CMA to make legal services more accessible to small businesses

The Competition and Market’s Authority, (CMA) has conducted a market study into legal services and found that businesses looking to employ legal help often don’t have all the information they need to make an informed choice. This can lead to poor quality service or consumers paying over the odds.

Small businesses are disproportionately affected by this lack of information and can find it hard to identify their exact legal needs and to choose the right provider. It is especially important that they engage a commercial law expert who is able to rapidly gain an understanding of business needs and provide expert, timely advice.

The study showed that it is hard to compare price, quality and service and that many businesses simply use a solicitor recommended by a friend or colleague without carrying out further research into the market. This doesn’t guarantee value for money and a lack of clear, comparable information in the industry limits competition between legal providers. This may keep prices high –and legal firms will have little incentive to innovate or improve their services for clients.

To this end, following the market study, The CMA has made a number of recommendations to help companies have the right information available to them when they need it for their business needs.

These include:

• Working with regulators to require legal providers to advertise their prices directly on their websites so that pricing is transparent.
• Encouraging legal providers to engage with reviews and ratings online.
• Helping to develop online legal price comparison tools by getting regulators to make data available.
• Asking regulators to work with consumer and small business groups in delivering improved information standards on price, service, quality, redress and regulatory status and general guidance on purchasing legal services.
• This will include revamping the current ‘Legal Choices’ website to provide a known and trusted site where individuals and small businesses considering the need for legal support can come for advice and guidance. The changes are designed to make the business legal sector easier to access and understand and will enable consumers to identify their needs better– before they start the process of buying or renting.

As well as making some immediate recommendations to legal providers through their regulators, the CMA is recommending that the Ministry of Justice undertake a review of the regulatory framework for the long term so that it is more flexible and targeted to protect consumers.

Executive Director for the legal services market study, Rachel Merelie said “You might not require a legal service very often but when you do it will often be at a crucial point in your life – whether it is setting up a new business, buying a property, resolving disputes or getting expert advice on financial and employment matters. So it’s a real concern that there have been long-standing concerns over the affordability and accessibility of legal services. As an occasional requirement, customers do not approach this market with much in the way of previous experience and can be in the dark about the whole process. For some customers, it can either look too confusing or too costly and they can be put off seeking the help they might need.

“We’re pleased that regulators have recognised the need for change to ensure that individuals and small businesses get good value when they seek legal advice and representation. They will work towards providing common standards on the information customers need on price, service and quality, in addition to helping guide them through the process and options available. Better informed customers more equipped to assess and make choices will increase competition, not just on price – where currently a similar service can cost twice as much depending on the provider – but on quality and innovation. It will also mean fewer customers are discouraged from seeking the help they need.

“We will be working very closely with regulators in delivering the changes and keeping a close eye on the progress they make. We also think that the regulatory system, with a mixture of providers and activities with different statuses, will need to change to make it fit for the future.”