What changes were brought about with the introduction of the Legal Services Act 2007?

The Legal Services Act

What is the Legal Services Act?

The Legal Services Act is the body of legislation which deals with the issue of legal services in England and Wales. Such issues dealt with by the Act can range from the requirements that firms of solicitors are required to posses before they can operate in England and Wales and how the legal institutions are regulated.

The Legal Services Act 2007 received Royal Assent on the 30 October 2007. The reason for the introduction of the Act in 2007 was to bring in certain reforms which were felt necessary for the way legal services are provided in England and Wales.

What is the main purpose of the Legal Services Act 2007?

The Ministry of Justice has stated that the Legal Services Act seeks to reform the way that legal services in England and Wales are regulated and to put consumer interest at the heart of the regulatory framework.

What were the main reasons why reform was considered necessary?

Reform of the legal services market in the UK was considered necessary for the following reasons:

  • To simplify the complex and inconsistent system or oversight regulatory arrangements in the legal services market

  • To provide common standards for professional practice

  • To increase competition, flexibility and choice for the consumer seeking legal services

What were the key changes brought about by the act?

The key changes which were brought about to the legal services market by the Legal Services Act are as follows:

  • A single supervisory body was created called the Legal Services Board (LSB) with the power to oversee all approved regulators in the legal services market such as the Law Society and the Bar Council

  • A single body to deal with the initial stages of consumer complaints about legal services was created called the Office for Legal Complaints (OLC)

  • The creation of alternative business structures (ASBs) in order to allow lawyers to form partnerships with non-lawyers accepting outside investment or being able to operate under external ownership

  • A requirement for professional bodies to clearly separate their representative and regulatory functions

  • Creating statutory objectives and duties for all regulatory bodies

Alternative Business Structures

What is meant by an alternative business structure?

An alternative business structure (ABS) is a structure which enables legal professionals and non-lawyers to share control and the management of a legal practice.  This removes the previous requirement for solicitors only being able to practice in firms wholly owned and managed by other solicitors or registered European Lawyers.

This has at times being dubbed the Tesco Law Reforms as it enables big companies such as high street supermarket chains to enter the legal industry and provide legal services to consumers.

Is there any advantage to the legal industry following this reform?

Following the introduction of alternative business structures creating outside ownership and investment into law firms the following advantages can be seen:

  • Increased access to finance – this will enable potential expansion and investment

  • Increased efficiency and economies of scale

  • As ownership does not solely fall on solicitors those staff who work in the firm in a non-legal capacity will be able to be rewarded with such things as partnerships or share ownership in the same way that legal staff can – this should make it much easier to recruit but also retain non-legal staff

What areas of the legal services are expected to be affecting by the change in the law?

The possibility for alternative business structures will become a reality in either 2012 or 2013 and is expected that many high street supermarkets will enter the legal services industry. Currently it is possible to get the following legal services online so it is expected that the supermarkets are likely to follow suit:

What will be the advantage for the consumer when this change in the law becomes apparent?

As stated above one of the key reasons for the introduction of the Legal Services Act 2007 was to ensure that consumer interests are put right at the heart of the legal services market. The ability for alternative business structures is clearly framed with this in mind with the main advantage being that a consumer will be able to obtain lower cost legal services which are available from accessible locations. Furthermore consumers will be able to obtain these legal services outside the traditional office hours that firms of solicitors will operate by.

This will enable a consumer to obtain legal services while doing their shopping as can currently be done with insurance policies. If this provides ease of use and lower costs for consumers then it should be considered a huge benefit.

Are there any disadvantages to this provision of legal services?

There are however, certain disadvantages to obtaining lower cost legal services from alternative business structures.  These can be broken down as follows:

  1. The level of service

  2. The understanding of various legal issues

The Level of Service

The level of the service provided is likely to drop with a reduction in the level of personalised service so often provided by solicitors. The reform may well reduce the level of direct client contact replacing face to face meetings and personal communications with much more generic communications. The use of generic letters and processes will be used and will be seen to be at the heart of the service rather than the customer in fact being at the heart of the service.

If a consumer wishes to get the level of service which is personal to their individual needs it would be advisable to seek the help of a professional solicitor.

The understanding of various legal issues

If generic letters and generic terms and conditions and contracts are being used in this less personal service then it requires that the consumer has full understanding of the various legal issues which they face. If they do not they can run the risk of opting for the incorrect legal option. If a fully qualified solicitor was used then they would be able to explain the full legal ramifications suggesting other possibilities and getting the best end result for the client.

Therefore it follows that a fully qualified solicitor although more costly may be the best route to take for complex legal issues.