Under New Management

From The Practice January/February 2021
Early Regulatory Reform in the United Kingdom and Australia

As we see in “Enter the Sandbox,” significant regulatory reforms to the delivery of legal services have begun to arrive in the United States. In “When Lawyers Don’t Get All the Profits: Non-Lawyer Ownership, Access, and Professionalism,” published in the Winter 2016 issue of the Georgetown Journal of Legal Ethics, Nick Robinson explores two case studies outside the United States—the United Kingdom and Australia—where reforms aimed at improving access to justice, among other things, have opened the market for legal services to the ownership, investment, and management of individuals without legal training. Robinson examines the ethical dimensions of these changes as well as the limitations on our ability to draw definitive conclusions from these case studies based on what data is—and is not—available (for more on tracking the impacts of regulatory reform, see “Quality Metrics for Regulatory Reform”). Notwithstanding these qualifications, Robinson explores some significant implications of these reforms, such as their capacity to improve access to and affordability of legal services. Below, we briefly review the cases of regulatory reform in the United Kingdom and Australia and highlight Robinson’s observations on their impact on access. For a complete account of Robinson’s analysis and conclusions, see the full paper here.

United Kingdom. Years of deregulatory efforts in legal services, with a notable call for reform from the U.K. Office of Fair Trading, culminated in the Legal Services Act (LSA) of 2007, writes Robinson. Broadly, the LSA resulted in two changes.

First, regulatory agencies were reorganized—both spreading regulatory authority across a number of profession-specific bodies as well as consolidating all those bodies under the oversight of one “meta-regulator,” the Legal Services Board (LSB). By statute, the LSB is chaired by a “lay” member, its first chair having been a competition expert and its current chair being a trained biologist with a long history in regulatory issues. By way of background, Robinson notes that in the U.K. jurisdiction of England and Wales, there is not one type of licensed legal professional (in other words, lawyers). Rather, there are several, ranging from barristers and solicitors to notaries and legal executives, among others (for more on these differences, see “Waiting for the Golden Ticket to the Chocolate Factory”). Under the LSA, each of these individual professions now has its own regulatory body under the LSB. For solicitors, that came in the form of the Solicitors Regulation Authority (SRA). Like the LSB, chairs of the SRA are not lawyers—for instance, their current chair is an expert in consumer advocacy. Similarly, chief executives of the LSB come from nonlaw backgrounds, including their current chair who has a background in operations in the medical field. (In 2014, Chris Kenny, inaugural chief executive of the LSB, spoke about how these types of regulatory changes can create the conditions for disruption at a Center on the Legal Profession conference on disruptive innovation—see video below.)

Second, the LSA opened the doors to new ownership structures in legal services, such as the introduction of alternative business structures (ABSs). In an ABS, legal services may be offered alongside other types of services (for example, accounting) and owners need not have any legal training.

Australia. Similar to the United Kingdom, Robinson notes, reform gained momentum in Australia due in part to discussions around competition. The state of New South Wales lifted restrictions on nonlawyer ownership and investment in law firms in the early 2000s, allowing legal services to be offered in new types of entities such as incorporated legal practices (ILPs) and multidisciplinary partnerships (MDPs). “ILPs and MDPs are corporations and partnerships respectively that can offer legal services, along with almost any other non-legal service,” writes Robinson. The process for forming these new entities, however, is not licensing but rather one of registration, he adds. In New South Wales, for example, ILPs may be disqualified by the Supreme Court on certain grounds laid out in the Legal Profession Act 2004. Throughout the rest of the decade, several other Australian states and territories followed New South Wales’ example.

One argument in favor of these types of regulatory reforms is that they might increase access to justice. In the LSA, these motivations are explicit, as “protecting and promoting the public interest” and “improving access to justice” are two of the first regulatory objectives listed in the text of the legislation. “Yet, the access benefits of non-lawyer ownership so far seem questionable,” Robinson writes. “At the very least, the available evidence should warn against viewing non-lawyer ownership as a substitute for more proven access strategies, like legal aid.”

Deliberate access-related goals and copious data collection are likely to be key to any regulatory reform.

While regulatory reform in the United Kingdom and Australia may contribute to a variety of innovations in the delivery of legal services and lead to “larger economies of scale and scope,” Robinson suggests that clear evidence of improved access among low- and moderate-income populations appears lacking. Further, he offers four possible reasons that evidence of nonlawyer ownership leading to significantly improved access-to-justice measures may not materialize at all. Robinson writes:

First, persons in need of civil legal services frequently have few resources and so it is unlikely that the market will provide them these services even where non-lawyer ownership is allowed. … Second, several of the legal sectors, like personal injury and social security disability representation, which have seen the greatest investment by non-lawyers, will likely not see corresponding increases in access. In these sectors clients are less sensitive to cost considerations since their lawyers are largely paid through conditional or contingency fees or by insurance companies. … Third, non-lawyer investment may not take place in some areas of the legal market because many legal services may not be easy to standardize or scale. Much legal work is complicated and requires the individualized attention of an experienced practitioner who often charges high rates. Even though many legal problems may have relatively uniform remedies, an experienced practitioner is needed to determine, case by case, the legal problem confronting the client before tailoring an appropriate solution. … Finally, some persons who could benefit from legal services may be resistant to purchasing them, even if they have the ability to do so, either because they do not believe they need a legal service or because of cultural or psychological barriers.

In the end, Robinson cautions that there is simply not enough data to go on in determining the efficacy of deregulation around legal services for the purpose of expanding access to justice. However, based on some data that is available in the United Kingdom and Australia, there is reason to believe the creation of new models of legal professionals is one aspect that could yield more affordable legal services in some areas. Robinson offers the example of licensed conveyancers, whose services transferring property are less expensive than those of solicitors in both countries. In terms of what seems to have the largest impact on access, Robinson maintains that legal aid budgets remain critical to access. “Indeed,” he writes, “perhaps the most noticeable change in access was not produced by any shift in regulation or by pro bono activity, but instead by cuts in UK legal aid, which created a large increase in pro se litigants in family court.”

This is not to suggest that regulatory reform cannot be an effective tool in improving access to justice—or even that it is not doing so already. Deliberate access-related goals and copious data collection are likely to be key to any regulatory reform. As we see in “Enter the Sandbox,” some new regulatory reform efforts in the United States are trying to satisfying both, as with Utah’s new “regulatory sandbox,” which is premised on advancing access to justice and demands ongoing data submission from all participants. Time will tell what the data shows.


A Conversation with Dov Seidman, Founder and Chairman of the HOW Institute for Society

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