Legal Services Board Report into the Legal Services Act a Damp Squib

The Legal Services Act 2007 (LSA) was designed to increase competition in the legal market and to put the consumer at the heart of the regulatory system.  Half way through the first year of Alternative Business Structures (ABS) having been permitted, The Legal Services Board (LSB) has released an interim report into what impact the LSA has had on the profession.  The overall conclusion is, rather disappointingly, that it is “too early to tell’. 

This does rather beg the question of whether there was really any point in releasing a report at a time when only 3 ABS have been approved (2 of which were very small existing law practices, and all 3 of which were only approved 2 weeks ago).  It would be inconceivable that these 3 firms could have had any material impact on the legal market as a whole, much less to achieve it within 2 weeks of approval.  Of course, if only 3 legal business had applied for ABS status, then it might indeed have been a noteworthy finding that there had been so little interest as it could be seen as an indicator that the LSA was likely to fail in its main aim of stimulating competition, but this is not the case. It is known that at least 60 stage two ABS applications have been submitted, after initial interest from almost 180 organisations.  There has been much frustration on the part of the applicants at how opaque the system for approval is and how long it is taking.  Indeed, when the first 3 firms were approved by the SRA a couple of weeks ago, there was some hope that the log jam may start to move but since then, there has been a resounding silence and no further approvals granted.

Although the report claims to establish a “baseline” against which the profession will be measured annually in the future against 17 key indicators, surely it would have been more appropriate to do this either immediately before the ABS regime came into effect (ie 6 months ago), or after sufficient time for it to have had an impact?  In publishing now, it seems a lot of effort has been put into producing a 78 page report which is notable mostly for its lack of useful analysis. 

In some ways perhaps it is harsh to blame the LSB for the timing of the report.  6 months in to the new regime they should have been able to except to see much clearer signs of what changes the LSA was bringing in its wake, but this has been thwarted by the funereal pace at which ABS applications are being processed by the SRA. 

Nevertheless, neither organization has really come out of the first 6 months with much credit so far.