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The CLC’s Annual Regulatory Return asks all regulated entities that were active for the whole of the most recent professional indemnity insurance year to provide a range of information about the firm’s operations and expectations. This information is gathered to support the CLC’s work to maintain standards, protect consumers and to support innovation and competition in the sector.
In 2018, the survey was again carried out for the CLC by independent research agency IFF.
CLC’s commentary and response to findings of the 2018 Annual Regulatory Return
Adapting to changing circumstances
While there is no significant change in the pattern of work undertaken by CLC-regulated entities since the last ARR, there is some change in sentiment about the prospects for growth of business in the coming year compared to last year, with fewer firms expecting growth. This seems to reflect general uncertainty in the wider economy at the moment.
However, most firms expect the prices they charge for their services to stay the same in the coming year and roughly one-third were confident that they would increase their prices. This seems to contradict fears expressed by some firms (not as part of this ARR exercise) that greater transparency about costs and services could drive a ‘race to the bottom’.
The CLC monitors the financial health of the firms it regulates and this will be especially important as the wider economy reacts to the final form ofBrexit and the legal services market implements the new transparency requirements. We always encourage firms to plan carefully and ensure that they are prepared to respond effectively to changing market conditions.
Protecting their businesses and their clients
The intertwined issues of fraud, money laundering and cybercrime were perceived to be the biggest risks for the coming twelve months. The vast majority of firms reported that they have enhanced or tightened measures to protect themselves and their clients from fraud in the wake of some high-profile cases. These are viewed as a significantly bigger direct risk than Brexit, a downturn in the property market or increased competition for work. The Dreamvar case continues to have repercussions with the vast majority of practices reporting having changed their procedures in some way.
We will continue to provide firms with up to date insight into the evolving risks of fraud, money-laundering and cybercrime and provide further resources on our website and through roadshows and webinars.
Diversity and Inclusion
The gap between the proportion of all staff in CLC regulated entities who are women and the proportion of women in managerial roles persists. Women are not progressing to managerial roles in proportion to their presence in the wider workforce.
Only a little over half of firms monitor the diversity characteristics of their workforce and of those that do, 84% said that they took no formal measures to promote equality in their firms.
In 2019 we intend to undertake a full diversity monitoring survey of all CLC-regulated firms and report in its findings. We will then promote training and other measures that firms can undertake to address any issues identified from that survey.
Better informed choice for consumers
The percentage of firms that offer an online estimate generator for potential clients has not changed since last year (29%). Encouragingly, though, firms are significantly more likely to offer pricing information on their website now (20%) of all firms than they were in 2016/17 (12%). The percentage of firms with a quote generator on their websites is unchanged, at 29%
47% reported that they use Google Reviews or Trustpilot to seek and promote feedback from clients.
The information gathered in this ARR provides a useful baseline against which to measure the impact of new rules and guidance that we and the other legal sector regulators have introduced to help consumers make better informed choices of lawyer.
Perceptions of the CLC
Views expressed by those in CLC-regulated firms completing the ARR this year chime closely with findings of the 2016 Stakeholder Perceptions report on the CLC, as we have maintained the high levels of service to help firms achieve compliance while finding innovative new ways to meet changing consumer expectation. However, there is a slight drop in the percentage citing the tailored rule book as a significant advantage.
We will continue to engage with innovative firms, fintech and proptech providers to drive improvement in the home buying and selling process. We aim to maintain high standards of consumer protection while supporting innovation and preparing for the transformative change that we expect to flow from new applications of technology and more easily accessible data. We will be reviewing our rule book to ensure that it is tailored as closely as possible to changing models of practice.
You can view the ARR report here.