Legal advice would become cheaper, said the Lord Chancellor

Lord Falconer is revealing plans for a new White Paper that would allow commercial businesses to own and run legal firms, dubbed the "Tesco law".

The legal profession would also lose the power to investigate complaints against it, in favour of a single new independent body.

A review last year said legal services should become more consumer friendly.

The Law Society - which regulates solicitors in England and Wales - has welcomed the plans as a "better deal for consumers" but the Bar Council, for barristers, has been critical.

They have warned of the risks of allowing non-lawyers to own legal practices, and said private capital could jeopardise the independence of law firms and the interests of justice.

A single complaints body means consistent, fair and professional handling of cases for all complainants Lord Falconer

Last year's inquiry, headed by former deputy governor of the Bank of England Sir David Clementi, found that many of the "inflexible" practices under which lawyers work could not be justified as being in the public interest.

The review was ordered by Lord Falconer, who described the current set-up as "outdated, inflexible and over-complex".

Sir David also said law firms needed to reduce their fees.

BBC correspondent Danny Shaw said Lord Falconer had accepted one way to do this was to allow businesses such as supermarkets and insurance companies to invest in, own and manage legal services.

External investment is not currently permitted in law firms.

'More choice'

On the "Tesco law" proposals Lord Falconer said the present rules were "restrictive".

"It hampers the development of the practice and discourages innovation," he said.

He questioned why innovation should not be permitted, as long as proper safeguards were in place, adding that consumers wanted more choice.

The system was also inflexible because it prevented lawyers working in partnership with non-lawyers, such as accountants or financial advisers, said the Lord Chancellor.

"Wouldn't it be easier if the consumer could find these sorts of services under one roof?"

'Consistent and fair'

On regulation Lord Falconer said he would propose the creation of a new regulator to deal with consumers' complaints about solicitors, barristers and other legal professionals.

Complaint are currently heard by the Law Society and Bar Council.

"A single complaints body means consistent, fair and professional handling of cases for all complainants," said Lord Falconer.

He said he rejected the view that centralisation will lead to a slower service.

Under the new law the Law Society and Bar Council would face being derecognised by a new Legal Services Board if they failed in their remaining regulatory duties.