Robert Cross, Project Manager-Research, Legal Services Board

Some argue that that there is no evidence that regulatory reform in general, and that ABSs in particular, increase access to justice. In my opinion, this argument misses the point and is not the right place to start.

The Legal Services Board is an independent body responsible for overseeing the regulation of lawyers in England and Wales. It oversees, among other regulatory bodies, the Solicitors Regulatory Authority (which regulates solicitors) and the Bar Standards Board (which regulates barristers).

Some argue that that there is no evidence that regulatory reform in general, and that ABSs in particular, increase access to justice. In my opinion, this argument misses the point and is not the right place to start.

All the evidence — and there is quite a lot of it — shows that there is a continuing high level of unmet need for legal services. This is true in the UK and I strongly suspect it is also true in the United States, if not in most Western countries.

In the UK, even when legal aid funding was available for a wider range of problems and for a bigger group of people on different levels of income, the research showed evidence of U shaped distribution with those eligible for legal aid and those on high incomes more likely to seek legal advice when faced with a substantial legal problem. Recently the scope of legal aid funding has shrunk substantially in line with reductions in public sector spending. Funding for legal aid is unlikely to increase anytime soon, and it is clear that legal aid was not addressing all unmet legal needs.

The point is that we have a large unmet need for legal services and it is in the public interest to do something about it. It’s a complex problem to resolve. Regulatory reform and ABSs are one part of a mixed economy — just one of part of the solution to address it. I think this has to be the starting point — not an assertion that there is no evidence.

In the UK, the implementation of regulatory reform and notably the implementation of ABSs have been quite slow. Remember that while that Legal Services Act was adopted in 2007, applications for the first ABSs were not accepted until late 2011.

There have been issues in the past with the application process. Our research suggests that in considering ABS applications, the SRA risked a cognitive bias in its decision making process: anything that was different was “not normal,” was highlighted as high risk and was less likely to make it successfully through the application process. So, to the extent someone was seeking to provide legal services in a truly different way, the chances of it getting an ABS license were significantly reduced. I am using past tense here — this is because we have called the problems out to the SRA and it recently changed its application process and took steps to reduce its cognitive bias. Now applications are taking less time to be approved, and a greater number of different business models are receiving approval. We are expecting to see the impact of these changes in the future, as a greater variety of firms receive authorization.

Because ABSs have not been in existence all that long and because for much of that time it has been difficult to get approval to operate them, there is today little empirical evidence regarding changes to access to justice. We highlighted this in our 2013 evaluation report.

The LSB is planning to conduct a large scale legal needs survey of individuals, to see how things have changed since 2012, which is the last time we did such a survey. I am not expecting to see that all problems relating to access to justice have been resolved, but I am expecting to see some changes a difference. If ABSs have made an impact, then the results of the survey should show that in some areas but not others. The reason for that difference is that the adoption of ABSs is not the only regulatory change that has taken place in England and Wales. We have also experienced large changes to the scope and availability of legal aid as well as to litigation funding. For that reason, it will always be very difficult to say beyond a doubt that ABSs have improved access to justice.

By way of context, the approach in legal needs surveys is to start by looking at individuals who have had a problem that could be resolved through legal means — be it a court process or a transactional process. The researcher examines what the individual did in response to the problem — did they go to a lawyer, did they go to a not-for-profit advice agency, did they go to a friend, did they ignore the problem — and why they selected that course of action (or inaction). It is an objective and quantitative approach. If there is a positive impact of regulatory reform, with ABSs being a part of that, then in performing this survey at different points in time (over 3 to 6 years, for example), we should see changes in the way that people respond to their problems.

It is easy to forget that for ordinary people there is a real information asymmetry. Many people don’t understand either that they have a problem that can be resolved through legal means, or how to go about resolving it through legal means. It’s not as simple as just walking into a solicitor’s office — there is a whole lot that goes on before that. That is why a survey like this is so powerful in helping to understand what really goes on — or as some call it the rest of iceberg not just the tip. These surveys point to the courts as being on the periphery of everyday justice.

ABSs allow you to bring in the capital to invest in things like advertising and branding — big, expensive things that other service businesses invest in. These are things that have the potential to allow people to access legal services in different ways. For example, it is through advertising that individuals can better understand what legal services are on offer that can help them to resolve their problem.

The legal sector in the UK has done very well over the past 20 years or so — it has nearly doubled in value over that time. But there is still a problem of unmet need among individuals and small businesses. And there is still a problem of people not even understanding that a problem they have can be resolved through legal means.

Changes are definitely happening in England and Wales. ABSs and other regulatory changes are a reason for that, but not the only reason. Notably, technology is also a big factor in the changes occurring in the legal sector.

From our vantage point in the UK, it is very interesting for us to look at the US. We understand that the US market remains very restrictive as regards the business models that are permitted, and we understand that the US still regulates lawyers rather than legal activities. Yet, at the same time, there is still innovation occurring in the US. That shows that there is a lot going on — and that it is not only about regulation.

That being said, ABSs are important in that they allow firms to acquire the capital they need to develop or buy the technology they need, and to develop the branding they need.

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