Jacksons - Bank invasion of legal services

Dec 11 2006 By Simon Catterall, The Journal

By Simon Catterall, head of regulatory, liquor licensing, environment and safety, with Jacksons Commercial and Private Law of Stockton.

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It used to be said that people who lived through revolutions did not realise it at the time. The incensed mob that stormed the Bastille on July 14, 1789, had no concept they were participating in the main event of an insurgency that would topple 1,000 years of monarchy.

When the Belgium engineer Lenoir patented his 1860 internal combustion engine he could not foresee that within a century his practical power unit would render the horse obsolete and clog the world's roads with more than 400 million cars.

The 1773 Boston Tea Party, Baird's 1925 invention of TV - "a tupenny ha'penny tube" quipped Churchill - and Elvis' 1956 vocals on Hound Dog are other examples where those involved had little concept of what they were letting out of the box when they opened the lid.

Today there is revolution everywhere as the pace of commerce jumps into fast-forward and makes its way blind and unstoppable towards some pre-appointed corporate pinnacle.

Now, just when we thought we had seen it all, the latest developments in communications are set to consolidate markets even further while the internet, that genie of the button bestrides an equinox of change which having revolutionised the manner in which we conduct business brings ever closer the uncomfortable realisation of Bob Geldof's absurd silicon chip prophecy.

The latest knock on our own door came with the arrival of the financial institutions off the shores of the private client market, no doubt blown there by a pending Legal Services Bill that will permit the outside ownership of law firms from 2009.

Banks and insurers have long coveted the client base and cash flow of solicitors'practices and will embrace this opportunity of mobilising their brand and financial clout to invade the borders of domestic conveyancing, probate and personal injury.

And - at first sight anyway - why not when the latest research suggests today's consumers are increasingly receptive to purchase through email, telephone or internet as opposed to a face-to-face meeting?

The problem for the institutions is that while they might achieve modest savings on typical lawyer's bills, it is clear that responsibility for delivering any volume legal service will repose with paralegals and call centres raising the concern that irrespective of any notional supervision by qualified staff, these operators will be of uncertain quality and likely to be just as focused in promoting their employer's various financial products as offering solutions to legal problems.

The Law Society goes further, citing cases of "woeful service and dreadful advice" that have occurred following reliance on non-qualified advisers and warn head-to-head contact with a solicitor remains essential for complex or sensitive issues.

But there it is, within the next three years an assortment of supermarkets, banks, insurers and service industries will enter the fray and compete with solicitors' firms and each other for the mass provision of legal services.

The first whiff of cordite came a couple of weeks ago when one of the financial institutions launched its own legal service for members willing to pay an annual fee for limited telephone and internet access to a modest array of facilities. The thin edge of the wedge?

Unquestionably, for while the company involved insist they have `no plans' to storm solicitors' firms, this is not the case with the AA and Co-op who were first to declare an intention to the contrary with other major supermarkets and the banks expected to follow suit.

How will the forthcoming changes affect the conventional solicitors' practice? We'll see.

Many institutions burnt fingers following a poorly thought out hit on estate agents in the 1990s where the intention - to promote financial services - was the same as here.

They have more financial and marketing muscle than solicitors do, of course, and now equipped with the technology and the Legal Services Bill to guide them, hopes will be high of making an impact.

Against this however they will be new to the market and the vast majority of solicitors' firms, initially at least, will enjoy a marked advantage in levels of expertise, experience and professional service.

Jacksons, our predominantly commercial firm, has been in existence for more 130 years, in which time we have navigated some choppy waters including two world wars and a general strike.

The Law Society rightly warns complacency in the profession will be a fast road to ruin but then we never operated from a Bastille.

Far from it.

We already enjoy reciprocal relationships with some institutions and regard the opening of the sluice gates to the remainder as a tremendous opportunity for the firm to benefit from healthy competition and evolve further so we are able to provide an even better service to our clients.

Are we going to the Boston tea party?

Bring it on.

• Simon Catterall is Committee Member and PRO for Tees Valley Law Society.