CMA Proposes Reforms to Scottish Legal Services Sector

The CMA has completed a research project to examine competition and regulation in the Scottish legal services sector

The Competition and Markets Authority (CMA) is recommending a series of measures to improve the information made available to people to make it easier for them to shop around when arranging their house purchase or dealing with a divorce.

The CMA is also recommending a series of regulatory reforms, including that an independent body regulates legal services in Scotland.

Well-functioning legal services are critical to people and businesses, who can face costly legal needs at important moments in their lives. However, there are indications that the Scottish legal services sector may not currently be delivering good outcomes for people. Consumer complaints are increasing; high street solicitors are facing challenging market conditions; and regulation in Scotland has not adequately responded to new market pressures.

While there have been longstanding discussions in Scotland about the need for regulatory reform and lifting restrictions in the legal services sector, the pace of reform has been slow.

The CMA examined how well the current sector is functioning. It studied whether there is evidence of a lack of competition among legal service providers in Scotland, looking specifically at the transparency of information on price and quality. This work built on the CMA’s previous market study into legal services in England and Wales. The CMA carried out a survey, asking all the legal service firms in Scotland that provide the services most demanded by Scottish consumers for their views on offering better information on prices to their clients.

The CMA considers that legal providers can and should do a better job of informing people on what the costs will be.

To help customers get better value for money and make sure the industry is best placed to be competitive, the CMA is making a number of recommendations including:

  • A review by the Law Society of Scotland of the impact of existing price and service transparency guidance, including whether mandatory rules could strengthen the information available.

  • Asking the Law Society of Scotland and the Scottish Government to implement the alternative business structures scheme and for the Scottish government to remove certain restrictive requirements of the scheme. Legislation was passed to enable this in 2010 and it is well overdue. This will help law firms to be more flexible and innovative so that they can better adapt to consumer needs.

  • The introduction of an independent body to regulate the legal profession, setting standards and handling complaints, as recommended by Esther Roberton. Evidence the CMA has seen and heard suggests that this is necessary. Separating regulation from representation will increase trust in this sector and result in better regulation.

The CMA encourages the Scottish Government to implement the recommendations promptly, but recognises the challenges of the current environment and the impact of the Covid-19 outbreak.

As part of its research, the CMA engaged with a wide range of organisations including the legal services regulators in Scotland, legal professionals and consumer bodies. The CMA also commissioned IFF Research to conduct a survey of solicitor firms in Scotland on its behalf last year.

Andrea Coscelli, the CMA’s CEO said:

It is important that people in Scotland have access to high-quality and good value legal services. In addition to increasing transparency of information, our recommendations are intended to introduce greater liberalisation that could foster growth and innovation in the delivery of legal services which would help the sector grow. You might not need a lawyer very often but when you do it will often be at a crucial point in your life, so addressing regulatory and competition shortcomings will make a real difference.

More information can be found on the case page.