Evaluation: Changes in the legal services market 2006/07 – 2014/15
Why is this research important?
This report seeks to assess whether the market outcomes associated with the regulatory objectives in the Legal Services Act 2007 are being achieved over the longer term, and where more progress needs to be made. The LSB has a long standing commitment to evaluate the delivery of the desirable market outcomes associated with the LSA as set out in the 2011 evaluation framework. Using that framework, this report builds on the analysis in previous evaluation reports. This assessment pulls together data shared with us by approved regulators, LSB analysis of survey data, published official data on trends in the justice system, and the findings of our in house literature review. This analysis was undertaken by the LSB between August 2015 and May 2016.
All relevant material can be found here:
What new information did this research provide?
This report shows that:
Competition – positive developments but improved outcomes for consumers are emerging slowly – The sector has grown substantially since 2007 and new business models permitted by the LSA have established significant market shares. Changes to regulation have acted as drivers for procompetitive changes in the market. While levels of innovation have remained broadly the same, research suggests that ABS are more innovative. Levels of shopping around by consumers have only marginally improved. Limited price transparency, little advertising and an absence of high profile comparison website services inhibit faster improvement. There is some evidence that prices have risen over time, but a positive trend is the rise in fixed fee deals which offer consumers greater certainty on price.
Access to legal services – same proportion of people taking action, but more consumers handling their matter alone rather than seeking advice – Research evidence suggests more people are handling legal issues alone and fewer are obtaining professional advice; however the proportion of those who do nothing when faced with a legal issue appears unchanged. Analysis of official data suggests the trend to handle issues alone is driven by better technology (e.g. online probate applications) and legal aid reform (e.g. increase in litigants-in-person). People tend to handle things alone as they believe the matter is relatively straightforward and should not require lawyers, but a perception that lawyers are high cost is a barrier for some. Small businesses are experiencing fewer legal issues, however, they still do not view lawyers as cost-effective.
Quality of legal services – improvement in most areas – Levels of satisfaction with service have remained above 2009 levels. While the volume of complaints about SRA regulated entities has increased, more are being resolved at the first-tier – this trend is driven by new business models which have better complaint resolution ratios. The Legal Ombudsman’s caseload has also fallen. Misconduct cases appear to be falling over time. The international standing of UK law has been maintained: over time the reputation of the UK legal sector has improved, while in 2014 net exports of legal services were 33% higher than in 2007.
How are we going to use this research?
This work uses the best information available to help us understand how market outcomes have changed since the LSA came into force. It is particularly valuable in terms of what it tells us about the priorities for the regulatory community going forward.
Our strategic objectives remain well-aligned with the issues we have identified. We need to continue to work, together with the approved regulators, to break down regulatory barriers to competition, innovation and growth and to enable the need for legal services to be met more effectively. The evidence collected for the evaluation supports this.
There remain significant gaps in knowledge about the legal services market. These include information on the quality of services offered, and capital flows into the sector. We will continue to encourage regulators to undertake more analysis themselves, and we will continue to jointly commission research and undertake our own analysis to close identified gaps in knowledge.
We think that further legislative reform is necessary to complete the liberalisation of the legal services market. This report provides research evidence to further develop our ideas for an effective and ‘fit for purpose’ future legislative framework.