A bit of competition in the legal profession will be a step in the right direction, say Andrew Bond and Ben Elsom
Only days before David Clementi, the man charged by the government to review the provision of legal services, gave his first speech on how he intends to carry out his "root and branch review" of the legal profession, the Law Society Council voted to retain the archaic and anti-competitive code on introductions and referrals.
It is no surprise that Clementi told reporters "it would be surprising if he were to conclude the status quo to be perfect".
The vote by the council was even more surprising as the Law Society's own standards committee recommended relaxation of the code and the Office of Fair Trading had written a letter advising that it was investigating a complaint that the code may breach UK competition laws.
It is our opinion that until solicitors are released from the regulatory controls that prevent them from being able to conduct their business in an ethical, transparent but competitive manner, unregulated and unethical companies such as Claims Direct and The Accident Group will continue to be formed, flourish and exploit the legal services market.
In today's consumer-driven market there clearly has to be a move towards making legal services more accessible and user friendly. One of the areas that needs to be addressed is the question of the public's perception of the profession.
A recent letter to the editor of a local newspaper decried the fact that he had received a telephone call from a firm of solicitors offering their services. He said that while he accepted that it was usual to be canvassed by double glazing firms, solicitors should be above such practices.
If this is the perception of how solicitors should conduct themselves, how can they compete against the likes of the RAC, AA or the supermarket chains when deregulation becomes a reality?
While the comments of one individual may not be fully representative of the public at large, there would nevertheless seem to be the perception that the legal profession should be bound by a code of ethics that would, in any other profession, prevent them from being competitive.
Until the public perception of lawyers and their understanding of how the legal services market operates evolves, companies such as RAC will be able to steal a march in the run-up to deregulation.
It is clear that RAC has recognised the potential for a large national branded firm with a substantial budget to achieve considerable virgin growth in a hitherto unbranded market. The competition appears to be solicitors in small partnerships, without a national consumer presence, who are unable to compete effectively in marketing.
Solicitors should be asking themselves what effect several national branded service providers will have upon the private client legal services market of the UK.
The Law Society chief executive Janet Paraskeva recently advised the Motor Accident Solicitors Society Conference that companies like RAC were "chomping at the bit" to access the legal services market.
Deregulation, however, is an inevitable fact of life for the legal profession. Lawyers should use the next five years to prepare for what will be the most dramatic of changes the profession will have seen in over a century. Those that will survive in the pending competitive open market will be those firms who modernise their business practices, invest in IT, think outside the box and embrace change.
As Charles Darwin wrote in Origin of the Species, "it is not the strongest or the fittest of the species that will survive, but the species that is most readily able to adapt to change"
a philosophy that can be equally applied to the challenges posed by deregulation of the profession.
At Blakemores, deregulation is seen as an opportunity. We are meeting the challenge head on by diversifying into other business areas. We hope to be able to offer the consumer a one-stop shop of legal services and associated products that will compete in an increasingly cut-throat marketplace.
The launch of the legal expense insurance company Perception is the first of many steps on our journey to deregulation. We perceive our strategy as a response to what Lord Falconer of Thoroton describes as "the Heineken approach" where he calls for legal services to reach parts of the community that no other services have reached.
Given that David Clementi confirmed that his stance would be pro-competitive, this will certainly not be the last step in the evolution of our legal services.
