Ever been charged more than you expected by your solicitor?
By Kate Exall, Senior Lecturer in Law
The Legal Ombudsman estimates that 20–30% of their cases concern costs incurred by solicitors. The problem might be that they haven’t stuck to a fixed fee or that they have charged more than was expected or didn’t keep the client informed about costs.
Solicitors and other regulated providers of legal services have to comply with professional conduct rules as set out by the Solicitors Regulation Authority. These provide that solicitors must give clients written up front costs information either about the total cost or how that will be calculated. They should also keep clients up to date with the costs of their case and clients can request details of costs at any time.
However, the Ombudsman’s experience suggests that this is not always done and it may be that the regulator needs to be taking tougher action to ensure solicitors comply with their professional requirements. Another avenue to put pressure on solicitors to provide more transparent costs information comes in the unlikely shape of the Competition and Markets Authority (CMA).
In January the CMA announced that it would be investigating long standing concerns about affordability and quality of the legal sector and whether regulation was stifling competition and affecting prices. Last month they published their interim report [1] and concluded that the lack of transparency on price and service puts clients off accessing legal services and means that they can’t compare and find value for money. It also means, they say that “the lack of transparent information is limiting the ability of consumers to drive effective competition [2]” despite the large number of players in the legal sector.
They recommended that consumers need to have access to accurate price and quality information to make informed decisions. If competition works well they say it can lead to lower prices, higher quality and greater innovation [3].
The CMA takes the view that solicitors should provide clear information about costs at the start and suggest that fixed fees will give certainty and ease of comparison. In 2015, the Legal Services Consumer Panel calculated that 46% of clients had their costs calculated as a fixed fee, up from 38% in 2012 [4]. However just 17% of firms publish fixed fee information on line.
Research by Ipsos Mori [5] noted that most conveyancing transactions were dealt with as fixed fees (78–80%) which were generally cheaper that those who provided an estimate of costs up front. Not surprisingly they found that those in the South East charged more and that those in deprived areas charged least. Most legal service providers tend to price on a case by case basis with fixed fees being more common in matters such as uncontested divorces, straightforward residential conveyancing or standard wills. The CMA does recognise that not all transactions work in this way and in such cases then solicitors should give updates on costs as they go along.
The CMA is also concerned about how clients chose solicitors. They note that this is usually through word of mouth recommendation or previous experience rather than on the basis of online testimonials as to quality[6]. The CMA feels that this hinders effective competition and suggests that a possible reform is to publish customer feedback and complaints data [7]. However, whilst some will go online and do the necessary research (and many solicitors do already publish testimonials), many people will still stick with personal recommendations.
It is clearly a difficult area. Clients often require legal services on a one off basis and often at a time of distress such as bereavement, relationship breakdown or where they are being sued. They often need legal advice quickly and are not always in a position to sit down and rationally compare different providers in terms of service and costs. Legal transactions are often more complex than at first sight. The client isn’t always totally honest about the issue at the start and things come to light later that increase costs. Sometimes cases take an unexpected turn all of which can increase costs.
I’m concerned about the idea that competition can lead to lower prices and higher quality. This may be true of routine transactions that can be impersonal and high volume such as debt collection but doesn’t really work with dealing with estates, serious personal injuries and large value transactions. Cutting costs doesn’t usually lead to higher quality in personalised transactions.
In any event is competition appropriate in the legal marketplace where the issues can be sensitive and of high value? Should the focus actually be on more solicitors providing more transparent costs information throughout the transaction as a means of improving client care and service quality rather than as a means to drive competition?
[1] Competition and Markets Authority Legal Services Market Study Interim Report July 2016
[4] Legal Services Consumer Panel Consumer Tracking Data 2015
[5] OMB Research Prices of Individual Consumer Legal Services Research Report 2016
Originally published at blogs.northampton.ac.uk on August 17, 2016.
