Presentation to a staff seminar at the University of Derby, UK, February 2015

1. A perfect storm? Regulation
funding and education in the
English legal services market
Julian Webb
julian.webb@unimelb.edu.au
University of Derby
3 February 2015

2. • Increasingly complex interplay between
regulation, funding and the market
• Forces us to re-visit the relationship
between access to justice, access to
lawyers (and courts) and ‘LSET’
• Steps:
– Changes to regulation
– Changes to funding
– The market
– Implications – for LSET and broader legal
system design
Thesis

3. • Draws in part on original data gathered
in the research phase of the Legal
Education and Training Review 2011-13
• Mixed methods research
– Interviews and focus groups (307
participants)
– Online survey (1200+ legal service
providers)
– Secondary analysis of LSB consumer
survey data (4,000+ participants)
Research context

4. • Legal Services Act 2007 (see eg Webb, 2008; Boon,
2010)
– Market liberalisation measure – not deregulation per se
– Creates regulatory objectives – including enhancing access
to justice.
• A function of regulation is thus to ‘facilitate a market that improves
access to justice’ (LSB, 2012)
– Separation of regulatory and representative functions
– Oversight regulator (Legal Services Board)
– Seven main frontline regulators (professionalisation of
regulation and of para-professions);
– New forms of licensed entity/relaxation of ownership rules
(‘ABS’)
– Emergence of competition between regulators (eg over
existing ABSs; legal exec law firms, barrister-led entities)
Regulation

5. • Reserved activities only account for
about 20% of activity in the sector
• Regulated entities undertake both
regulated and unregulated work –
growing sophistication in workforce
deployment strategies
• Largest (regulated) firms undertake
minimal reserved work
• Growing ‘unregulated’ sector?
Regulated vs ‘unregulated’ services

6. Use of ‘unregulated’ providers
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Mental health
Homelessness
Planning application
Disputes with neighbours
Consumer problem
Domestic violence
Discrimination
Welfare benefits, tax benefits
Debt/money problems
Children
Road traffic accident
Re-mortgaged
Injured at work
Problems with a landlord
Problem with employer
Tenant/squatters
Other problems with property I own
Other personal injury
Home repossessed/faced eviction
Relationship breakdown
Been treated badly by the police
Made a will
Immigration
Clinical negligence
Dealt with estate
Been Arrested
Bought/sold a house
Divorce
Regulated Unregulated

7. • Legal Aid, Sentencing and Punishment of
Offenders Act 2012 (LASPO)
– Further cuts to civil and criminal legal aid rates
– Reduction in coverage
– Forcing market concentration - fewer contracts
– Impact on NfP sector in particular (Byrom, 2013)
• Continuing changes to contingent and
conditional fee arrangements
• Proposed increases in court costs
• Attempts to limit judicial review
Changes to access/funding

8. • Increasingly segmented (or differentiated)
market
• Rapidly and consistently growing regulated
sector until 2010….
• IER projections for LETR suggested
significant levels of growth unlikely to be
re-established before 2015-2018
• High concentration of legal aid work
making firms/chambers more vulnerable
• Uncertainty about scale and scope of
paralegal work, but seems to be growing
faster than for regulated occupations
Impact on the market

9. • …there are only certain sets with a particular ideological view that are actually willing
to say we’ll take the hit and just do publicly funded work. It’s also a threat to the
independence of the bar because sets are increasingly doing anything to get sort of
lucrative work.
Barrister
• …there’s certainly going to be fewer trainees in the legal aid subjects … they will use
paralegals where they can which means that in ten, twenty years time the qualified
solicitors are not going to be there to do that sort of work.
Solicitor
• The cuts in legal aid will impact particularly in relation to family law costs. I would
guess that is the bread and butter – put potentially a hundred [costs lawyers] who will
be in serious difficulty as a result, it may be that they still get work but of less income.
They may decide there’s no longer any benefit of me being a costs lawyer …
Costs lawyer
Perceptions of impact

10. • increased use of legal process outsourcing to reduce back office and some front
office costs, including direct labour costs, and to increase efficiency and flexibility of
response;
• developing flexible project delivery models, often utilising a mix of in-house and
external human resources – eg, where virtual law firms contract-in lawyers purely on
a project-based footing rather than as permanent salaried staff;
• decomposing and commoditising legal transactions so that more of the work may be
undertaken by non-qualified, paralegal or other professional staff;
• bundling legal services with other complementary services in a multi-disciplinary
practice or ‘one-stop-shop’;
• leveraging the opportunities created by multi-professional teams to add value to the
offering;
• using technology to enhance communication, information access, data management,
and workflow, particularly in conjunction with outsourcing and commoditised practices
• Respondents discussed the competitive advantages of being able to draw on a range
of expertise both for the business, and as a ‘one stop shop’ for the client.
Changing structures and processes

11. • SRA and CLC
currently licensed to
authorise and
regulate ABSs;
• 300+ ABSs
authorised so far
• Diversity: no typical
ABS
• But some potential
game changers
The ‘ABS’ phenomenon (or not?)

12. • ‘Concerns about new practices often ignore the benefits that new
service providers could bring. These benefits are not only that they can
bring about lower costs... they may be able to offer consumers better
access to other types of legal services’
Clementi Report (2004)
• 0ver 48% of LETR survey respondents saw ABSs as a threat to
maintaining professional competence
• Idea of ABSs inextricably linked to commoditisation:
Most of my work now involves people instructing me who have no legal
training whatsoever. Large firms of lawyers with up to 300 people in
them with two or three lawyers. They are not governed by the
standards I am expected to be judged by. The staggering
incompetence of many hard working and decent young people
entrusted with the public’s legal problems is breathtaking. They are
under so much pressure and have no support. It is not their fault.
Barrister (online survey)
ABS: opportunity or threat?

13. ‘the next two decades will see more
change than the past two centuries in
the way in which lawyers and the courts
function’
Richard Susskind (2012:41)
The future...

14. • Solicitors and
barristers as minority
providers of consumer
legal services
• Private consumers
losing out in the
competition for
access to
(professional) legal
resources (cf
Hadfield, 2000)
• Increased self-
representation
Access apocalypse?

15. Implications for LSET
• Power of commercial sector has distorted the market
for training
• Quality and training issues in respect of unregulated
providers
• Flexibility of pathways
• Skills gaps – ethics, commercial/social awareness,
mgt training,
• Preparation for new roles, eg
– ‘Triage’ and CRM
– Legal process engineers and project managers
– Legal knowledge engineering/AI

16. • Will change force us to re-visit the relationship
between access to justice and access to lawyers
(and courts)?
• Designing ‘rule of law systems’, not just legal
systems
– Need for joined-up policy-making (and scholarship)
• Education and training
• Legal services funding
• Substantive law reform
• Procedural reform
• Diversion from courts
• Academic role?
– Understanding the “levers of legal design” (Hadfield,
2008)
– ‘Jurist’ function as defenders of the rule of law (cp Pue,
2005; Cotterrell, 2013)
Some preliminary challenges

17. Questions for LSET
• How (far) does a law school design a
curriculum for roles that are changing/difficult
to predict?
• What are the particular threats posed by new
work environments to professional
competence and integrity?
• Should we be actively planning for
deprofessionalisation and more activity-based
authorisation?
• What steps will improve A2J?