A fig leaf of protection 

Professor Stephen Mayson examines consumer harm in legal services, the protections afforded by our current regulatory system and why he believes it is time for change

A core goal of legal services regulation is the protection of consumers from harm, yet our current system fails to do this, making structural reform more urgent than ever.

In my recent report, Consumer harm and legal services: From fig leaf to legal well-being, I sought to identify the nature of consumer harm in legal services, the causes of that harm, the consequences, and the remedies that might be available.

Types of consumer harm

The report identifies two major categories of harm – structural and transactional. The first, unmet legal need, arises from the growing inability of far too many people to access legal advice when they need it. 

The second, transactional consumer harm, arises from the unsatisfactory engagement of legal services, whether due to scams, incompetence, under or over-engineering of services or poor service.

Our current regulatory system covers regulated providers (mainly lawyers) but cannot deal with unregulated but nevertheless legitimate providers, both of which can cause consumers harm.

The Legal Services Act 2007 supports a regime of regulators who can authorise regulated providers, require those providers to make certain disclosures to consumers and to carry professional indemnity insurance, as well as submit to the investigation and resolution of unresolved complaints by the Legal Ombudsman.

Where harm is caused by unregulated providers, principal protection arises under the Consumer Rights Act 2015. While this also imposes certain expectations on providers, the remedies generally have to be pursued by third parties or through private court action by consumers. This means enforcement is patchy.

Both approaches focus on dealing with the provider rather than providing redress directly to the consumer who has suffered harm, either due to continuing unresolved legal issues, economic loss, stress, ill-health or lost opportunities.

For the most part, only economic loss will be remedied under the current system, although the Legal Ombudsman has some power to require rectification or compensation.

The fundamental weakness in this approach is the focus on the reduction of the prospect of harm, while consumers are left exposed and without redress when they try to pursue after-the-event redress for harm suffered.

There is an emphasis on taking action against delinquent providers but this is usually undertaken by third-party regulators with limited powers to offer redress directly to individual consumers, or by the consumers themselves in expensive and uncertain legal action. 

Vulnerable consumers

How consumers respond to their own legal needs will depend on their level of legal knowledge and how informed they are. In some ways, we are all likely to display a certain level of vulnerability and therefore regulation should recognise this universality and not seek to treat vulnerable consumers as a separate sub-group.

Those with less knowledge are less likely to engage, translating into unmet needs. This can be made worse by our daunting consumer protection system that emphasises the prevention of harm, increasing consumers’ burden with the expectation that they assume the risk and cost of personal action when things go wrong.

A positive approach

There is an alternative, more positive approach to regulation which is less about securing an absence of harm and more about achieving the opposite of it. It would see consumers have confidence in their choice of legal advisers without burdensome enquiry about regulatory status. It would see ease of access to advice and, if needed, a less onerous approach to redress.

In promoting such outcomes, regulatory policy would need to accept that vulnerability is not exceptional and that caveat emptor (buyer beware) has no role in the engagement of legal services. It should recognise that disclosure creates more difficulties than it solves, that competition in provision needs to be encouraged but cannot be relied on to result in fair dealing without some regulatory underpinnings.

There should be an acceptance that legal aid, pro bono services and public legal education cannot close the gap in meeting unmet needs, and that qualified lawyers are not always the best providers of legal services.

Time for action

We cannot continue to allow the complexity of laws and legal services regulation and the relative inaccessibility of regulated legal services – whether for financial, social or cognitive reasons – to force people into either doing nothing or using unregulated providers.

“My recommendation, therefore, is to extend the scope of regulation to allow competent providers who are not legally qualified to offer legal services in a sector-specific regulated environment” 

My recommendation, therefore, is to extend the scope of regulation to allow competent providers who are not legally qualified to offer legal services in a sector-specific regulated environment. This might not fully close the gap between met and unmet need, but it stands a better chance of slowing or reversing the increase than current approaches.

An increase in regulated providers would also allow the natural forces of competition to influence market discipline, quality, efficiency and prices, to the benefit of consumers. Of course, competition should not be unconstrained – consumers are vulnerable and the contribution of legal services to the rule of law and the fabric of society is too important to be left at the mercy of unfettered competition.

Accordingly, to improve the wellbeing of legal services consumers, I am advocating a single point of entry for regulation, registration and complaints about conduct and service, and the extension of mandatory consumer dispute resolution to complaints against all providers of legal services.

The protections afforded by the current framework are little more than a fig leaf. The main force of regulation is applied to preventing harm and to dealing with delinquent providers rather than for the direct benefit of consumers who have suffered harm.

There is also little that supports the pursuit of collective redress for one-to-many consumer harm that could be caused, say, by scams, dishonesty, and mistakes perpetrated by one provider on many consumers.

If citizens cannot readily and effectively enforce or defend their rights, if wellbeing is adversely affected by the effort of doing so, if they do not feel that their quality of life is enhanced by their successful interaction with the law, then it does us as a society little credit to stand by and do nothing to improve their experience.

We believe that in England & Wales we have the best legal system in the world, and some of the best lawyers. We are right to believe that. But we must also accept that the regulatory framework that oversees it is an emperor with precious few clothes on.

Stephen Mayson is an honorary professor of law at University College London and author of Consumer harm and legal services: from fig leaf to legal well-being which is a supplementary report to the Final Report of the Independent Review of Legal Services Regulation published in June 2020.