Frontier Economics, together with The Data City and BMG Research, were commissioned by the Solicitors Regulation Authority (SRA), the legal industry’s regulatory body for solicitors, to analyse the ‘unreserved legal services market’ .
The unreserved market represents around 6 – 8% of the legal services sector, with the majority of unreserved legal providers offering services related to wills, housing, family and employment law. This market is expected to continue growing in future. Unlike reserved services, which can only be provided by those regulated through a Legal Services Act (LSA) approved regulator, there are no restrictions on who can provide non-reserved legal services to the public.
To improve understanding of this market, our research explores the size of the market for unreserved legal services, potential future developments in the market, and the potential benefits and detriments to consumers. Our report draws on evidence from an in-depth machine learning exercise to identify unregulated providers of legal advice, surveys and interviews of providers of legal services, surveys of consumers of legal services, and stakeholder engagement with industry experts. Our focus was on providers that offer tailored legal advice to individuals and businesses, rather than broader legal services. This was to exclude organisations that only provide generic information and services.
- Unregulated providers currently provide a minor portion of overall legal services in the market but they may grow in significance. We estimate there to be at least 3,800 unregulated providers of unreserved legal advice in England and Wales, with the largest number in the areas of wills and estate administration.
- Small business consumers were slightly more satisfied with the quality of advice and the service from regulated compared with unregulated providers, although satisfaction was high for both types of providers. Both regulated and unregulated providers expressed concerns about the quality of advice and service from unregulated providers that are not subject to any regulation or professional membership.
- Most small business consumers view regulation as important for the market and said that they knew whether their providers were regulated or not. Most preferred using a regulated provider even if they were more expensive.
- A significant proportion of unregulated providers of legal advice also viewed regulation as beneficial, with half of unregulated respondents indicating that it would benefit the market if all legal services providers were regulated in some way. About half of unregulated providers thought that consumers do not understand the difference between regulated and unregulated services.
- Consumers are likely to benefit from better information about whether a legal services provider is regulated and the differences between, and within, regulated and unregulated providers.
- Growth in unregulated provision may increase access to justice, especially for those with lower incomes, but it brings the potential for increased risks. This is because there are fewer protections and routes to redress for poor quality and services when using a provider not subject to regulation.
It is likely that demand for legal services will rise over the next few years. It is not clear whether there will be a difference in how the regulated and unregulated providers will meet this demand.
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