CMA review – here we go again!

15 January 2016
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So the CMA have announced that they are to review the legal sector once again due to concerns as to whether solicitors are offering consumers & the SME sector value for money and good service.

Here we go again!

The CMA said the three key issues were whether customers can;

  1. Drive effective competition  by making informed purchasing decisions;
  2. Be adequately protected from potential harm and
  3. Obtain satisfactory redress;

In the week when BT have gained approval from CMA to buy EE I have to laugh about the competition comment. The consumer legal services market if anything is over supplied; there are almost 11,000 different law firms in England & Wales and over 100,000 solicitors. So a few more than there are telecoms providers!

When buying legal services do people really think to themselves “...am I protected here & can I get redress…?“. Of course not, they ask how much will it cost and do I think these people can do the job? They will normally approach a law firm based upon a recommendation e.g. from an estate agent if selling a house or from their own research. After all, there is an abundance of free information out there on the internet about lawyers & law firms.

Law is no different to any other professional service, it is about supply and demand and as above there is no shortage of supply. Talk to any high street lawyer, their biggest issue or challenge is creating a demand for the services they offer.

The truth is that the ordinary man on the street or small business owner has a perception about lawyers, which is generally that they are expensive and unapproachable. Unfortunately this is all too true about a large proportion of us which, is why accountants have stolen a march; it is they that are seem as the “trusted advisor” to most of the SME market not the lawyer.

Another challenge is that so many legal services are a “distress purchase” for example, any form of dispute resolution such as divorce or commercial disputes. In these processes lawyers are seen as a necessary evil and if the clients expectations are not managed well from the beginning and the result does not match their aspirations, then 9 times out of 10 they will blame the lawyer.

My predictions as to the likely findings

  1. The consumer legal services market is hugely fragmented
  2. New ABS entrants have made a difference but it is too soon to see the full impact
  3. There is a huge choice when it comes to different legal offerings
  4. Regulatory requirements continue to add disproportionate cost to the provision of legal services
  5. The market would benefit from consolidation to reduce the cost of production
  6. Clients expectations of service are often very different to the price they expect to pay