The new Legal Services Act comes into force today, allowing non-lawyers to own businesses offering legal services to consumers in England and Wales for the first time.
Dubbed ‘Tesco Law’, the Legal Services Act 2007 was created with the aim of offering more choice and better value through competition for consumers of legal services.
Whilst it will also introduce outside investment to law firms for the first time, we have no doubt that it will threaten the existence of some local solicitors who will be unable to match the efficiencies and brand presence of well established national firms.
This morning on Radio 4, a representative of small solicitor firms pointed out there is a risk to independence when legal advice is provided by commercial firms. There is of course also a motivation to generate a profit for partners in traditional law firms.
Legal services tend to be a ‘distress’ purchase, with visits to a solicitor prompted by people who need to deal with issues like probate, criminal charges or divorce. This has made it difficult for solicitors to establish long-term relationships with clients, resulting in a more transactional relationship.
One potential benefit of this new law and the Alternative Business Structures it will create is a likely change to the nature of legal fees.
Solicitors typically charge an hourly rate which can result in uncertainty for the consumer. Some new firms preparing to offer legal services have indicated their intention to charge fixed fees, established ahead of the legal services being provided.
We often refer our clients to solicitors we know and trust when they require legal advice. This approach is unlikely to change; I cannot envisage a situation where we send our clients to the supermarket to write a will.
One thing that could ensure the survival of local law firms is a close working relationship with other professional advisers, particularly Chartered Financial Planners.
Photo credit: Flickr/superba_
