Legal Market Landscape Report (July 2018)

Commissioned by the State Bar of California, July 2018, Professor William D. Henderson

The Bar contracted with Professor William D. Henderson to conduct a landscape analysis of the current state of the legal services market, including new technologies and business models used in the delivery of legal services, with a special focus on enhancing access to justice.  The report is the first step in the
Bar’s study of delivery of legal services through the use of technology.

Read the report…

Outcome of Hong Kong foreign lawyers consultation

The Law Society of Hong Kong has been considering changes to their foreign lawyer practising rules for the past three years.  The principal proposed changes were as follows:

  • Amendments to Rule 12(1) to clarify that a foreign lawyer may only provide a legal service which relates to the law(s) of the jurisdiction(s) stated on a certificate of registration issued by the Law Society
  • Changes to Rule 12(2) to clarify the circumstances in which a foreign lawyer may be involved in the process of disseminating advice concerning Hong Kong law given by a practising solicitor
  • A proposal which would require international firms practising in Hong Kong to hire two domestic lawyers for each foreign lawyer, double the current quota
  • A change of the period from three to five years required of a foreign firm to be established in Hong Kong prior to being entitled to convert to a Hong Kong firm
  • An increase in Foreign Lawyers Registration Fees, which have remained unchanged for twenty years.

The outcome of the consultation is to proceed with the amendment exercise on the Foreign Lawyers Registration (Fees) Rules, however the Law Society Council decided against pursuing the other legislative proposals as there were concerns that doing so could adversely impact the development of the legal services market in Hong Kong.

Read more…

 

 

 

 

 

Lawyer regulation reforms in the US

We recently reported on the work of the California State Bar and their proposals for regulatory reform put forward by the Task Force on Access Through Innovation of Legal Services as well as the work being done by the National Conference of Bar Examiners (NCBE) Testing Task Force.

In her article, ‘Re-regulating Lawyers for the 21st Century’, Jayne Reardon, Executive Director of the Illinois Supreme Court Commission on Professionalism highlights the work of a number of US State Bars, regulators and national bodies who are currently reviewing lawyer regulation issues and reflects upon how any advancements in lawyer regulation could lead to a fundamental re-structuring of the legal market.  Read the full article on the Illinois Supreme Court Commission on Professionalism’s website.

 

 

State Bar of California seeking public comments on regulatory reforms

The State Bar of California is seeking public comment on proposals for regulatory reform put forward by the Task Force on Access Through Innovation of Legal Services. The task force was set up to improve access to justice through regulatory reform, following a report in 2018 that suggested that regulation was limiting innovations which could improve the public availability of legal services (report available here). The task-force has unveiled sixteen concepts for regulatory reform, including allowing non-lawyers to hold financial interests in a  legal practice, and permitting fee-sharing between lawyers and non-lawyers. The Bar has now opened the options up to comment and they would appreciate the views of foreign regulators on their proposals.

The consultation closes on the 23rd September 2019. Full details of the consultation are available here.

LSB updates governance rules to “enhance regulatory independence”

A new set of rules have been released by the Legal Services Board (LSB), which aim to clarify the separation between representative bodies and their regulators. The internal governance rules (IGRs) have been published following a series of public consultations that first began in November 2017. The rules which were released by the oversight regulator provide and define the relationship between the approved regulator and the regulatory body can be viewed here. Legal regulators now have one year to implement changes to bring themselves in line with the new rules.

Lawyer Disciplinary Processes: An Empirical Study of Solicitors’ Misconduct Cases in England and Wales in 2015

Abstract

The Legal Services Act 2007 effected major changes in the disciplinary system for solicitors in England Wales. Both the practice regulator, the Solicitors Regulation Authority, and a disciplinary body, the Solicitors Disciplinary Tribunal, were reconstituted as independent bodies and given new powers. Our concern is the impact of the Act on the disciplinary system for solicitors. Examination of this issue involves consideration of changes to regulatory institutions and the mechanics of practice regulation. Drawing on Foucault’s notion of governmentality, empirical evidence drawn from disciplinary cases handled by the SDT and the SRA in 2015 is used to explore potentially different conceptions of discipline informing the work of the regulatory institutions. The conclusion considers the implications of our findings for the future of the professional disciplinary system.

Citation:

Boon, Andrew and Whyte, Avis, Lawyer Disciplinary Processes: An Empirical Study of Solicitors’ Misconduct Cases in England and Wales in 2015 (January 31, 2019). (2019) 39:3 Legal Studies. Available at SSRN.

Regulation of legal tech companies in Germany?

Politicians in Germany are seeking to bring in legislation which will bridge the gap between advice provided via legal tech companies and by lawyers.  German laws governing the profession currently only recognise legal advice provided by lawyers, with only a few exceptions.  The FDP political party is proposing the adoption of a tiered regulation model that would introduce Legal Tech companies to the liability model of lawyers and subject them to the judicial oversight of the German federal states.  In particular they are targeting automated platforms that guide people through a legal claim process, such as flight compensation sites.

BRAK – the German Federal Bar Association has been critical of the proposed law, however, as it maintains the position that only lawyers can provide regulated legal advice.  If this legislation is ultimately adopted it could lead to other European jurisdictions adopting a similar approach, and possibly even legislation at an EU-level.

Read more on this story…

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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.

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Four steps legal regulators can take to embrace their data

Data has always been a foundational part of the practice of law. However, the convenience, accessibility, and speed of digital mediums is transforming the discipline from within. Law firms are stepping up the plate leveraging their internal data, as well as industry data to make their practice and delivery of services more efficient and effective. E-Discovery, case predictive technologies and even fledgling artificial intelligence programmes are proliferating across top firms globally. Small and large firms alike are engaging with varying degrees of software to manage information and leverage its value.

It is time legal regulators attempt to match pace. This month ICLR.net is focusing on how legal regulators can start to think about data’s role in improving their regulatory responsibilities. We have identified four preliminary steps to help your institution to start thinking about leveraging data.

1. Start small and close to home: Identify your data sources

Identify consistent incoming sources of data. This may be lawyer registrations, renewals and fees. This “low hanging fruit” often serves as the fundamental data base, which can yield insights such as lawyer demographics and disciplinary patterns.

2. Clean and organise your data

Unwieldy spreadsheets no longer make the grade. Setting your organisation up for success means treating your data properly and preparing it for utilisation. Categorising and cleaning your data in a consistent manner will make things easier down the road. Data should be stored in a clear and structured format, which is both secure and shareable with appropriate access permissions.

3. Collaborate with those who know data

Some institutions may want to call the professionals in from day one. Smaller organisations may be able to tackle the first two steps on their own, but to begin to leverage analytics really requires a professional touch for the best results. You should be looking for a company specialises in data structures and analytics. The legal tech sector is rich with software providers offering data management products, but working with a professional in selecting the best fit for your organisation’s data or building a unique system is what will ensure success. It is key to work with someone with the skills as well as background knowledge and insights into the legal profession and industry.

4. Fostering a data-driven culture

Legal information and data powerhouse Thomson Reuters puts it best:

“Building a data-driven legal practice is not something you assign to a task force, department, or an individual. It requires a buy-in from everyone from the top leadership down.”

In addition, it is worth saying that employees at all levels should be involved in the data system development process, to ensure compatibility and realistic adoption and utilisation of the system. The human resource is what will bring an organisation the strongest return on any data investment.

Is data analytics for your organisation?

Some regulators may believe they are too small or the resource required to harness data is too great. However, these four steps can be completed at various levels, just as law firms of all sizes are engaging in data tools. Ultimately, it will be a matter of survival for regulators to keep pace with those they regulate. Information has a strong multiplier effect, and data analytics has the power to transform regulation and industry’s productivity as a whole.


We are interested in hearing about how your institution is using data to assist in regulation. Let us know! Interested in the power of data in regulation – get involved at this year’s annual conference. Contact Jim McKay (jamesmckay@lawscot.org.uk) to become involved as a speaker or session moderator. 

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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.