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September 19th, 2018

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Law firms must prepare for the introduction of new transparency rules in December

Risk and compliance advisory business Legal Eye is advising law firms to gear up for the introduction of new transparency requirements around price and quality of service.

Legal Eye MD Paul Saunders said: “Now that the Legal Services Board (LSB) has granted the Solicitors Regulation Authority’s (SRA) application to introduce new transparency rules in full with a deadline of 1 December; law firms need to be alive to forthcoming guidance from the SRA and the Law Society as to what information they will need to make available on their websites and how prices should be presented.”

The rules require firms to publish more information on their websites about price, service and regulatory matters and will come in to force in December 2018.

The SRA has said it will issue guidance on how to comply with the requirements in the coming weeks. Paul Saunders said: “The SRA and Law Society will be issuing guidance and developing resources to help support firms in responding to the changes during the Autumn. This guidance will be critical in understanding how the requirements will be adopted practically by law firms.

“As always the ‘devil will be in the detail’ when more information becomes available. However the overarching principle of driving greater customer service and therefore improving client satisfaction must be welcomed. For too long consumers have argued that lawyers surround themselves by a self-generated ‘mystique’; bamboozling clients with legal jargon and making it hard for clients – the majority have whom will inevitably not be legally qualified – to fully grasp the implications of a lawyer’s advice in terms of how much time and money it will take to resolve the issue in hand.

“Parts of the legal sector – such as those offering conveyancing services – have become adept at ‘packaging’ their services and communicating quotes upfront in a simple, easy to understand way. Fixed fees have become the norm across the majority of legal services and certainly in conveyancing this is by far the most common way of quoting for work.

“This is partly driven by demand from lenders and brokers who look to engage with conveyancers in a much more straightforward way. They want to be able to compare ‘apples with apples’ and secure the best value for money for their clients whilst still expecting a high level of customer service measured against critical indicators such as speed of the transaction, high levels of proactive communication with their client (and with them as interested parties), and availability of advisers to answer questions and provide updates.

“The challenge for the legal sector is always to provide good value for money whilst still being able to deliver a high standard of service. And as more and more people routinely navigate their lives via digital means such as smartphones this means having the technology and systems to work in this way as well as continuing to be available by phone, email and so on.”

Paul Saunders warned that whilst conveyancers may be ‘ahead of the game’ in respect of many aspects of the proposed new rules, implementing these changes would not be without its challenges.

“The SRA has said that it believes that greater transparency will stimulate competition as customers are able to compare potential service providers on price and quality,” he said. “However any price comparison scenario can only be effective if the end customer is able to compare ‘like with like’. Although sometimes lawyers may sound as though they are trying to avoid the directive on pricing, it is fair to say that publishing prices in a way that genuinely allows meaningful comparison is by no means straightforward. We would query whether it is really possible to commoditise all legal services to the point where a client will be able to visit multiple law firm websites (or an amalgamation site such as comparethemarket) and make a choice based on full transparency.

“Our concern is that the increased competition which the SRA are seeking to stimulate will lead to an increased focus on price by law firms. It’s possible that this could have an adverse effect in that if firms start losing business to competitors on cost alone they will reduce their prices to match. Whilst on the face of it this would deliver the SRA’s intended result, we are concerned that it could precipitate a return to the ‘bad old days’ where law firms notoriously advertised a low ‘fixed fee’ but then applied a whole series of additional charges from a supplementary list of services in order to be able to carry out the job at a reasonable profit and to cover the cost of the time expended on the job.

“It would be counter productive if a low base unit price was routinely adopted only to find that consumers were hit with ‘hidden extras’ at every turn. Firms may find this leading to an increase in complaints which is of detrimental to everyone whether adviser, intermediary, third party or consumer.

“Legal Eye will be keeping a close eye on developments in the coming weeks and working with our clients to ensure full compliance whilst also taking into account the commercial implications for the firm.”

From December 2018, all regulated law firms will be required to publish information on prices they charge, and what these cover, across a number of common services:

  • For members of the public: conveyancing, probate, motoring offences, employment tribunals (claims for unfair or wrongful dismissal) and immigration (excluding asylum).
  • For small businesses: debt recovery (up to £100k), employment tribunals (defending claims for unfair or wrongful dismissal) and licensing applications for business premises.

Legal Eye is offering one-to-one guidance to firms around implementing the price transparency changes. Register your interest in this service by emailing bestpractice@legal-eye.co.uk. We’ll send you details of further guidance as it is issued and further information about how Legal Eye might be able to assist as the situation develops.

Please also register your interest in our Legal Eye webinar covering the price transparency requirements here and we will send you details as soon as they are released.

Our Director of Business Development, Jody Evans, has been invited by the Land Registry to present on this topic at the Liverpool Local Land Charges Launch Event on 3 September 2018 alongside the Land Registry, United Utilities and The Coal Authority.