Competition watchdog to investigate operation of legal services market

The Competition and Markets Authority (CMA) is to hold a market study that it says will examine “long-standing concerns about the affordability of legal services and standards of service”.

The CMA said concerns had also been raised about the complexity of the current regulatory framework for legal services.

The watchdog said it intended to look in particular at:

  • whether customers could drive effective competition by making informed purchasing decisions;
  • whether customers were adequately protected from potential harm or could obtain satisfactory redress if legal services went wrong; and
  • how regulation and the regulatory framework impacted on competition for the supply of legal services.

Rachel Merelie, Senior Director at the CMA, said: “Whether it’s buying a property, resolving disputes or getting expert advice on financial and employment matters, it’s vitally important that consumers and small businesses can access the legal advice and representation they need. They also need to secure value for money and quality when purchasing these services. These are all areas that can have a major impact – both personally and financially – on the lives of individuals and on the success of small businesses.

The watchdog plans to carry out surveys of consumers and small businesses and also plans to conduct a number of case studies into specific legal service areas.

The impact of alternative business structures, which now number 600, will be considered as well.

The watchdog is required to announce within six months whether it intends to refer the market for a more in-depth (‘phase 2’) investigation and must publish its report within 12 months, setting out its findings and the actions (if any) it proposes to take.

The CMA expects to produce an interim report in July this year, with a final report following in December.

The CMA’s announcement was welcomed by the Solicitors Regulation Authority and the Legal Services Board.