In a hugely embarrassing defeat, the Law Society has been found guilty of abusing its dominant position in the legal training market by compelling more than 3,000 law firms to buy its own training courses.
The Law Society established the Conveyancing Quality Scheme in 2010 in the wake of the financial crisis. Over the following years more and more mortgage lenders required firms to be CQS accredited if they wanted to be considered for appointment to the lenders' panels. The Law Society appointed itself as the sole vendor of CQS-accredited training courses, and by 2015 the majority of firms which dealt with conveyancing were customers. But in 2016 a company which also offered training courses, Socrates, sued. It argued that by hogging CQS accreditation, which had become effectively compulsory for conveyancing firms, the Law Society was dominant in the market and abusing its position. At the time a Law Society spokeswoman told RollOnFriday the case was "wholly without merit”.
But the Law Society's performance at the Competition Appeals Tribunal revealed that its PR team was just projecting. During the trial, its claim that other courses would be too hard or costly to monitor was ruled "scant and unpersuasive". Its suggestion that clients deserted Socrates because they weren't happy with the service was dismissed as an attempt to "belittle the evidence". And in a failure the court called "striking", the Law Society, represented by Norton Rose Fulbright, was unable to find a single witness to testify that it was not dominant.
The Law Society also claimed that its training was loss-making, but in a toe-curling admission on the final day of the hearing its counsel admitted that the Law Society's estimates of its CQS revenue had been up to 100% too low. She said that her client may have been raking in as much as £1.5m a year, but could not give an accurate figure because Law Society staff had used the wrong codes to record income. She revealed that there was "about £500,000 of unallocated training income" sloshing around its bank account. In its ruling, the CAT judges called the Law Society's attitude towards the court's orders for accurate figures "wholly unsatisfactory". The panel of judges called the Law Society's failure to disclose other key documents until after the trial had finished “deeply unimpressive”.
Socrates director Bernard George said, “It was obvious what the Law Society was doing was not just illegal, but also desperately unfair to us and to law firms". He said, "it has been a long and gruelling battle but we felt we had no choice despite having to take on a powerful opponent, represented by a QC and one of the biggest law firms in the world".
Law Society president Robert Bourns said, "For the vast bulk of the time CQS training has been available it has been compliant with competition rules. I am certain that in setting CQS up, the Law Society acted in good faith and in the public interest". He said, "CQS has never been about profit".
Tip Off ROF
The Law Society established the Conveyancing Quality Scheme in 2010 in the wake of the financial crisis. Over the following years more and more mortgage lenders required firms to be CQS accredited if they wanted to be considered for appointment to the lenders' panels. The Law Society appointed itself as the sole vendor of CQS-accredited training courses, and by 2015 the majority of firms which dealt with conveyancing were customers. But in 2016 a company which also offered training courses, Socrates, sued. It argued that by hogging CQS accreditation, which had become effectively compulsory for conveyancing firms, the Law Society was dominant in the market and abusing its position. At the time a Law Society spokeswoman told RollOnFriday the case was "wholly without merit”.
Socrates' website hints at the result |
But the Law Society's performance at the Competition Appeals Tribunal revealed that its PR team was just projecting. During the trial, its claim that other courses would be too hard or costly to monitor was ruled "scant and unpersuasive". Its suggestion that clients deserted Socrates because they weren't happy with the service was dismissed as an attempt to "belittle the evidence". And in a failure the court called "striking", the Law Society, represented by Norton Rose Fulbright, was unable to find a single witness to testify that it was not dominant.
The Law Society also claimed that its training was loss-making, but in a toe-curling admission on the final day of the hearing its counsel admitted that the Law Society's estimates of its CQS revenue had been up to 100% too low. She said that her client may have been raking in as much as £1.5m a year, but could not give an accurate figure because Law Society staff had used the wrong codes to record income. She revealed that there was "about £500,000 of unallocated training income" sloshing around its bank account. In its ruling, the CAT judges called the Law Society's attitude towards the court's orders for accurate figures "wholly unsatisfactory". The panel of judges called the Law Society's failure to disclose other key documents until after the trial had finished “deeply unimpressive”.
Socrates director Bernard George said, “It was obvious what the Law Society was doing was not just illegal, but also desperately unfair to us and to law firms". He said, "it has been a long and gruelling battle but we felt we had no choice despite having to take on a powerful opponent, represented by a QC and one of the biggest law firms in the world".
Law Society president Robert Bourns said, "For the vast bulk of the time CQS training has been available it has been compliant with competition rules. I am certain that in setting CQS up, the Law Society acted in good faith and in the public interest". He said, "CQS has never been about profit".
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*rofl*
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And it really is worth repeating what the president of the Tribunal had to say of the way in which the Law Society conducted its case and the way in which its evidence would have mislead the Tribunal had the evidence not been challenged by Socrates:
THE PRESIDENT: I have to say, from any responsible company I would regard this as a pretty shoddy product and I would expect The Law Society, the body that represents the solicitors of England and Wales, to operate in what it produces for the Court to a high standard.
MS. SMITH: I can only apologise for that, but I think the main source of the problem was the very diffuse way in which this product is managed across the organisation.
THE PRESIDENT: I understand that, but it could have been explained, as you have very clearly explained it, so one could understand what has been done. I am not saying that they necessarily should have had better record keeping, but they should not have presented what they have in a misleading way.
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