Legal Services Board research reveals extent of unregulated providers’ market shares
The Legal Services Board (LSB) has published the findings of its unregulated providers research project which, it says, significantly advances understanding of unregulated provision of legal services.
The LSB’s 2016 individual legal needs survey indicated that the size of the unregulated sector is smaller than originally thought. This new research suggests consumers are using unregulated providers for a number of reasons, including:
- lower prices compared to regulated provider
- higher levels of transparency in pricing and
- higher levels of innovation and service differentiation.
The main risks for consumers were said to be:
- not making informed choices
- misleading advertising claims.
According to the research, consumer satisfaction with customer service is broadly comparable across regulated and unregulated providers: 84% versus 81%.
The research examined, amongst other areas, divorce services. It found that 10-13% of market share was serviced by unregulated providers, essentially online divorce providers and fee-charging McKenzie Friends.
In that sector it the researchers identified five active unregulated providers operating 11 websites, serving 23-30,000 clients annually. The service was delivered online and was reliant on search engine optimisation and adwords. Services range from DIY packages (average price of £36) to managed services (average price of £173).
Commenting the research, Law Society chief executive Catherine Dixon said:
“Many legal services can be provided by regulated and unregulated providers. If legal services are purchased from a solicitor, buyers can rest assured that the service is fully regulated, that insurance is in place, and that in the event that something goes wrong they have the right to redress.
“Unfortunately, however, it is not always clear to consumers whether they are buying from a regulated provider. As the LSB research shows, there are a number of unregulated providers supplying the same legal services as solicitors and many buyers simply will not know that they won’t get the same level of protection from an unregulated provider if something goes wrong.
“This can be exacerbated if the unregulated provider calls themselves a lawyer, which is not a protected title. We think that you should only be able to call yourself a lawyer if you are a qualified legal practitioner. We are concerned that many consumers may not know the difference, which can leave them exposed.
“If it is the case that consumers need regulatory protection, such protection should be consistent across the market. If not, this can lead to unfair competition and a lack of regulatory protection for some buyers who genuinely believe they will have rights of redress and are insured in case something goes wrong.
“The expertise of solicitors comes from rigorous training. They work to professional standards, are regulated, have insurance, and their clients have access to redress if services do not meet the required high standard.
‘There are obvious benefits in improved, consistent price and service transparency in advertising across all suppliers of legal services, whether regulated or unregulated. Solicitors are also bound by a code of conduct which ensures they are transparent about pricing with a client before beginning work.
“Sometimes, fixed pricing for less complex issues may be the best pricing solution. For many of the more complex services that solicitors provide, such as family services, clients have more complex needs and so the price of the service they receive will be determined by their individual circumstances and the type of advice they require.
“The profession has a great track record of innovation and creativity in a changing market. Solicitors embrace new technology to meet the needs of clients, reduce costs and maintain their competitive edge. This ability to adapt ensures the vibrancy and long term success of the legal sector in the UK.”
