On Monday the Law Society announced that, jointly with the Ministry of Justice and the Legal Services Board, it intended to commission research to understand more about ‘high street’ law firms, the main providers of legal services and legal aid.

The aim of the research is to understand more about the providers of legal services ahead of regulatory changes, the reforms to legal aid, and other significant changes in the legal sector. This research will act as an initial baseline with the potential for follow-up research to be commissioned at a later date to measure the impact of changes once they have bedded in.

The Law Society needs information from a large and nationally representative sample of legal service suppliers. The research will probably take the form of telephone interviews with 2,000 senior representatives from law firms operating in England and Wales. A significant sub-group of this sample should be legal aid suppliers. Given that most legal services are supplied by smaller law firms the Society proposes to exclude the largest 200 firms (in terms of turnover) from the research, unless the firm is a legal aid provider.

The research will consist of three stages. Stage 1 will be an evaluation of a draft questionnaire provided by MoJ, LSB and LS, and a definition of sampling strategy. Stage 2 will be the main stage fieldwork, consisting of 20 minute interviews with senior representatives from 2,000 law firms across England and Wales. Stage 3 will be the analysis of survey results, together with the written report and presentation of the results. The findings from this research will be used to produce a state of the market report and to inform the on-going work of the three sponsoring bodies.

Stage 1 is expected to take place mid January 2012 – mid March 2012; stage 2 is expected to take place mid March 2012 – end May 2012; and stage 3 is expected to take place beginning Jun 2012 – end July 2012.
Expressions of interest from consortia of institutions (eg joining expertise in legal services with social survey capacity and expertise) are encouraged, although tenders from individual institutions are also welcome. But if you are interested in tendering you will have to be quick. Expressions of interest should arrive at the Law Society no later than 10.00 Monday 5 December 2011.

More details of the evidence being sought and the expected outputs for each stage can be found in the Law Society’s release at:

http://www.lawsociety.org.uk/newsandevents/news/view=newsarticle.law?NEWSID=444155

Soon we will have Tesco Law. On present plans, 6 October is the date on which the first alternative business structures (ABS) will be able to open for business in the legal services marketplace in England and Wales. This will mean that for the first time non-lawyers can fully own and invest in law firms.

An ABS is a firm where a non-lawyer is a manager of the firm, or has an ownership-type interest in the firm. A non-lawyer is defined as a person who is not authorised under the Legal Services Act 2007 to carry out reserved legal activities. A firm may also be an ABS where another body is a manager of the firm, or has an ownership-type interest in the firm and at least 10 per cent of that body is controlled by non-lawyers. Under the proposed rules, ABS are not limited in the services that they can offer to the public.

It has been a long road since Sir David Clementi was appointed to conduct a review of the regulatory framework for legal services in England and Wales. He presented his report in December 2004. One of his terms of reference was:

“To consider what regulatory framework would best promote competition, innovation and the public and consumer interest in an efficient, effective and independent legal sector.

The outcome is ABS. The expressed belief is that ABS will bring benefits to consumers through increased competition, the development of new services and ways of delivering them and the integration of the delivery of legal services with other related services.

Enterprising firms have been positioning themselves to be in pole position when the starting gun is fired. A clear example of what Clementi had in mind is the online conveyancing service set up by Rightmove founder Harry Hill. His In-Deed Online operation allows people buying or selling a home to track the legal process from instruction to completion. The website was launched by Hill, the former chief of estate agents Countrywide, and Peter Gordon, a former partner at private equity group 3i. The firm has signed up two law firms to do the conveyancing work, which will operate under the In-Deed Online brand, and hopes to sign up another two. Their claim is: “Our online system was designed to make conveyancing simple and transparent. You can track every step towards completion online or on your mobile. We tell you what to expect, what we’re doing and what we need from you.” 

As they rightly point out, “You bank online, you shop online. Now you can do your conveyancing online.”
And so we come, finally, to the tipping point for the commercial future of the legal profession. In-deed.net is the tip of the iceberg. The difference is, perhaps for the first time, we now see how non-lawyers will seek to change the way law is practiced in England. The battleground will be online and the future belongs to anyone who uses it well.

Editors note: We don’t normally use the blog to sell ourselves but this is an important exception. Anya Designs has huge experience in both law firms and online commerce. We are probably the only legal software firm in the UK that genuinely understands how law and ecommerce work and when you decide to take the next steps in the new commercial landscape, we would really like to talk to you because a standard web agency may not understand the particular requirements of law firms. Call us on 0845 259 1276 and ask us questions!

Lord Hunt of Wirral was commissioned by the Law Society in October 2008 to advise on what was needed to establish best modern practice in the regulation of solicitors. His terms of reference were:

‘In light of current and forthcoming changes in the Legal Services market, the differing needs of different types of client, current regulatory debates and the need to promote equality and diversity, to consider the appropriate regulatory rules, monitoring and enforcement regime to ensure high standards of integrity and professionalism for solicitors and their firms in all sectors, and to make recommendations.’

This week the Law Society published his report. In his ‘Welcome’ to the report, Lord Hunt acknowledged that the legal sector is undergoing a radical transformation. Alternative Business Structures will have to be assimilated into the legal regulatory system, the ever changing demands of clients will need to be satisfied, and English and Welsh law must maintain the high international reputation which provides so many business benefits for the UK. “For these, and many other reasons, it is critically important that the regulatory system is constantly revaluated to ensure it is fit to meet both new challenges, and long standing regulatory needs”.

Lord Hunt makes 88 specific recommendations, and there are four main themes in the report. He stresses that all firms must be regulated to the same standard, by a knowledgeable and credible regulator and in accordance with the well-established BRE principles of better regulation. But this does not mean that every firm should be treated in the same way. He advocates a system which he describes as Authorised Internal Regulation (AIR). AIR will be available to all firms, not just those concentrating on corporate work, who demonstrate their willingness and ability to set up internal governance standards that are robust enough to secure compliance. Secondly he recommends the extension of the regulatory net to include will writing, claims management companies and all of probate, as these are complex matters with potentially far reaching consequences.

Lord Hunt recommends that legal professionalism should be translated into regulatory principles. He says it is essential to base any regulatory system in a strong and transparent theoretical framework, ensuring that it has the necessary resilience and flexibility to adapt to the changing world in which it operates. His view is that legal professionalism, rooted firmly in the concept of the rule of law, provides a sound base for the regulator to build on. The fourth theme concerns the regulation of Alternative Business Structures (ABS). He does not oppose the 2011 launch date, as proposed by the Legal Services Board, but stresses the importance of getting it right. It is crucial that appropriate public and consumer safeguards are put in place. Regulators must be clear about the information they require, the scrutiny they intend to undertake, and how they will deal with regulatory breaches. He recommends that ABS should be subject to the same regulatory requirements that govern other law firms.

Bob Heslett, President of the Law Society, welcomed the report and said “Lord Hunt has set out an imaginative and thought provoking blueprint which I am confident will be invaluable to the SRA [Solicitors Regulatory Authority] as it charts its way forward for the future. We look forward to working closely with the SRA as it develops its approach.”
The full text of Lord Hunt’s report can be found at:

http://www.legalregulationreview.com/files/Legal%20Regulation%20Report%20FINAL.pdf