Scottish Government

Chapter 3 Characterising the legal services markets in Scotland

(a) Research methodology

3. The main aim of this phase of research was to identify those legal markets with relatively high and low levels of competition, with a view to more intensive investigation at a subsequent stage. This research was carried out by way of a series of face to face interviews. The research sought interviewees' perceptions on the level of competition in the various legal markets. Interviewees were also asked, where appropriate, to identify any strengths or weaknesses at particular stages of the legal provision process in the various markets, as well as to comment on advantages and disadvantages for consumers and providers of: professional rules and practices; organisational structures; and providers' profiles. The summary findings for each of the identified legal markets are presented below, as are the more general views of key stakeholders. This is followed by a grid to represent the market-level findings systematically.

3.1 Interviews were conducted with representatives of the CBI Scotland, the Law Society of Scotland, Citizens Advice Scotland, the Scottish Legal Aid Board, the Office of Fair Trading and the Scottish Consumer Council, the Scottish Legal Action Group ( SCOLAG), a representative of the Society of Solicitor Advocates, as well as members of the Faculty of Advocates.

(b) Interview findings

Commercial law

3.2 The market for commercial legal services was reported to be robust and competitive, with the corporate client frequently a professional buyer of legal services and better informed than most other legal services clients. Further, a range of providers operated in this market including solicitors, advocates, in-house lawyers and 'non-lawyer' specialists. Competition operated along both quality and cost dimensions. The larger (mainly Edinburgh and Glasgow commercial) firms were now competing in a UK-wide market and were reported to be taking business away from Magic Circle and other large City firms because of their relatively lower cost base.

3.3 Commercial law firms competed in the quality realm by exhibiting an understanding of the businesses of their potential customers and by demonstrating their ability to provide legal services tailored to the needs of business clients. For this same reason, there was a growing tendency for commercial law providers to position themselves in the locality which they served, with large firms setting up satellite practices in other cities so as to establish themselves as part of the local business community.

3.4 Recognising that they had to provide the highest quality services to retain clients, firms providing commercial legal services maintained their clientele by providing premium/ incremental services and giving their clients no reason to seek provision for legal services elsewhere (often providing services that were not paid for - e.g. corporate entertainment). There was some uncertainty as to whether negotiation over price was extensive. As in other markets, powerful clients were more likely to have the ability to negotiate price than others.

3.5 For their part, clients/customers were most likely to look for lawyers delivering a good package of services, of which price was only a small part. They were likely to retain the same firm for dealing with all legal matters pertaining to the operation of their company, such as employment, commercial conveyancing and personal injury (defender work), as well as commercial and company law. Building up and maintaining relationships with organisations that had empathy with their business needs was a crucial aspect of business life, and this also applied to relationships with the providers of their legal services. Hence, loyalty was thought by some to play an instrumental role in business life and the business client was unlikely to behave in the legal services market like the archetypal supermarket shopper. According to one interviewee, however, client loyalty was no longer found to play the role it once had in commercial law practice.

Wills, trusts, executries, estates

3.6 This was a growth area in Scotland, as the population aged and, perhaps for some social groups, became wealthier. Nevertheless, entry into the market remained low, with approximately 30% of Scots making wills. Since the proportion of property owners had increased dramatically over the past 20 years (with the purchase of council housing, the demutualisation of banks and share ownership following privatisation), this was a matter of some concern.

3.7 There was strong concern, from both the legal profession and representatives of consumer interests, as to the "unfortunate spectre" of people making their own wills. In particular, they were often found to be guided by materials for producing wills under English law. Even where that was not so, DIY wills found no support from any interviewee.

3.8 There was thought to be little price competition between firms for wills and executries. Wills might be drawn up 'free' and given at no extra cost, often in connection with conveyancing matters. Firms viewed them as loss leaders because they brought in executry business on the death of their clients. So, for example, the "going rate" for wills in one area of Scotland was estimated to be between £45 and £50, while the actual cost of preparing a will varied between £150 to £300, depending on the time taken with the client. Interestingly, Will Aid was reported to have had the effect of increasing cost in some areas, with Will Aid now recommending a donation of between £75 and £90.

3.9 It was reported that consumers rarely shopped around for executry services. That was not because of anything inherent in the market but rather because consumers ceased to behave as archetypal supermarket shoppers at this particular life stage. Instead, they preferred to honour the relationship between the will-maker and the legal services provider. This might have militated against the success of newly established professional executors who found themselves unable to recruit clients. Because of consumer vulnerability at the time of their need for executry services, it was suggested that price controls might be needed to safeguard them (much like controls over funeral charges).

Employment law

3.10 Employment law had become an increasingly complex area of law and there had been constant changes, mainly due to the application of EU directives. This had led to a growing specialisation in the field. It had also made an impact on the need for legal services in the area. So, for example, tribunals were set up to allow people to appear without representation. It had become increasingly difficult to do so, because of the complexity of the law.

3.11 There were two distinct markets operating within this field of practice, one for employees (claimants) and one for employers (respondents). This is best illustrated in the grid later, but the consumer types, level of information and consumer orientation in particular varied across those distinct markets.

3.12 The legal services market for employees was not a viable one, with little competition between a few providers. That was partly because legal aid was available for representation at tribunals only under special circumstances. At the same time, lay representatives avoided employment tribunals since they had become so legalised.

3.13 There were a small group of firms that had close connections with particular Trade Unions and did a substantial amount of work on their behalf. These firms, however, would often absorb the costs of acting on behalf of employees if the case was lost, and would be paid by the other side (or the other side's insurance company) if their case was won. However, this service was available only to members of the relevant Unions. Since unionisation amongst Scotland's employees was declining, the service was available to a decreasing proportion of the population.

3.14 Unlike the market for employees, the legal services market for employers was reported to be strong and competitive. Employers had already established connections with legal services providers through their commercial and company practices and these firms would provide specialists in employment law for the needs of their commercial clients. Unlike many employees, they were also able to pay for these services.

Personal injury

3.15 Up until 20 years ago, almost every Scottish law firm had some personal injury practice and provided this service to existing clients. The decline in heavy industry in Scotland was only partially responsible for the withdrawal of legal services in personal injury law from the High Street. Growing specialisation in the personal injury field and the limited availability of civil legal aid had also contributed to the changing structure of the legal services market for personal injury.

3.16 Claims management companies had also made inroads into the market. Unlike England, however, the pursuers market was not shared with claims firms to the same extent since civil legal aid might still be provided in personal injury actions in Scotland. Claims management companies constituted an unregulated sector of the personal injury markets and there was no systematic evidence as to their impact on consumers.

3.17 There was reported to be a serious gap in provision for pursuers who were neither legally aided nor sponsored by Trade Unions. Few law firms were reported to be acting on a speculative basis, and only those with a high volume of personal injury work were prepared to do so.

3.18 Like employment, two different and distinct markets were operating in the personal injury field: one for pursuers and one for defenders. Concentration of personal injury work in a small number of firms was evident in both of these markets. Trade Union work was channelled through a small number of firms instructed by the Trade Unions. There was a similar concentration amongst defenders. Insurers had limited the number of firms they instructed in an apparent bid to control expenses and were reported to have made substantial reductions in the amounts that they were prepared to expend per case. That was responsible for forcing a few firms into a volume situation.

Financial services and tax advice

3.19 This was a growth area, but with much external competition (with main competition from accountants, but an element of competition from London lawyers). Indeed, the legal profession was reported to be in almost direct competition with accountants for market share.

3.20 From the consumer perspective, the problem in this legal market resided in the low level of financial literacy amongst individual (though not business) consumers. Hence, consumers were unable to evaluate the complex products on offer. The Scottish Consumer Council ( SCC) was of the view that the most straightforward solution to this problem was to exert pressure on financial institutions to simplify the complexity of financial products and to specify their risks more clearly.

Criminal law

3.21 Criminal law was virtually a 'stand-alone' market, with many providers of legal services in the criminal law committing themselves to this area of legal service practice to the exclusion of all others. This qualified them for substantial discounts on their premiums, which might also impact on their decision to undertake work in no other practice area.

3.22 Competition in this market was intense, and particularly so in some parts of Scotland. Nevertheless, there was considerable concern as to future supply since few young solicitors were being recruited into this practice area. There appeared to be a reduction in the number of traineeships available. The Public Defence Solicitors' Office ( PDSO) had become prominent in the Edinburgh market for criminal legal services, and there were new PDSO offices established in Glasgow and Inverness. However, these were relatively small scale.

Residential conveyancing

3.23 Price competition was thought to be robust in the cities, with conveyancing costs cut quite significantly in recent years. Indeed, quite different stakeholders thought this to be the legal market exhibiting the strongest competition and the greatest price sensitivity. Compared to their knowledge of other legal service markets, individuals were reported to be knowledgeable, to be "acutely aware" of what they wanted from this service and the price that they were willing to pay for it. Large commercial organisation, in contrast, might have considerations other than price in respect to the conveyancing services they required.

3.24 The domestic conveyancing market was more local than many other markets for legal services, with some local markets more competitive than others. Consumers tended to opt for firms with local knowledge, particularly in relation to the purchase of a property. They were more likely to bring in firms from outside the area to sell their properties, though that was not widespread.

3.25 The estate agency aspect of selling domestic property was more lucrative than the legal aspect of buying and selling property. It was reported that there was growing competition for this area of work between solicitors and estate agents, particularly in the West of Scotland, though there was no evidence currently available to support this. Indeed, the Scottish Consumer Council was of the view that vendors and purchasers benefited from the power of Solicitors' Property Centres by creating a visible and accessible marketplace for consumers.

3.26 While conveyancing (rather than the estate agency aspects of buying and selling property) remained in the hands of solicitors, the Monopolies and Mergers Commission concluded in 1997 that this monopoly was not contrary to consumer interests in Scotland.

Family law

3.27 Family law was reported to be a 'difficult' market, with considerable concerns as to current and future supply of practitioners. Though there were some users of family law services with considerable assets (mostly in Edinburgh and Glasgow), a far higher proportion sought legally aided advice.

3.28 The market for family law services was split between legal aid and non-legal aid work, with reports from an interviewee of a marked exit from legal aid work in family law over recent years, including practitioners of repute. The same interviewee reported problems in the recruitment of young solicitors into the area. This was of particular concern to the profession since family law was one of those practice areas for which the profession was exclusively required to provide services. The profession perceived that legal aid funding was making it difficult to recruit law graduates into this area of practice. At the same time, it was becoming a particularly complex area of law.

3.29 The Scottish Consumer Council noted that it was sometimes difficult to separate out the family law market from other markets, since the provision of legal services in this area often required services in other areas.

Welfare, debt and housing

3.30 Since consumers had little or no buying power in these areas, there was little competition between service providers in Scotland. Certainly, there were no financial incentives for solicitors to operate in these markets. The competition, so far as it existed, was between publicly funded agencies for public funds and was therefore thought to be inappropriate. There was little competition between publicly funded agencies for clients since rules often circumscribed the location of clients. While Law Centres might provide advice on a range of social welfare matters, their funding arrangements had traditionally restricted their service provision to particular geographic areas.

3.31 The Scottish Consumer Council reported that the supply side, and the contribution of the voluntary sector to these markets, were not helped by complex and arcane court rules, dealing with such matters as the rights of audience of lay representatives, particularly in housing eviction cases. While housing advice might be good, difficulties pertaining to representation in eviction cases (rights of audience were available only to party litigants or solicitors after the first calling in summary cause) and the varying approaches taken by sheriffs to such cases were of some concern to the Scottish Consumer Council.

3.32 The consumer was faced with substantial difficulties on entering the market for these services, given the absence of information as to quality. There was thought to be greater competition in England and Wales in these markets due to the way in which contracts were awarded.

Immigration law

3.33 There was some provision of legal services in relation to immigration in Glasgow, principally because Glasgow participated in the Home Office dispersal scheme. There were also a few Edinburgh firms that had acquired expertise because of the immigration appeals system which was based in Edinburgh. Altogether, there were probably at least 15 firms in Scotland which had expertise in this area. They were competing with advisers certified by the Immigration Services Commissioner, as well as non-certified advisers. There were probably less than 5,000 asylum seekers in Glasgow at any one time. However, as ports of entry were liberalised, the demand for services in this market area was likely to grow.

Advocacy

3.34 The Scottish bar had grown substantially over the past 10-15 years and had almost doubled in the past 30 years (from 250 to about 470 advocates). With only one advocate to 20 solicitors, the bar was relatively small nonetheless when compared with bars in England and Wales and Ireland, where the equivalent ratios were 1 to 11 and 1 to 9 respectively. This was partly because of the comparatively broad rights of audience in Scotland, which had encouraged solicitors to develop their advocacy skills. Cultural differences within Scotland could also be discerned : East Coast solicitors were less likely to compete with advocates and West Coast solicitors were more likely to do so.

3.35 A high proportion of new entrants to the bar were solicitors and their average age at admission to the Faculty was in their mid-30s, after a range of previous legal experience. That had implications for the way in which the market for advocates' services operated.

3.36 In understanding the operation of the advocacy market, it was necessary to separate out the two distinct roles of the Scottish bar : specialist advice and courtroom advocacy. In Scotland, others competed with members of the Faculty of Advocates for the provision of specialist advice. So, for example, some solicitors' firms had built up an opinion practice in specific areas, while academia also maintained a strong tradition of opinion practice in certain fields such as conveyancing, wills and succession. Solicitors might also seek advice outwith Scotland on tax and company matters.

3.37 As for courtroom advocacy, advocates competed with solicitors in the Sheriff Court and with solicitor advocates in the Court of Session. Interestingly, few solicitor advocates appeared regularly in the Court of Session on the civil side, though many appeared in the High Court on the criminal side. Several reasons were offered for this. Competition with solicitor advocates was therefore variable, depending on the particular market.

3.38 The major division in the markets for advocates' services was between the civil and criminal bar, though even here the division was informal and based on pragmatic considerations. Hence, some advocates with a mainly criminal practice took on civil work while senior advocates on the civil side had been instructed in criminal trials and civil practitioners regularly became Advocates Depute in the Crown Office. While there was specialisation in the criminal sphere, this was mainly related to seniority, with senior counsel commonly handling cases involving alleged murder, rape and other serious crimes. In the civil sphere, specialisation was more marked, though many advocates did not locate themselves within particular substantive legal markets. Specialist practice, for example, was unlikely to constitute more than 50% of the practice of most self-styled specialists. Even where advocates had established themselves in a specialist area, they were unlikely however to monopolise provision of legal services in that specialist area. Indeed, flexibility of practice was reported to be amongst the chief strengths of the Scottish bar, allowing advocates to respond to changes in the demands for advocacy from different markets and to move between different fields over the course of their legal career. The flexibility of the generalist orientation of advocates was said by some to be reinforced by the "cab rank" rule (see chapter 5) and also by the necessities of a small jurisdiction.

3.39 Nevertheless, some advocates maintained that the 'cab rank' rule was responsible for making their practice more 'demand-led' and this was driving them towards greater specialisation. As solicitors became more specialised in their areas of practice, so they were increasingly seeking out specialist knowledge amongst the advocates that they instructed. As a result, not only were advocates specialising in specific areas in the civil sphere, such as reparation law, but they were specialising within that field, for example in clinical negligence actions, disease cases, head injury accidents, pursuer or defender work, and so on.

3.40 Solicitors were the main consumers of services provided by members of the Faculty and made their 'purchase' decisions either on the basis of reputation, previous experience, or the recommendations of clerks to the stables. However, some clients, such as insurance companies, often played a major role in their decision-making. Advocates were responsive to the needs of solicitors because they were the source of their business. The interviews did not explore the issues of how those needs were perceived and the changes to which they were subject. Because many advocates were former solicitors, it was frequently the case that new recruits to the Faculty had already made a reputation for themselves in a particular area of the law and were therefore well known to instructing solicitors.

3.41 Many solicitors instructed a narrow range of advocates from a few stables on the basis of prior experience, often choosing different advocates for different parts of their case and at different levels of experience so that they could put together a team that fitted the case in a cost effective way that best advanced their client's position. Indeed, in the civil sphere the large bulk of advocates' work was instructed by a relatively small number of Edinburgh firms that had "the knowledge". Advocates in the criminal sphere, however, were instructed by a larger number of firms located across Scotland, though most instructions came from the Central Belt. At least two interviewees argued that the speed and competency with which an experienced solicitor could brief an advocate justified the restriction of direct access by members of the public (see chapter 7).

3.42 Clerks to the stable were also instrumental in recommending advocates according to the specification provided by solicitors. Indeed, clerks appeared to play an important gate keeping role in the market for advocacy services, particularly in relation to junior members of the Bar, negotiating availability in the civil and criminal spheres - as well as payment and level of seniority in the civil sphere. The role played by clerks and its impact on the market for advocacy services might merit further exploration.

(c) Stakeholders perspectives

The market for legal services : commercial interests

3.43 The operation of Scotland's legal markets did not appear to be an issue for concern on the part of the membership of CBI Scotland. The organisation raised several legal issues as matters of some importance to its membership, but those issues lay outwith the operation of Scotland's legal markets. The sheer volume of new legislation was reported to have an adverse impact upon Scottish business and to require businesses to have greater recourse to legal services. Secondly, the pace and requirements of tribunals and court based procedures did not appear to recognise the needs of business, especially the need of small businesses, for a speedy and affordable solution.

The market for publicly funded legal services : a view from the funder

3.44 Legal aid was going through a period of substantial change and reform. The Scottish Legal Aid Board was committed to working with the Scottish Executive, the profession and others to further develop and improve the delivery of legal aid in Scotland.

3.45 One of the most important developments was the introduction of quality assurance across all aspects of legal aid. A peer review system was now in place for solicitors undertaking civil and children's legal assistance. Peer review arrangements for solicitors and counsel providing criminal legal assistance would be introduced in 2006.

3.46 It was essential to ensure an adequate supply of good quality practitioners to provide legal aid services if access to justice was to be made available to those who could not themselves meet the cost of legal cases.

3.47 There was some concern that the number of solicitors providing legal aid services was in decline and that fewer of those coming into the profession might be exposed to this kind of work in future, not least as there had also been concern that there had been a decline in the number of traineeships in legal aid firms. Previous research by the Scottish Legal Aid Board showed a reduction in the numbers of solicitor outlets providing civil legal assistance services between 1997 and 2001. More recent analysis suggested that this trend had continued and indeed accelerated.

3.48 There had also been an overall reduction in the number of solicitors on the Board's Criminal Legal Assistance Register, which was introduced in 1998. The Board did not believe that the current level of provision in criminal legal assistance was problematic, but did have some concern that there might be problems in the medium term if more solicitors were not encouraged to enter this area of work. The Board also believed that the issues were slightly different for civil and criminal legal assistance.

3.49 The Board, the Law Society of Scotland and the Scottish Executive were in the process of commissioning research into the recruitment and retention of solicitors into publicly funded legal services, which would explore both the current situation and why and how young solicitors entered this area of work, identifying any barriers to doing so.

3.50 The Board also saw merit in a more mixed approach to the provision of publicly funded legal services using the private sector, employed solicitors and law centres. There also needed to be closer working between local government, the Not-for-Profit advice sector and the legally qualified sector to better co-ordinate legal advice and representation for clients and ensure better referral mechanisms between providers. The Board also believed there was a need for greater management and co-ordination of the supply and demand for publicly funded legal services.

3.51 The Board considered that the system of taxation, whilst valuable in helping protect funders and providers, needed review and reform of its transparency, effectiveness and consistency.

Law Society of Scotland : a view from the profession

3.52 The Law Society of Scotland provided some general information on recent developments in the various markets for legal services in Scotland.

3.53 The profession was going through a period of expansion in Scotland. While just over 200 solicitors were retiring every year, the profession was now admitting over 430 solicitors a year. However, the increasing complexity of the law had contributed to gaps in the supply of providers in some substantive areas of the law, such as employment and tax. The Law Society believed that trainees and young professionals were now particularly responsive to legal aid rates in making their career choices, in view of the increasing indebtedness of recent graduates, and that was responsible for concerns about the future supply of solicitors in criminal and family law. In some areas, such as welfare, debt, housing and consumer law, the weak buying power of consumers was responsible for shortages in provision.

3.54 Gaps in provision in rural areas were increasingly likely, with younger members of the profession reluctant to move out of the major conurbations. This was not thought to be a problem peculiar to Scotland. Nor was it thought to be a problem peculiar to the legal profession. Nevertheless, it was a matter of some concern and in rural areas was impacting on the markets for legal services in family and private law in particular. The problem was one of growing demand for specialisation in the law, as well as supply. As the law became increasingly complex, solicitors found it difficult to remain general practitioners. Rural areas, however, were unable to support specialist practitioners. The Law Society identified a need for networking between rural firms and central belt practitioners, to enable rural firms to refer their clients for specialist advice. However, the Law Society recognised that a change in culture might be required before some rural practitioners became comfortable about referring clients to city based consultants. The Law Society identified the growing disparities in rural and urban legal services provision to be one of the main problems facing Scotland. Indeed, it expressed concern that the Research Working Group into the Legal Services Markets in Scotland was too narrowly focused on competition issues. A forum was required where the more fundamental issue of what legal services were required across Scotland in the next 20 years could be discussed.

3.55 Significant growth was to be found in the larger firms in the urban conurbations while the fee income of 2-5 partner firms had remained relatively static.

3.56 The Law Society reported that competition between solicitors and the 'unregulated sector' in some markets, such as reparation, was a source of concern for the profession. There had been no attempt to regulate in these markets and the profession looked forward to a level playing field, whereby all providers would be regulated and required to have a complaints system in place, as well as indemnity insurance to provide clients with similar levels of protection to that provided by solicitors.

3.57 The Solicitors (Scotland) Act 1980 reserved three areas of practice for qualified solicitors : the preparation of conveyancing writs, executry documents, and documents pertaining to court action ³¹. In general only solicitors could provide those services for reward ³² and anyone other than a solicitor who took on the preparation of such documents for reward was breaking the law. However, when reference was made to the conveyancing or executry monopolies that solicitors ³³ enjoyed, there was very often a gross misunderstanding of solicitors' 'monopoly' in these areas. In executry services, for example, application for confirmation of executors was the only reserved area while all other services were unreserved. In conveyancing, it was often assumed that solicitors enjoyed a monopoly over many different aspects of the conveyancing process, such as the preparation of missives, security documents and registration. In fact, they were outwith solicitors' reserved areas. Paradoxically, pitfalls in conveyancing were now most commonly due to missives, which had increased enormously in their complexity over recent years and reflected a growth of law in these areas. Yet solicitors did not enjoy a monopoly over the preparation of missives. Hence, the notion of 'reserved areas' had provided an inflated sense of importance to what was actually reserved.

3.58 The Law Society of Scotland estimated that a very small proportion of the income earned by large law firms in Scotland derived from work over which the profession enjoyed a strict monopoly, though such work was still a substantial part of the income of smaller High Street law firms. The level of such work was decreasing year on year as a proportion of the profession's total income, while growth was in other areas of practice such as commercial law and intellectual property. However, in practice, consumers rarely sought the inputs of different professions in the course of residential conveyancing, or indeed in executry work. Some of the larger commercial firms were reported to be unwilling to engage in two of the three reserved areas. Nevertheless, the Law Society was clearly of the view that reserved areas should be maintained because of the professional certification, integrity and consumer protection that they demanded.

3.59 The Law Society reported growing movement of high and low value business between firms. So, for example, some of the larger commercial firms passed on private client work to smaller firms because they found it unprofitable, given their high overheads. Similarly, smaller firms might pass on their higher value business to larger firms if they found it necessary to buy top-up cover, which might prove economically unviable. While there was reported to be substantial networking in Scotland in that respect, the Law Society was of the view that more should be encouraged.

3.60 The extent to which legal markets were UK wide depended on the substantive area of the law. In the area of immigration, for example, English solicitors had been holding on to clients who had entered through English ports of entry, most of which were currently in the south of England. As ports of entry became liberalised however, the market was likely to become more local. The markets for family, and criminal law, as well as residential conveyancing, were mostly contained within Scotland. The markets for company and tax law were those which were most likely to extend outwith Scotland.

3.61 As expressed elsewhere, the Law Society of Scotland was strongly opposed to many aspects of the Clementi Report. The Society regarded the structure of its complaints procedures, insurance scheme and Guarantee Fund to be essentially collective measures, based on the profession at large, which provided protection for the public. It argued that Clementi's proposals could not be grafted on to that underlying structure. It argued that the exponential growth of the City of London was responsible for an enormous gulf between City firms and other firms, and that even Scotland's largest commercial firms could not be compared with City firms. It was of the view that Clementi "was backing the City horse, as opposed to the High Street horse", and its recommendations with regards to proprietorship might be understood in that context. In particular, the Law Society of Scotland expressed grave concerns for regulation of the profession where ownership was in the hands of those outwith the legal profession,

Citizens Advice Scotland: The perspective of an advisory and referral service

3.62 From the perspective of an organisation that offered advice in the areas of debt, welfare, housing, employment and immigration, the main problem identified by Citizens Advice Scotland ( CAS) was on the supply side of those legal markets in which it was involved. There was frequently no one to whom Citizens Advice Bureaux could refer their clients, especially in the areas of welfare and debt. That was particularly the case at the representation stage given the unavailability of legal aid for most tribunal work. Lack of representation at employment tribunals was also identified as a problem.

3.63 Despite the availability of legal aid Advice and Assistance, CAS reported a dearth of solicitors willing or able to give advice in the areas of welfare and debt. At the same time legal advice was thought to have become increasingly important, with more people going into debt in recent years and consumer credit reforms looming. The need for advice and assistance on immigration issues outside the major conurbations was also identified.

3.64 Even where supply was not in question, Citizens Advice Bureaux were reported to lack confidence as to the quality of their referrals. While not themselves consumers of the services, their task was to provide informed referrals to other legal service providers where necessary. They therefore felt themselves to be responsible for the quality of their referrals. They were frequently unable to provide informed referrals however because of a dearth of information as to the quality of identified legal service providers. CAS therefore looked to the Law Society to act as a central repository of information as to "who did what, and with what level of experience" and looked forward to quality assurance of publicly funded legal services providers from the Scottish Legal Aid Board. For the time being however, the absence of public quality measures was often responsible for the lack of confidence with which Citizens Advice Bureaux made referrals to legal service providers.

3.65 Because of professional confidentiality rules, Citizens Advice Bureaux did not receive feedback from the legal service providers to whom they had referred their clients. Once clients had been referred, their involvement had to come to an end. So, for example, Citizens Advice Bureaux received no information as to the services that their former clients had received once they had been referred on. Hence they could only evaluate the services received by their clients from their clients' accounts, which they could not always accept at face value. Because of the absence of feedback, Citizens Advice Bureaux could not be sure that they were referring on their clients appropriately.

Scottish Consumer Council : The Consumer's Perspective

3.66 Besides commenting on discrete legal markets (see above), the Scottish Consumer Council also raised points of general interest. It reported that public and voluntary sectors were now far more likely to change legal service providers than previously because they had been opened for review. Businesses, companies and lawyers, however, made substantial investments in the loyalty of their clients. The Scottish Consumer Council was of the view that though individuals were likely to change legal service provider more frequently than previously, they were nevertheless more subject to inertia -or loyalty - than the public or voluntary sectors.

(d) Conclusions

3.67 The exercise demonstrated the high degree of variability in the characteristics of the legal markets in Scotland. Some markets were identified as demonstrating 'high' levels of competition (financial services and tax, residential conveyancing, commercial) while others were assessed as having relatively 'low' levels of competition (family law, welfare, debt and housing and consumer). The other markets sat somewhere in between.

3.68 Further, within some markets there were distinct 'sub-markets' operating. In particular the market for employment law had distinct markets for employers and employees. There were key differences between these markets on sources of funding, levels of consumer information and consumer orientation. There were also geographical differences within markets across Scotland. For example there appeared to be marked variation in the availability of family law practitioners across Scotland. Further, the provision of housing, debt and consumer law specialists might be problematic in some areas.

3.69 Some concerns were raised about the future supply of legal practitioners in specific markets. In particular, there was an expected shortfall in family law practitioners, in practitioners engaged in welfare, debt and housing work, and in criminal legal aid work. That had emerged as a future problem in other exercises conducted as part of the Research Working Group's remit and was being addressed (in research terms) by work planned on the recruitment and retention of lawyers in Scotland.

3.70 The researchers involved in this exercise were also asked to highlight areas for further research work, specifically where there was a need for more information about the operation of specific markets to assess whether consumer protection could be improved. The research team recommended that further work on the market for wills, trusts and executries and employment law (particularly from the employee's perspective) should be priorities for future work.

(e) Tables showing characteristics of legal services markets in Scotland

* Indicates reservation of work to this provider **Purchase driven by rational economic enquiry (on price/quality) *** Where consumer of end service is referred by informed specialist
#This column indicates the source of funding for the provider, where consumer is indicated this implies a payment of fee other sources indicate a funding of a service not of a particular case.

*Under supply some areas, particularly rural
** Concerns over future recruitment