The Legal Services Act 2007

This article, will examine to what extent the Legal Services Act 2007 (Written as ‘Legal Services Act’ or ‘Act’) has been successful in widening the legal services market.  Firstly, this article will begin by explaining why reform of the legal services market was necessary.  Secondly, this article will ask what is question the legal service market, and whether it gives access to justice. Thirdly, this article will explore the objectives and key provisions of the Legal Services Act with respects to increasing the accessibility to the legal market. Finally, this article will critically assess the success of the Legal Services Act.

In order to examine the effectiveness of the Act with respects to increasing the access to legal services, this essay will analyse the legal market through the lens of Jane. Jane is a hypothetical single mother who has recently been unfairly dismissed. She will be a tool that this essay will use to compare legal access before and after the passage of the Legal Services Act of 2007.

The Need for Reform in the Legal Services Field:

The Office of Fair Trading (OFT) mentioned in its 2001 legal services report, that the legal service market in the UK hinders competition.[1] Following this review, the Department for Constitutional Affairs decided that the regulatory framework for legal services was “out-dated, inflexible, over-complex and insufficiently accountable or transparent”.[2] Sir David Clementi conducted a review of legal service regulators and of the legal service market. Clementi suggested that legal regulators remove entry barriers to the legal service profession, and diversify the legal service market so that consumers would have more engagement with the legal profession.[3] It was mentioned, for example, that even though there are approximately 115,000 solicitors in England and Wales, majority of the public do not hire legal professionals because the services are so commonly seen as unaffordable.[4] Although there is a hefty price tag for legal services, the legal sector before 2007 had the highest number of complaints.[5] In 2006, the various regulatory bodies tallied up over 17,000 complaints,[6] and because of the complaints were handled by professional bodies, they failed to meet time targets, set by the ombudsman, to clear complaints.[7] These complaints were typically extremely serious, with the most common complaints being: inadequate service, professional misconduct, and negligence, respectively.[8]

These circumstances are particularly burdensome for Jane, our test individual. Jane, if she was unfairly dismissed, would mostly likely be searching for advice on her potential claim. Barristers at this time could only be approached by an instructed solicitor so Jane faces the cost of instructing two sets of professionals for the same application. As a recently unemployed single mother, she cannot pay for the cost of two professionals; she does not pursue her claim. Even if she did instruct two professionals, there is no competition in the market, and Jane’s complicated unfair dismissal claim is ignored for as long as possible, leaving Jane completely unsatisfied with her treatment and legal representation.

Widening the Legal Services Market:

Clementi argued that the legal services market should be widened to encompass a broad range of legal professionals so that the wide range of legal problems that businesses and people encounter could be easily addressed.[9] He suggested six objects points to improve the accessibility of legal services to consumers. Clementi suggests, maintaining the current rule of law,[10] to improve the access to justice,[11] to promote the consumer’s interests,[12] to promote competition,[13] to encourage a confident field of legal professionals,[14] and to increase the citizen’s understanding of their legal rights.[15] Clementi’s report was published in 2004, three years later, the Legal Services Act of 2007 would breathe life into his six guiding objectives.It has allowed legal services to be provided in an innovative way and enables different service providers to present better legal advice in a new legal service market.[16] David Edmonds argues the thinking behind this is “access to justice – remain[s] the right [priority].”[17] According to Cappalletti and Garth, “access to justice” requires a system by which people may assert their rights and resolve their disputes with support of the state. The role of a fair adjudicatory framework in providing an accessible legal system was recognised by Lord Diplock in the case of Bremer Vulcan Schiffbauund Maschinenfabrik v South India Shipping Corp that:

“Every civilised system of government requires that the state should make available to all its citizens a means for the just and peaceful settlement of disputes between them as to their respective legal rights. The means provided are courts of justice to which every citizen has a constitutional right of access in the role of Plaintiff to obtain the remedy to which he claims to be entitled in consequence of an alleged breach of his legal or equitable rights by some other citizen, the Defendant.”[18]

A wider meaning to access to justice has been provided by the LSB as a means to different routes of accessing legal services, which include routes that are not typically traditional such as the wider legal services industry, related professions and related advisory bodies in businesses such as insurance, banking and financial services.[19]  In addition, widening the legal services market requires the professionals to have business acumen and commercial awareness necessary to provide a cost-effective service in a simple language which isn’t too technical for the ordinary person to understand.[20] Opening the legal services market is essentially meant to benefit Jane, and in the next section we compare the scenario after the 2007 Act was passed.

The Legal Services Act 2007:

The Act was written with Sir David Clementi’s report in mind. In his report, Clementi “described a significant sector of the UK’s economy where competition, innovation and a focus on the consumer interest as we know it did not exist.”[21] The report’s homage to Clementi is most apparent in Part 2 of the Act, which establishes the Legal Services Board (LSB). The board would be a single supervisory body to oversee approved regulators like the Law Society and the Bar Council. Many problems stemmed from inefficient regulation and lack of competition. The 2007 Act attempted to improve access to justice in the way that Clementi suggested. The Act permitted Alternative Business Structures (ABS) which enable different types of lawyers and non-lawyers to manage and own legal practices.[22]  More than 247 ABS’s now exist, which have clearly expanded the legal service market and the choices that individuals have.[23] Within this legal landscape of opening up the legal profession we have seen the rise of law clinics. One example of an ABS created by the 2007 Act is The Law Clinic, based in Notting Hill.[24] The Law Clinic is a firm run by non-qualified lawyers and paralegals offering cost-effective alternative legal service in unreserved areas of law.

Speaking to the director of the Law Clinic, Miss Wioleta Nowicka, she explained that she is a non-law graduate and who saw a lack of affordable legal assistance, and opened an ABS law firm. Nowicka explained that the Law Clinic is not entitled to do ‘reserved legal activities’ these are listed in s.12 and Schedule 2 of the Legal Services Act 2007.[25] The Law Clinic is not entitled to exercise of rights of audience, or conduct litigation. The Law Clinic works within the Act by accompanying clients to court as a Mackenzie friend or offer representation in the Tribunals. The actions defining litigation are in a grey area, and the penalties for litigation as an ABS are harsh. With little guidance on such issues, s.14 LSA 2007 makes it a criminal offence for a person to carry out a reserved legal activity. The Law Clinic made clear they do not carry out a reserved legal activity; they help manage a client’s case and support self-representation.The LSB has since its creation has made it its first priority to give consumers more options and lawyers new business opportunities by widening the market to allow new types of legal business to emerge.

Jane, instead of giving up her claim before the 2007 Act, would now be able to meet with an ABS like The Law Clinic and not only receive advice, but have the firms compete for her business by offering her lower rates. Jane could receive help in managing her case for a third of the cost of a solicitor if she chose an ABS like The Law Clinic. If her case was found to have merit, she could rely on The Law Clinic to help her evaluate evidence, establish the merits of her claim, and represent her at the Employment Tribunal, on a no-win-no-fee basis or at cost far lower than that of a traditional lawyer’s fee.

Has the Act been successful so far?

In order to determine whether the Act has widened the legal services market, one could begin by looking at the amount of cases that have been taken to court since the Act came into practice in 2007.[26] It may be helpful to review the rate of complaints raised by members of the public against legal professionals as a positive sign of increased and improved access to justice.[27] Moreover, we must review other social and economic factors in relation to legal advice access before we could definitively conclude.[28] ABS’s have led an exciting new era for legal services and in effect have opened the legal services market to more consumers. Their existence has allowed a variety of professionals to serve communities that normally were not served by the traditional model. To conclude, the success of the Act is evident in creation of ABS and LBS. The traditional lawyer is a dying breed, legal professionals after the Act much now either be a low-cost all-in-one advocate or extremely specialised. However, ABS’s are not authorized to carry out particular reserved legal services. It can be argued we have been given a wider, more competitive legal market, but also given very harsh rules which could deter some professionals from opening ABS law firms.

BIBLIOGRAPHY

Cases

Bremer Vulcan Schiffbauund Maschinenfabrik v South India Shipping Corp [1981] AC 909, 977

Journals and News Articles

Alex Roy,‘Improving access to justice – can changing regulation help?’ LSB (2010), 3

John Flood ‘Will there be a Fallout from Clementi? The Repercussion for the Legal Profession after the Legal Services Act 2007’ MSLR (2012), 4

The Guardian, ‘Soliciting Sound Legal Advice’ The Guardian (London, Oct 26, 2006) http://www.guardian.co.uk/money/2006/oct/26/yourrights.legal1

Legislation

Legal Services Act of 2007, Part 5

Reports and Speeches

Daniel Clementi, Review of the Regulatory Framework for Legal Services in England and Wales-Final Report (2004)

David Edmonds, Speech, at Hertford Seminar in Regulation “Legal Services Regulation: Past Present, and Future” December 9th, 2014

David Edmonds, Speech, at Legal Week’s “Future of Legal Services Forum” May 14, 2009

Department for Constitutional Affairs, “Competition and Regulation in the Legal Services Market – A Report Following the Consultation ‘In the Public Interest?’” (2003

Legal Service Board, “Market Impacts of the Legal Services Act –Interim Baseline Report” (2012).

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