CMA cites lack of pricing transparency in interim Legal services market study

The Competition and Markets Authority says that a lack of upfront pricing information is stopping consumers from comparing legal services.

Publishing their interim report as part of a study looking at the supply of legal services, the CMA say just 17% of legal services providers publish prices online with just 22% of individual consumers 22% being able to compare providers.

Senior Director for the legal services market study, Rachel Merelie, said: “Consumers in this market are often not equipped with the right information before they make important purchasing decisions – which often come at critical points in their lives.

“Whether it’s buying a property, resolving disputes or getting expert advice on financial and employment matters, individual and small business consumers deserve to get good value when they seek the legal advice and representation they need.

“Without greater transparency, individual and small business consumers find it difficult to compare and choose providers of legal services. For many of them this is an infrequent purchase and a lack of experience or prior knowledge makes it very challenging to assess what represents good value.

“As a result, they tend to rely on recommendations from family or friends in choosing providers without checking for themselves what the market has to offer. This is unlikely to drive effective competition.

“The lack of competition may remove a crucial incentive for such firms to compete on price and quality as well as innovate and may help to explain why there have been long-standing concerns over the affordability and accessibility of legal services.”

The Law Society welcomed the CMA’s conclusion that no formal market investigation is needed.

Catherine Dixon, the Law Society’s chief executive said: “We believe that the market for legal services is already competitive and solicitors offer exceptional services to their clients as a consequence of rigorous training and years of experience. We are pleased that the CMA recognises that there is no requirement for a full market investigation.

“Making information available about the range of services and ensuring that pricing information is on offer to clients to enable them to judge on quality and price is always important.

“Recent research commissioned by the Law Society and the Legal Services Board showed that solicitors were already more likely than other advisers to provide information on costs and indicate how long the work would take.  78% of those who sought professional advice were satisfied with the outcome of their problem.

“The Law Society provides a free “find a solicitor” service for people looking for a solicitor to help with their legal problems. We will work with the CMA to consider how this service can be improved and will also provide guidance and support to solicitors on best practice in price and service transparency. They will involve the profession coming together to share best practice.”

The Solicitors Regulation Authority (SRA) welcomed the report which they believe supports the importance of reform to increase competition and improve consumer choice.

Paul Philip, SRA Chief Executive, said: “The CMA has rightly focused on the changes that will make the biggest difference to the public.

“Too many people and small businesses are not using legal services. We agree that the best way to address this unmet need is through significantly improving information for the public and driving an open, healthy competitive legal market that provides affordable services. Our own reform programme is focussed on these objectives, but we know there is more to do. We will be looking at the detail of the report and considering next steps.

“I am pleased that as a key principle the CMA has said that regulation should be fully independent from the providers of legal services. Modern, independent regulation is what the public expect. It supports the development of a competitive legal market and can only increase confidence in both legal services and those who provide them.”

The CMA is now seeking views on its interim findings and must publish its final report by 12 January 2017. Comments should be made in writing by 19 August 2016.

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