The Competition Appeal Tribunal has ruled that the Law Society of England and Wales abused its dominant position by ordering over 3000 law firms in the Conveyancing Quality Scheme (CQS) to buy training from itself.
Virtually all law firms which handle conveyancing are members of the CQS, because mortgage lenders insist on it. The Law Society makes it a condition of CQS membership that firms buy training from itself. We got involved when the Law Society started to compel firms to buy its own online anti-money laundering training, rather than the online training Socrates offers on the same subject. Firms started to call us and cancel their subscriptions. Some of them were pretty cross. One said “This is obviously illegal, but I don’t suppose there is anything you can do.” We got in touch with the Law Society in January 2016. They told us they had legal advice that what they were doing was legal. But they refused to show it to us.
We issued proceedings in April 2016, leading to a four-day trial in November. Former President of the Law Society Jonathan Smithers gave evidence for the Law Society by videolink from Australia, where he now works. Judgment was given on Friday 26 May.
The Law Society’s case was that it was not dominant, or that if it was dominant then making firms buy its training was not an abuse, or that if it was an abuse then it was justified in the public interest. They also claimed that the CQS training was loss-making, despite evidence that its income was over £1.5m a year.
The Tribunal rejected these arguments.
Socrates was and is concerned about the Law Society’s conflict of interests. With the CQS it is acting as a regulator telling firms what training they needed. As such it should act in the public interest. But at the same time it has set out to make money by selling training on the back of the CQS. These two roles are not consistent.
The Tribunal has ordered that in future the Law Society must operate “in a non-discriminatory and transparent manner” (para 172 of the judgment).
We were represented in the Tribunal by Philip Woolfe of Monckton Chambers. Stephen Tupper of TupperS Law, a specialist competition law firm also provided advice. We are eternally grateful for the work and dedication of Philip and Stephen.
We were also very grateful for all the messages of support we have received from solicitors during this long and gruelling battle.
The Law Society was represented by Norton Rose Fulbright and Kassie Smith QC.
The Tribunal will next assess damages. Socrates’ costs are over £300,000. In June 2016 the Law Society said it was planning to spend £637,000 defending the case to this point.
Bernard George, Director of Socrates said after today’s hearing “While I am pretty disappointed with the way the Law Society has behaved I have no ill-will towards them. I have been a member for almost 40 years. I have served on Law Society committees and edited a Law Society publication. I hope this case will prompt some reflection at the Law Society, including a reappraisal of the structure and objectives of the CQS, and of the Society’s governance.”