Ordinary consumers increasingly cannot afford lawyer fees and do not even contemplate seeking legal advice, one of the profession’s leading regulators warned on Friday.

Recent research from the Solicitors Regulation Authority showed that less than half of those surveyed anticipated that they could afford to instruct a lawyer.

“It is the biggest problem facing the legal profession,” said Paul Philip (pictured), the authority’s chief executive, who did not shy from taking some responsibility. “In part, this is a failure of regulation,” he added.

Philip prescribed “more competition” as the cure for the public’s fear of high costs from taking legal advice. “More competition, and more information for consumers is what is required,” he said.

Philip was speaking at a conference in London that represented the authority’s latest bid to raise its profile and to ramp up its campaign for full independence from the Law Society, the body that represents 130,000 solicitors in England and Wales. He said that the vast majority of consumers had the perception that the SRA was “the Law Society in disguise”. Some 11,000 complaints from clients are received about solicitors annually, but, said Philip, “as soon as those complainants find out that the SRA is part of the same organisation as the Law Society they have a crisis of confidence in the system”.

Provisions in the Legal Services Act 2007 gave the regulator functional independence from the society; however, it is still technically part of the same body. Philip has spent much of the past year lobbying for full separation. He said last week that the current situation resulted in complainants generally perceiving that “an old boys’ club” was operating.

A leading pollster told the conference – which was titled Question of Trust – that public confidence in lawyers fell in the middle of the spectrum. When asked whether they considered lawyers to be trustworthy, Ben Page, the chief executive of Ipsos Mori, said that 29 per cent said “no” compared with 27 per cent who replied “yes”. The remainder were ambivalent.

However, Page provided the SRA with a boost, returning research showing that 82 per cent of the public backed the idea of a completely independent regulator for solicitors.

Row over insurance cover in liberalised regulation regime

Law firms could be left in an insurance gap and clients out of pocket in cases of negligence if plans to drop barriers to lawyers switching regulators are given the green light, the solicitors’ trade union said on Friday.

In yet another round of sniping in the war of words between the Law Society and the Solicitors Regulation Authority, the arcane role of run-off insurance cover for law firms was put in the spotlight.

The SRA has proposed that lawyers should be allowed as much flexibility as possible in choosing which authorised regulator should oversee them. The Law Society has said that it supports in principle the authority’s aim “to encourage a competitive market by removing unnecessary barriers”.

However, the organisation’s chief executive, Catherine Dixon, warned that switching regulator “must not be at the expense of client protection. We are concerned that the SRA’s proposals could leave existing and past clients of firms that switch regulator without appropriate cover.” Dixon added: “We cannot be confident that other regulators’ professional indemnity insurance requirements can appropriately accommodate an unknown number of solicitor firms coming under their umbrella.

“We will therefore be requesting that any changes to the regulatory framework which enables solicitors to change regulator ensures that PII arrangements protect our clients’ interests.”

An SRA spokesman said that the authority had raised client protection issues in its recent consultation on proposals for switching regulators. “Our aim as always is to strike the right balance on removing unnecessary restrictions on firms without reducing the protections in place for users of legal services.”

Businesses and individuals sent a record number of disputes to be heard by the EU’s Court of Justice last year, figures released today show.

The challenges before the Luxembourg court – which will be closed as a remedy to UK business when Britain leaves the union – rose by 20 per cent to 423 last year.
The figures, analysed by Thomson Reuters, the legal information provider, indicate businesses being more willing to use the European court to resolve commercial issues. At present the rulings affect all UK businesses, whether the cases come from the UK or other countries.

The analysts note significant rises in the number of competition cases, up 74 per cent to 40 cases in 2015, and intellectual and industrial property, up 87 per cent to 88 cases.

Laurence Gormley, professor of European law at the University of Groningen in the Netherlands and a member of the editorial board for Thomson Reuters’ European Law Review, said: “The European Commission has been going through a more active period in terms of competition investigations, creating more cases for the ECJ.”

He said that one area where disputes were likely was the internet sector, "where there is a strong tendency for markets to develop into monopolies. Google and Amazon are just two players on which the EC has set its sights.”

Another likely growth area was public procurement, which had 26 cases before the court last year compared with none in 2010.

Financial loss at law firms from cyberfraud has rocketed by 40 per cent over the last year, a study published today reveals.

In the past six months alone, researchers found that UK law firm losses to online criminals totalled £2.53 million, up from £1.81 million in the same period a year earlier.

Much of that increase is attributed to a sharp rise in fraudsters attempting to trick law firms into transferring funds to them by hacking the email accounts of the practices’ employees, or more commonly, their clients.

After gaining access to accounts through “phishing” emails, the fraudsters email an employee at a law firm asking for a transfer of funds to a bank account. If the employee transfers this money, it is generally withdrawn from the fraudulent account almost immediately, making it virtually impossible to trace or recover.

“Every law firm needs to ensure that all its staff are trained to be vigilant, and treat with suspicion any request for a transfer of funds,” said Andy Harris, a director at Hazlewoods, the accountancy practice that commissioned the research. “If a client requests via email that money be transferred, it’s critical that the firm verify the request over the phone or in person.”

According to the analysts, some frauds involved firms’ own email accounts being hacked. Harris said that meant that “all employees need to follow some basic data security rules: don’t use easily-guessed passwords, update your antivirus software on a regular basis, and don’t log into your email account when you’re on public wifi. All staff should also be given training in identifying suspected phishing emails”.

Harris pointed out that cybercrime was particularly hard on smaller law firms. “Replacing what can be hundreds of thousands of pounds of client funds from their own accounts might be impossible,” he said.

Judges have been warned about downloading films or TV programmes on their computers at work after three of them “severely hampered” their court wi-fi and brought it almost to a standstill.

Their activities – no doubt in their lunch hour or after court to relieve the daily diet of murder, sex offence and assault trials – prompted complaints in the court building about the poor wi-fi service. An investigation was launched and, judicial authorities say, downloading was discovered to be the reason.

As a result a letter was sent to some 2,000 full-time judges in England and Wales from Lord Justice Fulford, the senior presiding judge. They are being urged not to download material from iTunes, update the software on their personal devices or stream material from Spotify, Netflix, BBC iPlayer, YouTube or similar websites. In the letter, Lord Justice Fulford says downloading “place[s] very considerable demands on the service, presently constituting over one third of the use of the system”.

Court resources have been "dramatically reduced" year after year, a former lord chief justice told peers last week.

Lord Woolf – who was the senior judge in England and Wales from 2000 to 2005 – told the House of Lords that he had recently taken the view that a lack of funding had created “an alarming picture across the system”.

The independent crossbencher said that there were isolated exceptions but the generality was "uniformly bleak". The whole of the courts and tribunals system needed "profound modernisation" to help tackle a serious backlog in cases, Lord Woolf said.

During the same session at the House of Lords, the former president of the Supreme Court, Lord Phillips of Worth Matravers, criticised the "under-resourcing" of the justice system and warned that the public sector was "starved of resources across the board".

Calling for radical measures, Lord Phillips said that decent prison conditions would never be provided until the number of prisoners was reduced. He also warned that the prosecution of historic sex offences was "overburdening both the criminal justice system and the prisons".

Only hours before he resigned as a justice minister, Lord Faulks said that the cost of justice was high but legal aid remained "generous". The Prison and Courts Reform Bill would include "vast numbers of changes" to the courts system both criminal and civil, he claimed.

Lord Faulks acknowledged there was a "huge mountain" for the new lord chancellor, Liz Truss, to climb in providing the sort of courts service needed to ensure the "rule of law flourishes".

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