+ All Categories
Home > Presentations & Public Speaking > Disruptive innovations in legal services - James Mancini - OECD Competition Division – June 2016...

Disruptive innovations in legal services - James Mancini - OECD Competition Division – June 2016...

Date post: 10-Apr-2017
Category:
Upload: oecd-directorate-for-financial-and-enterprise-affairs
View: 2,811 times
Download: 0 times
Share this document with a friend
15
Disruptive innovation in legal services Presentation of the OECD Background paper James Mancini OECD Competition Division Working Party No. 2 on Competition and Regulation 13 June 2016 Roundtable
Transcript
Page 1: Disruptive innovations in legal services - James Mancini - OECD Competition Division – June 2016 discussion

Disruptive innovation in legal services

Presentation of the OECD Background paperJames ManciniOECD Competition Division

Working Party No. 2 on Competition and Regulation13 June 2016 Roundtable

Page 2: Disruptive innovations in legal services - James Mancini - OECD Competition Division – June 2016 discussion

The Background note together will all materials related to the discussion can be found at:

www.oecd.org/daf/competition/disruptive-innovations-in-legal-services.htm

2

Page 3: Disruptive innovations in legal services - James Mancini - OECD Competition Division – June 2016 discussion

Despite traditional resistance to change in legal professions, pro-competitive “disruptive” innovations are beginning to transform legal services and the manner in which they are delivered.

• Online service delivery is allowing both legal professionals and unlicensed providers to serve clients remotely;

• Ranking and review information regarding legal professionals is allowing clients to assess the quality of professionals before retaining them – a previously difficult proposition;

• The unbundling of services, is transforming the distribution of tasks in legal services and ending traditional “black box” models of service delivery; and

• Automation is changing the nature, and volume, of tasks that legal professionals perform.

Abstract

3

Page 4: Disruptive innovations in legal services - James Mancini - OECD Competition Division – June 2016 discussion

As a result of these innovations and the new competition they bring, the regulatory framework in which legal professionals operate is under pressure. The exclusivity enjoyed by legal professionals, and the precise scope of activities to which it applies, is becoming unclear as unlicensed entrants offer a widening range of services. Restrictions on the quantity of professionals that can operate in specified regions are being questioned at a time where the services they provide could easily be made available online. Further, legal professional self-regulators may be unable, or ill-suited, to identify accommodations that permit innovative entrants to serve consumers.

Competition authorities, which may have limited experience in legal services markets given that enforcement issues have been rare, should be aware of the challenges described above. Authorities can play a role in advocating for regulatory systems that reflect current market realities and ensure market access for pro-competitive disruptive innovations. Such a role could include advising policymakers who may be seeking to balance the benefits of competition with other policy objectives such as consumer protection. This process will require consideration of the objectives of legal professional regulations, particularly those addressing market failure, as well as the current design of those regulations.

Abstract

4

Page 5: Disruptive innovations in legal services - James Mancini - OECD Competition Division – June 2016 discussion

Defining disruptive innovation

• New products, processes or business models that redefine a market and displace incumbent firms.

• Come from outside a market’s value network

Page 6: Disruptive innovations in legal services - James Mancini - OECD Competition Division – June 2016 discussion

LEGAL SERVICES REGULATIONS: RATIONALE

AND SCOPE

Page 7: Disruptive innovations in legal services - James Mancini - OECD Competition Division – June 2016 discussion

Why are legal professions regulated?

Information asymmetries

• Inability to assess quality (credence/experience good)

• Use of alternative indicators of quality• Moral hazard

Externalities• Imposition of additional costs due to poor

quality• Positive externalities from good quality

Other policy objectives

• Regional fairness• Accessibility of services at low incomes• Legal principles (attorney-client privilege)

Page 8: Disruptive innovations in legal services - James Mancini - OECD Competition Division – June 2016 discussion

The scope of regulatory restrictions

• Qualitative entry • Quantitative entry• Fees• Advertising• Partnerships, ownership,

management• Legal aid

Many are enforced through self-regulation (i.e. bar associations)

Page 9: Disruptive innovations in legal services - James Mancini - OECD Competition Division – June 2016 discussion

RECENT DISRUPTIVE INNOVATIONS IN LEGAL

SERVICES

Page 10: Disruptive innovations in legal services - James Mancini - OECD Competition Division – June 2016 discussion

No shortage of dramatic predictions…

Page 11: Disruptive innovations in legal services - James Mancini - OECD Competition Division – June 2016 discussion

What is underlying these bold predictions?

Communication technology

A few broad trends (not all of them new)…

Accessibility of knowledge regarding legal needs and services

Fee and affordability pressure

Page 12: Disruptive innovations in legal services - James Mancini - OECD Competition Division – June 2016 discussion

These trends have given rise to:

Online service delivery

Professional quality data via rankings and reviews

Automation of tasks or

entire services

Service unbundling/ end of the

“black box”

Page 13: Disruptive innovations in legal services - James Mancini - OECD Competition Division – June 2016 discussion

IMPLICATIONS OF DISRUPTIVE INNOVATION

FOR LEGAL SERVICES REGULATIONS

Page 14: Disruptive innovations in legal services - James Mancini - OECD Competition Division – June 2016 discussion

Does the rationale still apply?

Information asymmetries

• Inability to assess quality (credence/experience good)

• Use of alternative indicators of quality• Moral hazard

Externalities

• Imposition of additional costs due to poor quality

• Positive externalities from good quality

Other policy objectives

• Regional fairness• Accessibility of services at low incomes• Legal principles (attorney-client privilege)

New relationship due to online research, reviews, new competition,

commoditisation

Still an open question – will reputation and consumer awareness mitigate these

risks? Will new problems arise?

Innovation could be addressing some of these concerns

Changes to the market may mean fewer, or different, market failures

Page 15: Disruptive innovations in legal services - James Mancini - OECD Competition Division – June 2016 discussion

Implications

The current regulatory framework rests on several foundations which may be under stress

ExclusivityQuantitativ

e entry restrictions

Qualitative entry

restrictionsSelf-

regulation

Consumer protection and other

regulationsIs it

necessary, desirable or enforceable in current

forms?

Are they still relevant?

Should they be adapted to fit online

service delivery models?

Are conflicts of interest emerging?

Have any new

consumer protection

issues arisen?

What is its precise scope?

Are they limiting

innovation?

Can para-professional

s play an expanded

role?

Is there a need for further

oversight?

Can other policy

objectives be achieved without the status quo?


Recommended