Scandinavia reviews our legal market

It is difficult to write about ordinary things when the pandemic is causing such harrowing pain and devastation around the world. 

In among the recent coronavirus deaths in India was that of Soli Sorabjee, who was twice India’s Attorney General. I knew him when he was involved in the Commonwealth Lawyers Association. He participated as counsel in vital constitutional litigation in India over his long career, and held a string of international human rights positions: special rapporteur on human rights in Nigeria, a member of the United Nations Sub Commission on the Promotion and Protection of Human Rights, which he chaired from 1998 to 2004, and a member of the United Nations Sub Commission on Prevention of Discrimination and Protection of Minorities.

As with everything that the coronavirus touches, it highlights starkly what already exists, in this case between the rich and poor. Even though I live in the EU with its mocked slow roll-out, I have had my full double dose of a vaccine. I deal with lawyers around the world, including in developing countries, and, though I am relieved and delighted by my own privileged access to vaccines, I am at the same time discomfited and angry at the gross disparity in opportunity.

With those details out of the way, I turn to what I was intending to write about, which is the debate which has broken out over a report commissioned by three Scandinavian bars into the regulation of the legal profession. That may seem to have nothing to do with us, but it does, because the bars of Denmark, Norway and Sweden commissioned research into our own legal services market, being concerned about a political focus on increasing competition in the legal services sector in their own countries.

For instance, in Norway there has been talk about opening up law firms to external ownership. The Norwegian Bar commissioned a study from a consultancy, Copenhagen Economics, on Analysis of changes in Norwegian legal regulation. The study pointed out that there may be certain gains by opening up to such ownership, but that there were also disadvantages - and existing competition in the Norwegian law market was already good, with very low concentration.

Denmark similarly commissioned a report from another consultancy, Boston Consulting Group (BCG), on the Danish market for legal services, which again stated that existing data do not provide a sufficient basis for concluding that there is a need for increased competition, nor was it certain what the effect of any deregulation of ownership rules might be.

BCG went further and looked at the legal services market in our own jurisdiction after the Legal Services Act 2007, and concluded that the growth of new law firms had fallen since 2011, that new types of conflicts of interest between client and law firm have arisen, and that the prices of legal services in the same period have increased more than general price development.

So Norway, Denmark and Sweden clubbed together and commissioned BCG to undertake a study into the effects of deregulating the legal services market in England and Wales. In view of the foregoing, it may not be surprising to know that this new study, only recently published, concluded that the Legal Services Act 2007 has delivered few of the benefits typically associated with deregulation, with lower prices and better quality not being among them.

Supporters of the Legal Services Act 2007 have not been pleased. In their view, BCG has definitely come to the wrong conclusion, and they have rushed to the aid of the Act. They argue that the BCG report used wrong assumptions and data.

I remember that when the Legal Services Act was passed, it was seen as a pioneer, in the expectation that the rest of the world would soon follow in their hordes. 14 years later, when we look behind ourselves as we rush into the glorious future, we find no enthusiastic followers, although there a few stragglers in the distance, such as the dozen or so US state bars who have either allowed or are considering alternative business structures (the majority in the still-considering category).

Personally, I don’t think that any of this much matters. The forces pressing on regulation are immense, mainly from trends which are barely controllable by an act of Parliament. The threats – opportunities, some say – from big tech are the most obvious. Parliaments around the world are struggling to regulate the big tech companies in basic matters such as the spread of hate or disinformation, or even the payment of basic taxes. They are failing miserably. When big tech turns its attention to legal services, as is already happening through some platforms, no legislation will stand in its way. The aims of the Legal Services Act 2007 will not then be worth arguing about. We should be thinking about that.

Jonathan Goldsmith is Law Society Council member for EU matters and a former secretary general of the Council of Bars and Law Societies of Europe. All views expressed are personal and are not made in his capacity as a  Law Society Council member, nor on behalf of the Law Society