In a week in which the Legal Services Board has issued another consultation on alternative business structures, I want to speak about the importance of good-quality research before important policy proposals are made which may radically affect the legal services market.

I attended a breakfast meeting recently in the European parliament on the importance of research before policy decisions are made. The discussion centred on how you judge whether one legal services market is freer than another. We learned that research shows that reality may be very different to what it seems.

You may not think that Finland and Germany have anything to do with us. But some of the discussion in the parliament centred on the legal markets in these two countries. Finland’s legal services market (along with the Swedish system, with which it has strong similarities) is among the freest in the world, meaning that anyone can do anything, including representing a client before the Swedish supreme court without a legal qualification. The European Commission loves this and, in studies comparing the state of regulation of lawyers in different member states, Finland is always top of the class.Zero entrance barrier

But Dr Matthias Kilian of Cologne University, a researcher, highlighted how complicated such comparisons can be. He compared the legal services market in Finland with that of Germany. Finland has a zero entrance barrier, since on paper no one needs university training to provide legal services, and there are no final examinations for law students. However, that is not the reality. Although there are no monopoly rights for lawyers, there is also no significant market for legal services for those without university training.

In addition, the reason why there is no final exam for law students is that almost 90% of high school graduates wanting to study law are weeded out through a pre-university entrance exam that many applicants pass only after years of preparation through expensive private preparatory schools.

Germany, according to Dr Kilian, features lower in the commission’s benchmarking studies because it has two state law exams, with an overall failure rate of 30%. However, it admits every high school graduate to law school – and 70% of those high school graduates eventually enter the market as legal professionals, whereas in Finland only around 10% of all high school graduates who apply to study law are allowed to do so, as we have seen. Currently, between 75% and 80% of all graduates in Germany become lawyers, whereas in Finland only 19% of the already relatively few graduates go into the legal services market.

Dr Kilian has also looked at lawyers’ fees. Finland does not regulate fees of legal professionals at all, and so again goes straight to the top of the commission’s class. However, in the absence of fee regulation, legal costs are difficult to predict for the consumer. Legal costs for the average claim with a value of €15,000 in Finland come to around €9,200. In Germany, a market where fee regulation exists, overall costs would be under €5,000. Or, to put it differently: for the costs that have to be paid by a Finnish citizen for a claim worth €15,000, a German could file a claim worth €45,000.

The lesson is clear: research is vital before decisions are made to change legal services markets. The examples above are between shallow research (undertaken by the commission) and deeper research (undertaken by Dr Kilian). But when we met the LSB some weeks ago, and requested it to undertake at least some research – any research – before introducing ABSs, it rejected the idea. That response resembles a hospital going out into the street to ask the first person it meets to come in and perform difficult surgery, without qualifications and without anaesthetic.

This is absurd. Please, LSB, ask qualified academics to study the likely consequences of your actions before you embark on your programme, or its outcome may not be what you plan.Jonathan Goldsmithis secretary general of the Council of Bars and Law Societies of Europe