Consumers have benefited from the first four years of the Legal Services Act, but there remains an ‘imbalance of power’ which acts to their detriment in dealing with lawyers.

So says the first consumer impact report by watchdog the Legal Services Consumer Panel, published today.

While consumers generally get the outcomes they want and are happy with the service they receive, issues such as cost and a perceived lack of choice remain.

In particular, the report identifies an ‘imbalance of power between consumers and lawyers’.

It finds that competition in legal services is weak, with the vast majority of consumers not shopping around, while many find it difficult to compare providers or believe their choice is restricted.

‘There is also a sense that people approach lawyers with trepidation: many admit they have little knowledge about what lawyers do, and lack confidence either that their consumer rights will be protected or how to complain when providers get things wrong,’ it says.

A survey published earlier in the week by the LSCP showed that, even when unhappy with the service they get, a third of consumers do nothing about it.

More positively, the report found that people entering the legal profession are increasingly representative of the general population, although women and black and minority ethnic individuals are not progressing to senior roles.

It said this ‘remains a stubborn problem’.

It was pleased with the introduction of new systems of regulation governing the way lawyers work, which it said were more ‘consumer-friendly’ and gave providers greater flexibility to respond to the diverse and changing market.

It added that there was also evidence of innovation in the delivery of legal services as traditional and new providers position themselves in readiness for a more liberalised market.

However, the report adds that too many consumers are still being let down by delays and communication breakdown.

‘The high number of complaints about costs has not abated.

'Especially alarming is that one in every five people do not trust lawyers to tell the truth, and also that the very high volume of claims on the solicitors compensation fund is rising,’ it says.

On the issue of regulation, it said consumers cannot be confident that it is being conducted independently of the profession as only three approved regulators have a lay majority on their regulatory boards.

The SRA is among those bodies which presently operates with a majority of professional members, but it plans to have a lay majority ‘in the near future’.

It said all the approved regulators need to engage more with customers as they design policy while some need to be more open about their activities.

The report concluded: ‘Although the overall figures are promising, they mask significant levels of dissatisfaction with some core elements of service.’

Renewing its call for complaints data to be published, it suggested customers would receive better service if the names of those who persistently fall short of the required standard were exposed.

The Legal Ombudsman has deferred a decision on this issue.

The report added: ‘New entrants counting down to October 2011 will see the above problems as a commercial opportunity to make legal services more approachable and to deliver services that meet people’s needs.’

The panel’s chair, Dianne Hayter, said there is more to achieve before the legal services reforms can be judged a success.

She said: ‘Consumers are demanding more of business across the economy, but find it harder to exercise their market power when dealing with lawyers.

‘They need a helping hand, such as access to complaints data, in order to play their full part in driving greater competition between firms.’

Commenting on the report, Legal Services Board chief executive Chris Kenny said: ‘The Consumer Panel’s report has done a valuable job in three ways.

'Firstly, through highlighting where reforms of the market are already starting to benefit customers, Secondly, through demonstrating where there is more progress to be made, notably on access to redress.

'Thirdly, through showing where data needs to improve to enable fuller judgements to be made in future.’

Read the report.