Access to justice and the ABS regime

Nick West, LexisNexis Director of Legal Markets, has another perspective on the ABS regime and fears around market distortion

Jonathan Ames had an interview in The Times recently with Lord Phillips of Sudbury. The article is behind the paywall, so only accessible to those who subscribe.

Lord Phillips is a long-standing campaigner for access to justice. In the interview with Ames he sets out his concerns over the changes taking place in the legal services market. He fears that “if leading corporations get involved in ABSs they will not do the work that is complex, difficult and under-rewarded; they will cherry pick. And the diminishing number of high street solicitors' firms that are trying to service the whole population - and in particular, the less well off - will have the bits of work that are relatively profitable and relatively straightforward cherry picked by the ABS outfits. So what will they be left with? The difficult cases, with inarticulate clients, who can't instruct them in a straightforward manner.

"ABSs will offer loss-leading deals until they knock the local high street solicitors out of the market. And then they will up their prices. It is an approach totally devoid of any sense of social contract.”

This prediction makes for depressing reading. As I discussed recently, private equity firms will look to invest in law firms in order to make money. Will this, along with changes to legal aid and reforms to civil litigation mean that some segments of society are no longer able to seek legal redress?

I’m confident that part of the picture that Lord Phillips paints will happen – new entrants to the market will focus on work which is highly process-oriented, less complex (relatively) and which is both already profitable and has scope for margin growth. However, as Lord Phillips himself acknowledges, what we are seeing is a “marketization” of legal services and, as such, I don’t think there’s any certainty at all in the long term market distortion he projects. More likely, in my opinion, is that as new entrants flock to the conveyancing, personal injury and other ‘volume lines’ of work, price competition will ensue and profitability will fall. And over time, firms (both new and old) will be forced to target other segments of the market, applying the lessons learned in industrialising volume lines to more complex work, which by then may offer more attractive returns. That’s how markets work. And if such an efficient market doesn’t ensue, then it is highly likely that he, and others, will campaign hard for changes. On that basis, we could see reform that returns the balance in the favour of the ‘complex and difficult’ cases.

One thing is certain - there are already major changes taking place in the world of high street law but not all of them point to Lord Phillips’ doomsday scenario. We know that the Co-op intends to be a dominant force on the high street. The Co-op prides itself on ethical behaviour. It was formed to offer affordable services to those ‘less well off’. Further The Access to Justice Foundation and other organisations have been supporting and promoting pro bono legal advice for some time. With a newly-shaped legal services market, will lawyers feel they must engage more with their communities? And while the high street law firm faces many challenges they can survive if they embrace change: moving away from ‘Tesco law’ to ‘GP law’.

If prices are driven down, an ethical legal provider offers tailored services for those less well off and pro bono work increases, things may not be as bleak as Lord Phillips suggests.

Filed Under: Legal Services

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