Tag Archives: David Clementi

Even Lawyers Can Change their Ways: the UK Story of Innovating in Legal Services

Several friends have asked me to write a post to explain how it is that the UK managed to massively innovate and transform its legal services sector in the past ten years, while the legal profession in other jurisdictions, such as Ontario, by comparison, virtually stood still. In many ways, it’s an example of needing to challenge old assumptions and unlearn old ways, something that always will ruffle feathers somewhere.

Among the major innovations in the UK reforms were the creating of three new bodies formally dedicated to defending and protecting consumers’ interests in legal services, and new business structures designed to help make legal services affordable. Such innovations did not also occur in Canada, at all. Why? Why did the UK become so much more innovative than Canada in protecting consumers?

Tony Blair - courtesy of Wikipedia

Tony Blair, UK Prime Minister, 1997-2007

The story really begins back in 2001. Two people in particular, Tony Blair and Sir David Clementi, are the main protagonists in the UK’s transformation, although I’m inclined to add an influential woman as well, Cherie Blair, who was a leading lawyer and the country’s first lady at the time.

(Back in 2001, I was practicing law with a major UK firm, so I’m familiar with the origins of the UK’s transformation, and even had many a discussion on the early reforms.) 1

Let’s go back to 2001.

In 2001, Tony Blair’s Labour Government published a report called ‘Competition in Professions,’ a report that drew attention to the problems created by monopolies in a profession. It called for removing any unjustified restrictions on competition. It was a first step in the direction protecting consumers better. 2        

In July 2003, the Blair Government then published a further report, this time specifically on the legal services sector. It concluded that the existing rules and framework were outdated, inflexible, over-complex and insufficiently accountable or transparent. The Government concluded that “a thorough and independent investigation without reservation is needed.” 3

The Government backed up its commitment to fairness and objectivity with action. The Report required that “the investigation will be undertaken by an independent person who commands public confidence but who is neither a practising lawyer nor a judge.” 4

Sir David Clementi, courtesy of Winchester College

Sir David Clementi

To fulfill that requirement, Tony Blair appointed Sir David Clementi, a respected former deputy Governor of the Bank of England who was then Chairman of Prudential plc.

The Terms of Reference for the investigation contained two simple guidelines, both of which focused on consumers:  first, to consider what structures or framework would “best promote” the “consumer interest;” and second, to recommend a framework that would represent both the “public” and “consumer interest,” and be  “comprehensive, accountable, consistent, flexible, [and] transparent.” 5

The mandate given to the Clementi commission was thus to find ways to specifically  protect the “consumer interest,” not just the traditional – and vague, often-used legal jargon – “public interest.”

From 2003 to 2004, the Clementi commission received submissions from a wide range of people and organizations – including “organisations who speak for the consumer; lawyers; academics; and members of the public.” Clementi described it as a “significant amount of evidence” that he used in forming the final recommendations.

In December 2004, Clementi presented his final Report. He said that the 18 months of review had confirmed what the Blair government had initially concluded: “the current system is flawed.” The final Report, also called the UK’s ‘Legal Services Review,’ was comprehensive. It contained a set of major recommendations, all built around the main theme of providing “a framework independent of Government in which to promote competition and innovation,” and protecting the “consumer interest.” 6

The Blair Government fully accepted the Review’s recommendations, and proceeded to develop the legislation to implement them.

In October 2005, the Government published an overview of the proposed new legislation in a report aptly called “The Future of Legal Services: Putting Consumers First.” 7 In brief:

“The purpose of the changes is to put the consumer first. The Government has set up a Consumer Panel to advise it as it takes forward reform. … The Government has accepted Sir David Clementi’s recommendations. …  Consumers will be clear about the system, and will be able to hold all partners in the framework to account for delivering these commitments. … These steps will increase confidence in the regulatory system and in legal professionals.

In 2006, the Blair Government tabled the first draft of the new Legal Services Act. The Bill was thoroughly debated for a year, by a joint committee of MPs and Peers.

In 2007, after a year of debate, the new Legal Services Act was adopted.

For the purposes of this brief post, the new Act brought in three main reforms:

The Legal Services Consumers Panel
http://www.legalservicesconsumerpanel.org.uk

Its role is to “provide independent advice … about the interests of users of legal services … by investigating issues that affect consumers.”

The Legal Ombudsman (also called the Office for Legal Complaints)
http://www.legalombudsman.org.uk/consumer/

Its mandate is to be an “independent and impartial” body that handles complaints from consumers of legal services, and seeks to resolve the disputes in a neutral manner and environment.

The Legal Services Board
http://www.legalservicesboard.org.uk

This is the new overall body created to be an “independent body responsible for overseeing the regulation of lawyers” in the UK (England and Wales); its stated goal is “to reform and modernise the legal services market place by putting the interests of consumers at the heart of the system.”

The new Act also brought in other reforms, such as new rules that allow ‘alternative business structures’ aimed to enable legal services to be provided more efficiently, with lower fees. (This is a major topic of its own, too extensive to cover here, and no doubt worth covering in a subsequent post).

If one were to sum up the UK’s reforms in a single word, it should be clear that the one word is consumers.

While many people talk the talk about innovating in legal services, the main reason for major reform and innovation in the UK is that the UK has actually walked the walk. The leaders in the UK embraced the reality that law belongs to the people, and accordingly put consumers first by treating the consumers of legal services with the respect they deserve.

Today, in Canada, not a single piece of regulatory legislation in the area of legal services even mentions the term “consumer interest” or creates a duty on anyone to promote and protect the “consumer interest.” Consumers, in the area of legal services in Canada, are voiceless and unrepresented.

The story of reform in the UK shows clearly that the innovations there really began with a courageous step to give consumers a voice. That courage took leadership. It remains to be seen whether any politicians or lawyers in Canada really have much regard or respect for consumers. Very odd when you remember that consumers are actually the people who make up 99% of society, cast the votes in elections, and pay the legal bills.

Notes:

  1. (In 2001, I was with the UK law firm Lovells, which has since become Hogan-Lovells.
  2. Office of Fair Trading, Competition in Professions (2001).
  3. Department of Constitutional Affairs, “Competition and Regulation in the Legal Services Market” (2003).
  4. Department of Constitutional Affairs, “Competition and Regulation in the Legal Services Market” (2003).
  5. The Terms of Reference are set out in the Report Competition and Regulation of the Legal Services Market, and are restated again in the final Clementi Report.
  6. Sir David Clementi, “Report of the Review of Legal Services in England and Wales,” (December 2004).
  7. Department of Constitutional Affairs, “The Future of Legal Services: Putting Consumers First” (October 2005).