at:

Mary.mcdermott@americanbar.org

State Bar of California publishes 2017 Annual Discipline Report

In 2017 the State Bar and its prosecutorial arm, the Office of Chief Trial Counsel, implemented a number of comprehensive structural and process re-engineering reforms designed to improve public protection for all California residents. Given the ambitious nature of these reforms, key measures from the report indicate a decline in short-term performance as compared to the previous year.

Key 2017 workload measures include:

  • Received 15,175 new complaints of attorney misconduct; of these 524 were immigration related;
  • Received 668 unauthorized practice of law complaints, 158 of which were immigration related;
  • Referred 315 unauthorized practice of law matters to law enforcement for potential prosecution;
  • Closed 14,063 cases and filed formal charges in 483;
  • Recommended disbarment or suspension to the Supreme Court in 592 cases;
  • Disbarred 129 attorneys; suspended 134 attorneys; and reprimanded 52 attorneys.

An additional performance measure included in the Annual Discipline Report is case backlog, which grew in 2017. The report notes that while the current backlog is up, the Office of Chief Trial Counsel has been developing a new system of case prioritisation to provide more protection to vulnerable victims of attorney misconduct, which will ultimately ensure that the cases that cause the most harm to the public never end up in backlog status.

“Californians deserve to be protected by a strong attorney discipline system. Our internal reforms and improvements will help the State Bar better achieve our mission of protecting the public from attorney misconduct,” said Leah Wilson, Executive Director of the State Bar of California.

Major initiatives of the State Bar Office of Chief Trial Counsel in 2017 include:

  • Development of an improved case prioritisation system to devote more resources to the cases which pose the greatest threat to the public;
  • Implementation of a new Case Management System to increase transparency, effectiveness, and efficiency;
  • Assessment of workload to allocate heavy caseloads among staff fairly and efficiently.

The State Bar’s ongoing reform efforts included additional measures  taken in 2017 to support the attorney discipline system and public protection:

Read the full 2017 Annual Discipline Report.

 

LSB open consultation: share your views

The Legal Services Board (England and Wales) has launched a consultation paper seeking input and comment on their proposed three-year strategy (2018 – 2021) and business plan for 2018/19.  Some of the key themes and questions they address include: the impact of technology; consumer engagement with and experience of legal services; the impact of changing population demographics (growing and ageing population); how to remedy the lack of competition in the legal services market and the increasing and changing demands on regulators and the profession.

In the attached consultation the LSB outlines their priorities and plans and asks other legal regulators and representative bodies to:

  • Highlight any additional significant market trends or drivers for change that the LSB should also take into account
  • Comment on the LSB’s strategic objectives
  • Comment on their equality objectives
  • Comment on their proposed approach to market intelligence within the strategy
  • Identify any elements of the strategy or business plan that present an opportunity for more detailed dialogue and/or joint working between your organisation and the LSB.

The consultation is open until 19 February 2018.

What We Know and Need to Know About Global Lawyer Regulation

This article is one of a series addressing the American Bar Association’s Commission on the Future of Legal Services, and is intended to provide a foundation for policymakers interested in global lawyer regulation. Rather than suggest the best approach to regulating global lawyering and lawyers, however, the article instead takes aim at developing a wish-list of information for use by any U.S.-based policymaker interested in thinking through why a particular regulatory strategy is most likely to satisfy their objectives. The article addresses three questions. First, what does “global lawyer regulation” mean? Second, what should policymakers know before imposing or changing regulation? And third, which aspects of this need-to-know category already are known or would be knowable with modest additional effort? This foundation is intended to help policymakers consider next steps in supporting their role as regulatory advisors or direct regulators in a global context.

Link to the full article

Citation: Silver, Carole, What We Know and Need to Know About Global Lawyer Regulation (May 19, 2016). 67 South Carolina Law Review 461 (2016); Northwestern Public Law Research Paper No. 16-11; HLS Center on the Legal Profession Research Paper No. 2016-2. Available at SSRN: https://ssrn.com/abstract=2782029