Pile 'em high, sue 'em cheap

Supermarkets of the future could soon be able to sell their customers legal services, in the same way that they already offer banking facilities. Proposals contained in a far-reaching document drawn up by the legal profession set out the arguments for lifting the current ban on businesses selling law directly to the public.

With the Government breathing down its neck, the Law Society has now actually dared to think the unthinkable and tackle its restrictive practices head on. A free market for the sale of law, the authors of a Chancery Lane discussion document argue, could unleash the huge retail resources of businesses "such as Virgin or Abbey National".

Supporters of the plan also believe the future of the profession would be best protected if they are allowed to move out of their high-street practices and into supermarkets, banks and other businesses. The blueprint document states: "Increasingly, high-street firms express concern that they are unable to operate profitably or to make proper investment, primarily in respect of staff and technology."

A relaxation of the rules that prevent solicitors in employed businesses from advising the public directly could stimulate a massive re-investment in the law and the new legal service companies, in which lawyers would have a secure career structure. The public would then have the option of choosing between a business like Virgin and Tesco Lawyers and a traditional high-street solicitors' practice.

"By and large, retailers, insurers, banks and building societies as groups meet the expectations of their customers. Their names are known to and trusted by their customers," says the paper. "If we believe in professional standards, we ought not to be afraid to put our belief to the test by giving the consumer the choice."

Janet Paraskeva, chief executive of the Law Society, is more cautious about the possible ways forward. She says: "The world has changed since the current regulations were drafted. It is more market-orientated, and consumers are more demanding. The professions are reviewing the way in which they operate and the Law Society is keen to ensure that rules do not necessarily get in the way of solicitors' ability to service the public."

Ed Nally, chairman of the working party which drew up the report on employed solicitors, says there is a "spirit of deregulation" in the Law Society. "The question is, do we go with it lightly or go the whole hog?"

Nevertheless, there is little doubt that the proposals have also been prompted by the Office of Fair Trading's own investigation into restrictive practices in the legal profession, which argued for greater relaxation in the sale of legal services. The Director General reported last year and the Government is preparing to launch its own consultation paper, which will look at a number of OFT's recommendations for improving competition in the professions.

Around 20,000 solicitors already work exclusively for businesses advising them on the law. The trend is for this number to increase. Many of the "employed solicitors" believe that the existing rules serve the high-street solicitor but do not work to their advantage.

However, Mr Nally and senior Law Society officers acknowledge that the creation of a truly free market place for legal services would not only threaten the integrity of the solicitors' profession but also present serious regulatory difficulties. "Who would regulate 'mega-company' if it chose to offer legal services?"

To take the plans to their full conclusion, an unstructured relaxation of the rules might eventually lead to supermarkets selling legal advice to shoplifters. Mr Nally says that this kind of scenario highlights the serious conflicts of interest and social justice issues, which need to be taken into account. "After all, supermarkets don't like shoplifters, so it would not be in the interest of the supermarket to offer the best possible legal advice to someone caught stealing on its premises," he said. "The independence of the solicitors' profession is much cherished and should not be given up lightly. And the issue of conflict of interest is the most compelling reason for retaining the restriction."

The authors of the report make comparisons with America's free market place, which has led to four times as many lawyers per capita than in this country but a much greater public access to the courts.

Interest among the UK's retail and financial sectors for offering customers legal services is untested, but Mr Nally believes it will be those companies that already provide other professional services who will be able to capitalise on any relaxation of the solicitors' rules. Tesco and Sainsbury's offer customers personal banking facilities, while a number of internet companies are already providing DIY wills and divorces. Tesco has said that it is interested in hearing more about the idea.

In the past few years, claims companies for personal injury cases have taken clients from the high street and processed their claims by referring them to their panels of solicitors. But Mr Nally believes the temptation to cherry pick the most profitable services at the expense of social welfare legal advice would need to be addressed. "If a company chose to stake its claim on the high street by buying out an existing high-street practice, it may well be willing to include, for the time being, all areas of work currently offered... but some years down the line it might seek to off-load unprofitable service," says the report.

Nevertheless, there is a demand for niche law firms, and some practices' firms are voting with their businesses. Last year, the London-based media law firm Statham Gill Davies, which advises recording artists such as Radiohead and Oasis, sold up to accountants Tenon, and became millionaires overnight.

The proposals, which will be voted on by the Law Society council in March, include three possible ways forward, the move towards total deregulation being the most radical. The other two options are to maintain the status quo or to adopt a "progressive professional approach". The Law Society believes that the conservative approach is unrealistic, while the progressive option of implementing gradual deregulation on a rule-by-rule basis is the more attainable one.

The paper argues that gradual deregulation would allow the "Society to keep the bulk of the profession on side" while recognising "changing consumer needs". That is not to say that overnight deregulation would not be attractive to some. A move towards a free market for legal services might make lawyers popular with the public. The paper states: "The traditional generic unpopularity of solicitors derives from the public's perception that for certain work it has no alternative but to refer to solicitors, and solicitors exploit the market by overcharging."

The Law Society also notes that by advocating a legal free-for-all they would be stealing the Government's thunder. "A response of the kind advocated in this paper would wrong-foot the Government. It would be faced with the choice of rejecting the response outright, leaving the Law Society on the moral high ground..."

But there is a danger that they might be turkeys voting for Christmas, on the verge of professional suicide. The authors of the proposals recognise this. The paper says that if the profession were to choose the free market option, it would be "unlikely that the high street could survive in its current shape".