De-regulation of the legal services industry could see supermarkets and other players opening one stop shops for insurance, conveyancing and other services We ask the experts how much of a threat these new players could pose.

On 4 June the consultation period will end on a crucial review of the legal services industry.

The review, headed by Sir David Clementi, has far-reaching implications not only for solicitors and barristers, but also for insurers.

The proposals, if made law, could see the de-regulation of the legal services industry. Retailers, such as Tesco's, would be able to extend their brand to legal services, and the more flexible market would create new opportunities for lawyers.

Insurers too would benefit, being able to tap into new distribution channels.

Clementi proposes two new business models: the legal disciplinary practice (LDP) and the multi-disciplinary practice (MDP). LDPs would comprise lawyers such as solicitors and barristers, while MDPs envisage other professionals also participating.

These new structures open up a wealth of opportunities with regard to management and ownership, as the candidates need not be lawyers.

The potential of the blueprints needs careful analysis. Sensibly, both Law Society and Bar Council intend to make representations, but insurers should also make their views known.

The proposals could provide lucrative business opportunities. - insurers or even brokers could own law firms.

Consumers might benefit from competitive fees, top-notch technology and, hopefully, competent lawyers. Business incentives to achieve customer satisfaction would be great.

On the negative side, there are a number of concerns, particularly with regard to MDPs, as to regulation and potential conflict of interest between the ultimate client and the business.

For MDPs there is the additional legal headache of how to preserve client privilege - a concept unique to lawyers.

If LDP legal teams are 'ring fenced' would this protect clients as much as a normal private practice? With limited liability partnerships, the shift from old fashioned 'joint and several liability' has already begun, so ring fencing would just develop this concept further.

Owners too might need to be vetted for suitability and there may even be a case for FSA regulation of owners and managers. Adequate insurance cover for managers and lawyers would be essential.

A major opportunity for law firms could be found in the sphere of before-the-event (BTE) legal expenses insurance. They could offer a branded service for the sale of these products.

Innovation in this sector has been criticised, with some arguing that improvements need to be made in the marketing of the product. The problem is that consumers do not understand BTE products. Research has found that two thirds of people who buy BTE policies do not know what they are buying.

A branded legal service would help insurers to better look after the customer and capture the good will that the law firm has for achieving results.

We see it as an opportunity and are keen for alternative distribution strategies to come in. It will enable us to deliver a more holistic service and will benefit the consumer.

- Penny Lewis is a marketing consultant and Tim Roberts is a consultant at Parabis, a division of Parabis Law

A lot of debate in this area has been around supermarkets and the prospect of 'Tesco Law'. Supermarkets are undoubtedly a distribution channel; they have well-placed branding, they sell insurance, and could sell straightforward BTE policies in much the same way as they sell travel policies.

To enter the BTE market supermarkets would need to get into a partnership with an underwriter and be comfortable with the service that it provides.

They would not want to risk damaging their brand. As such they would therefore be looking for insurers with a proven track record of quality service.

There is no threat to us here.

But thinking beyond this, would supermarkets want to go beyond a simple legal package? Their business is about fast turnaround, so new opportunities would need to fit into that model. Areas such as litigation and conveyancing can take a long time to resolve and may not work out the way the customer is expecting. The customer could, unjustifiably, blame the supermarket.

There is a potential brand risk here.

Granted, there is an argument that consumers would be more comfortable dealing with a supermarket than going to a lawyer. But it would be a big hassle for the supermarket.

Moving to the opportunities for law firms, de-regulation may make them take the initiative. They may become more actively involved in selling insurance brands if they can operate in a more flexible market. This may be in connection with a broker.

We would be happy with movements in this area. We see solicitors as a good distribution channel.

- Peter Dobie is underwriting manger at Allianz Cornhill Legal Protection

The anticipated de-regulation of the legal profession, as a result of the "Clementi" review, will present exciting opportunities for companies wishing to provide a wider range of professional services to consumers.

The market place will open up and those who currently provide mainly legal services will find themselves in stiff competition with well known companies and brands that choose to move in to the market.

De-regulation will enable companies to offer a 'one stop shop' service in many areas of consumers' lives. For example, buying or selling and insuring property and obtaining legal services and advice all from a single company is likely to appeal to the majority of consumers who currently have to shop around for the best deals, but who would rather place their trust in known brands. In the near future it is feasible that such a 'package' service will be available simply by using a known building society/bank/insurance company/estate agent or even a supermarket or department store.

Companies wishing to offer legal services will have the option of either acquiring an existing legal capability (which would require significant capital investment), or creating and building their own capability, although this may prove to be too slow a method in what is likely to be a rapidly opening market. However, should such new providers wish to beat the competition to the burgeoning market, there is a way in which they can start delivering the services immediately. The current stage of de-regulation enables corporate bodies and law firms to 'fee share' in certain circumstances. Therefore, by working in tandem with existing law firms, companies can jump ahead of the competition. Such an arrangement already exists within Capita Legal Services.

In these circumstances, finding a trusted partner is vital. If customer service is not of the highest standard, brand reputations are at risk.

Not only that, if you are offering a complete financial and legal service to your customers, you need to ensure that there is a consistent consumer experience across the whole range of products. Therefore it becomes logical to choose both a trusted partner and one who can offer the complete range of services for companies to offer consumers.

While opportunities abound there is a cautionary note to tell. The first stage of de-regulation in 1999, with The Access to Justice Act, left a bad taste in the mouths of many consumers and insurers alike. The creation and subsequent demise of some of the high profile 'no win - no fee' claims companies not only created a high level of insecurity in consumers seeking legal help following a personal injury claim, but also played a significant part in the insolvency of some underwriters.

I think it would be safe to predict that the final stages of the de-regulation of legal services will create an inevitable period of chaos, as new providers jostle for market share and consumers are swamped by such companies touting for their business. The providers that will successfully emerge from this period will be those brands that are trusted and, more importantly, those that can deliver. Therefore, it is essential that companies and brands choose their partners carefully.

- Lee Gladwell is business development director at Capita Insurance Services.

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