The impact of non lawyers in the legal services market. Robert Cross 3 rd International Conference of Legal Regulators Gray s Inn 9 July 2014
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1 The impact of non lawyers in the legal services market Robert Cross 3 rd International Conference of Legal Regulators Gray s Inn 9 July 2014
2 Overview What is a lawyer? Non lawyers aren't new Early impacts within regulation LDPS and ABS 2
3 Regulated Lawyers? Master of Faculties ABS ABS 3
4 Problem solvers for individuals? Source: Legal Services Benchmarking Survey
5 Problem solvers for small businesses? Source: In need of advice?
6 Reserved activities... Source: Part 3 Legal Services Act 2007 Reserved Activities by Profession Solicitors Barristers Legal Executives Licensed Conveyancers Patent Attorneys Trademark Attorneys Cost Lawyers Notaries and scriveners 1. Right to conduct litigation 2. Right of audience in the courts X X X X X X X X X X X X 3. Probate services X X X X 4. Reserved Instrument Activities X X X X X X 5. Notarial services X 6. Acting as a commissioner for oaths X X X X X X X X 6
7 ...and statutory protection Protected Solicitor Barrister Registered Trade Mark Attorney Patent Attorney Unprotected Notary Costs Lawyer Lawyer Law Practitioner Paralegal Legal Adviser Attorney Advocate 7
8 Overview What is a lawyer? Non lawyers aren't new Early impacts within regulation LDPS and ABS 8
9 The legal industry Sources: ONS, LSC, MoJ, SLAB, NILSC (est.) Unregulated legal businesses (20% Tnvr UK) 9
10 Is not just regulated providers Other lawyers firms (10-20% Tnvr UK) Solicitors firms (60% Tnvr UK) Unregulated legal businesses (20% -30% Tnvr UK) Source: LSB estimates 10
11 And market shares fluctuate Sources: ONS UK WIDE Unregulated legal businesses (20% Tnvr UK) 11
12 They play an important role in providing access the specific use of lawyers in the U.K. surveys is roughly the same as in the U.S. - 27% in England and Wales, 29% in Scotland versus 26% in the U.S. Where the substantial difference emerges is in the use of other third-parties. Moreover, because non-lawyers in the U.K. are authorized to give legal advice (such as volunteerstaffed Citizens Advice Bureaux or proprietary legal advice centres), the effective difference is even greater: Americans received advice from those who are able to give legal advice in only 37% of cases, compared to 60-65% of U.K. cases. Furthermore, a far smaller percentage of the U.K. respondents, as compared to U.S. respondents, lumped their problem by doing nothing at all: fewer than 5% versus 29%. Source: Higher Demand, Lower Supply? A Comparative Assessment of the Legal Landscape for Ordinary Americans, Gillian K. Hadfield
13 Overview What is a lawyer? Non lawyers aren't new Early impacts within regulation LDPS and ABS 13
14 Recap - what is an ABS? 4
15 The ABS suitability test Source: SRA Handbook You must: 1. uphold the rule of law and the proper administration of justice; 2. act with integrity; 3. not allow your independence to be compromised; 4. act in the best interests of each client; 5. provide a proper standard of service to your clients; 6. behave in a way that maintains the trust the public places in you and in the provision of legal services; 7. comply with your legal and regulatory obligations and deal with your regulators and ombudsmen in an open, timely and co-operative manner; 8. run your business or carry out your role in the business effectively and in accordance with proper governance and sound financial and risk management principles; 9. run your business or carry out your role in the business in a way that encourages equality of opportunity and respect for diversity; and 10. protect client money and assets. 15
16 Who has become an ABS? Data sources June SRA and 43 CLC ABS LSB analysis of SRA regulatory returns data (125 ABS April 2013) LSB survey (64/193 ABS July 2013): SRA survey (41/190 SRA regulated ABS November 2013) SRA analysis of application form data (219 SRA Regulated ABS - February 2014) 16
17 Who has become an ABS? SRA Research on ABS Status at application stage Existing LDP firm 15.9% Linked to existing SRA firm 11.3% Existing firm 40.2% New entity 32.6% Total 100% SRA ABS survey % new to market 82% Source: SRA ABS survey 17
18 Why did they become an ABS? LSB Survey of ABS, July 2013, n = 64 (33%) Source: LSB ABS survey 18
19 Which areas of law do they work in? LSB analysis of SRA Data April 2013, n=125 19
20 What non legal services do they offer? Survey of ABS, July 2013, n = 64 (33%) Source: LSB ABS survey 20
21 How are they different to non ABS firms? Survey of ABS, July 2013, n = 64 (33%) Source: LSB ABS survey 21
22 What's changed since they became an ABS? Survey of ABS, July 2013, n = 64 (33%) Source: LSB ABS survey The way they market the services provided No change 77% The groups of consumers they provide services to 91% No change Areas of law they provide services in No change 83% 22
23 What's changed since they became an ABS? SRA survey of ABS, November 2013, n = 26 Source: SRA ABS survey The way the business is structured No change 23% The way the business is managed No change 31% The way the business is financed No change 73% The services offered to clients No change 77% 23
24 How has the investment been used? SRA survey of ABS, November 2013, n = 13 Technology 62% Changes to the way legal services are delivered - 62% Marketing 62% Source: SRA ABS survey 24
25 How are they different to non ABS firms? Survey of ABS, July 2013, n = 64 (33%) We are well managed and organised which results in the provision of a good service to our customers. We work hard at customer service and this makes a big difference Our management structure now reflects what our clients would expect from their suppliers - which is not the traditional partnership model! The customer is the whole focus of the business; the way we're set up and how we deliver our services Source: LSB ABS survey 25
26 How do we think they are different to non ABS firms? Early indicators: LSB analysis of SRA Data April 2013, ABS n=125, (LDP s circa 400, Others circa 10k) 26
27 LDPS market share: LSB analysis of SRA Data April
28 How do we think they are different to non ABS firms? Early indicators: Greater use of technology websites 91% v. 52% Resolve more complaints at first stage 11 for every 1 referred to LEO v. 4 for every 1 referred to LEO Greater use of non qualified lawyers 1% of all organisations, 4% of qualified lawyers, 12% of nonqualified lawyers Sources : LSB survey of ABS, A Time of Change? Pleasence et al, LSB analysis of SRA data 28
29 Contestability the real impact? Fixed fee services Online divorce, wills, document preparation Outsourcing, insourcing, offshoring, onshoring etc. Consumer brands offering legal services Subscription legal services for businesses Consolidation in PI market Public Access barristers More shopping around 29
30 One Kemble Street London WC2B 4AN Follow LSB_EngandWal
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