Plan for One Stop Legal Shop Supermarkets Could Soon Compete With Solicitors
Thursday, July 24, 2003
- Organization: The Gaurdian
The Tesco law option will be looked at by a wide-ranging review of the way legal services are regulated, with the aim of increasing competition and providing a better deal for consumers.
The government favours "one-stop" shops - with solicitors, accountants and other advisers under one roof - and wants big corporations to be allowed to offer legal services.
But the review, launched yesterday and led by David Clementi, the chairman of Prudential, has been asked to suggest first how the new businesses should be regulated to protect customers.
As a first step Lord Falconer announced that banks, building societies and insurance companies will be allowed to compete with solicitors in offering probate services - winding up estates after death.
The shakeup follows a review by the office of fair trading of restrictive practices in the legal profession. It could also mean the end of the elite rank of Queen's Counsel, which critics say operates as a licence to mark up fees.
Lord Falconer warned yesterday that there was a "significant chance" that the Law Society, the professional body for 85,000 solicitors in England and Wales, could lose the power to regulate itself after failings by its complaints handling body, the Office for Supervision of Solicitors (OSS).
An overarching regulator for legal services, like the existing one for financial services, was a possibility, he said.
A report published yesterday by the Department for Constitutional Affairs said the changes could increase competition in the market.
"There will need to be quality control, but if we can get to the point where there is 'Tesco law' we think that's probably something of interest to the consumer," Lord Falconer said.
The report said: "Large institutions are likely to introduce modern and efficient business practices, and to make considerable investment in infrastructure. Institutional providers may have better procedures for marketing and targeting of potential customers and a strong ethos of customer service."
The bar's chairman, Matthias Kelly, said barristers would fight the proposals for one-stop shops with lawyers and accountants practising together "tooth and claw", because they would lead to the "Enronisation" of the legal profession.
The Law Society's chief executive, Janet Paraskeva, said: "Our concern is that new entrants might cherrypick the more profitable and less complex areas of work, threatening the viability of established local firms that offer a full range of services at the heart of their communities. If that happened, where would consumers go for advice on complex matters?"
But Lord Falconer said: "I don't think they should be apprehensive. It is not saying there will be fewer lawyers but that there will be different ways of providing services that meet the needs of their client."
The report suggests that some solicitors might prefer to work for big companies with more family-friendly policies than traditional law firms.
Lord Falconer said costs would be brought down by allowing banks, building societies and insurance companies to deal with the probate process, which can currently be handled only by solicitors.
An umbrella regulatory authority would regulate not lawyers, but legal services, he said, closing the gap which currently allows "claims farmers" such as Claims Direct, which recently went bust, to operate free of the stringent rules of conduct that bind solicitors.
Lord Falconer said the Law Society's ability to deal with complaints from the public had been repeatedly questioned. He added: "The document we have published is saying the current system of regulation does not work."
The existing framework is "outdated, inflexible, over-complex and insufficiently transparent", the report said. The "maze-like" system featured 22 different regulators, resulting in "confusion and fragmentation".
Mr Clementi is expected to complete his review by the end of next year.
Copyright Guardian Newspapers Limited