There is a misconception that the
Competition & Markets Authority review that I
recently blogged about is only about unregulated providers. It isn't. The review is about certain services that do not need to be delivered by regulated providers. It is worth quoting the Government website announcing the review:
'The Competition and Markets Authority (CMA) has launched a new investigation looking at potential consumer law breaches in will-writing, online divorce provision, and pre-paid probate plans.'
By focusing on potential breaches of consumer law it is taking the current regulatory architecture (ie what is reserved and who regulates) as a given rather than something up for further review. Remember that it has
previously opined on regulatory architecture. The CMA says that the sorts of harms to consumers that it is interested in include 'misleading advertising, unfair contract terms, pressure selling, lack of transparency on costs, and the suitability of products being sold'.
That means that the CMA is looking at how law firms comply as much as those providers that are not regulated by the SRA or other legal regulators. How many law firms have thought about this so far - beyond thinking that the CMA is (in their view) finally and belatedly going to give them a monopoly on these services. I suspect not too many. What does it mean for law firms?
Most significantly any law firm that delivers services within the scope of the review is in the spotlight alongside the unregulated businesses. Thus if they do not comply with consume law obligations (distinct from the firms regulatory obligations from the SRA) they may face enforcement action from the CMA or face some action short of that. Where might law firms not comply?
- One obvious example is claiming that wills are written by solicitors when they are in fact written by paralegals. That sort of misleading practice is exactly the sort of thing that the CMA could tackle. I worry less about this given that the
research suggests that non lawyers write wills as well as lawyers.
- Bait pricing, where the advertised price is much lower than the final bill, is another such example. And who would ever think that unpredictable bills are a feature of engaging a law firm? SRA attempts (under direction from the CMA in its previous work int he sector) to push price transparency haven't really had much impact as far as I can see - not least because law firms often put up such vague price guidance as to be meaningless.
- How well are will stored? What safety or security is in place - are they in a lock up garage run by Del Boy? Is the clients data secure? Can the client get their will back easily without pressure to buy more services from the law firm?
- Misleading behaviours will also be under the spotlight. These could be varied but a few example might be:
- Through what process does the solicitor get appointed as executor, thereby capturing future work? Do customers really understand that they do not need a solicitor to be executor and that in the vast majority of cases, probate, if it is actually needed, is pretty straightforward?
- Do clients understand it when solicitors add themselves as executor regardless of which law firm they are working at? Is this in the clients best interests and is it transparent, or do the clients understand the alternatives?
- Do clients understand that the law firm (or unregulated firm) is keeping the original will (in order again to capture future work) and that the client does not have to agree to this?
- Do lawyers properly explain the benefit of
storing a will with HMCTS and could commercial alternatives striking a deal with the Law Society risk creating a conflict or consumer confusion?
- How well do consumers actually understand what the drafter puts in the will? So where a law firm is claiming expertise and personalised solicitor-led advice, are there genuine instructions, advice and explanation rather than just selling a standard product that may not be suitable?
I am sure that there are many more examples of breaches that can be identified. And, while the worst offences are likely to be rare, perhaps there are industry wide practices that need to be tested against a consumer welfare standard to see if they are appropriate for the modern world?
Is it time for the CMA (and/or the SRA for solicitors and law firms) to put constraints around solicitors and will writers or their related bodies being appointed as executors in wills they write? What is the real benefit to the client as opposed to the lawyer? Is there a risk of an own interest conflict in this established practice? And should the CMA be pushing further for all wills to be registered with HMCTS rather than stored at the firm.
These may be seen as heresy and undermining established law firm and will writer business models. But they should not be feared. Better to find news ways of connecting with clients, keeping them engaged and marketing services than trying to trap them (even with good intentions) into repeat use of the same lawyer, law firm or unregulated provider.
Perhaps the CMA will go further than enforcement and push hard in a new direction that puts consumer welfare at the heart of legal services. We have seen this start to happen in financial services with the new consumer welfare standard but at present legal services regulation has not confronted these difficult issues. Can the CMA change that?
In the meantime, all legal market participants that provide services within the scope of the CMA review should be reviewing their websites, their terms and conditions and their ways or working to ensure that they uphold current consumer law. And they might start thinking about how they can go further in meeting the challenge of rising expectations in consumer welfare in order to compete for consumers without restricting or inhibiting future client choice.
