Selecting a solicitor - why do consumers find it hard to engage with the legal market?

We are living at a time where policy makers, regulators and firms are focusing on how they can empower consumers. We have seen a boom in the use of comparison websites in insurance markets, and wider use of mobile apps that allow people to manage their energy supply, or banking services. Initiatives such as these give consumers tailored information in a format which is easy for them to understand. 

Many of these services have been borne from necessity. A lack of consumer engagement has been seen across many markets, and the legal market is no different. Research by the Competitions and Markets Authority (CMA) found that the legal market is not working well, and there are issues with individuals not accessing legal services, and firms not being transparent. In light of this, we are implementing reforms that will stimulate competition in the market, and are also working to ensure that consumers are provided with the information they need to make effective decisions. 

Decision making in the legal market - barriers to engagement 

 There are a number of characteristics of the legal market which make it challenging for consumers to engage. Firstly, the decisions they have to make are complex. This means that consumers often choose an option which is convenient, rather than evaluating all the possibilities. Not surprisingly, research shows that consumers largely rely upon recommendations to find their legal provider.

 A further issue is the infrequency with which consumers access the market, and therefore the lack of experience that they have in making legal choices. We know that decision making generally improves with experience as people get used to easily identifying what is a 'good' choice. Once a complex choice has been navigated through a couple of times, it often doesn't seem like a complex choice anymore. 

 A final issue, which is perhaps unique to the legal market, is the fact that consumers can be in a highly emotional state when they choose a solicitor. Switching energy provider or choosing a new bank account, for example, are reasonably emotionless choices. Selecting a solicitor to act in your divorce case however will be highly driven by emotion. 

Transparency in the market 

The factors of complexity, inexperience and emotion, make it hard for consumers to make well-reasoned choices. Perhaps more importantly however, is the fact that these internal factors are exacerbated by the structure of the legal market. The CMA report points to low levels of competition, and the fact that there is little information available to consumers, as being the key contributors to the lack of engagement. For these reasons, we are reforming some important aspects of our regulation to encourage competition between firms, and empower consumer choice. 

Stimulating competition

A key focus of our reforms is freeing up solicitors to provide some legal services outside of regulated firms. In recent years, innovation in the market has resulted in an increasing number of alternative legal providers, set up to meet a growing legal need. However, solicitors are not currently allowed to work within these firms, and call themselves a solicitor. 

Providing solicitors with this freedom will increase competition in the markets, so that consumers will have access to a greater pool of high-quality legal advice at a more affordable price. 

A further point is that, as competition increases, there becomes a greater need for firms to compete for business and set themselves apart. Factors like price, complaints and quality, will therefore become a clear signal that providers can advertise, which will stimulate transparency in the market. 

Is all information, good information? 

Although we want more information in the market, we don't believe that simply providing more information will solve everything. Instead, we are working to identify how consumers make choices in the legal services market, and what information helps them to make good decisions. 

Trialling information with consumers 

The CMA recommended in their report that policy makers should undertake consumer testing in order to better understand the effects of our policies. We have taken this recommendation on board, and are currently commissioning research to look at how the presentation of price information affects consumer choice. We will also expand this research to explore how information on complaints and quality signals affects decision making. This research will help us to better understand how consumers are making choices, and will be used to advise firms on how to be present this information. 

More than ever before, consumers are being provided with the tools they need to make better choices. The legal market however, seems to have fallen behind. Working towards rectifying this, and placing the power of choice in the hands of the consumer, will remain a key aim for us for the foreseeable future.

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