By: 5 April 2017
Letting legal fees out of the box: price transparency

Andrew Cullwick on the push towards price transparency for law firms and what it will mean for PI claim lawyers

There is an increasing drive towards greater price transparency across the legal profession.

Last month, the Legal Services Consumer Panel (LSCP) published its “key criteria for success” which it hopes will lay the foundations for the new price and transparency regime for lawyers demanded by the Competition and Markets Authority (CMA).

The CMA’s call for law firms to publish prices and complaints records in its final report at the end of last year prompted the Solicitors Regulation Authority (SRA) to announce in January that it was working on plans to require law firms to publish prices for conveyancing, divorce and private client work.

The CMA’s report called on regulators to set a new minimum standard for disclosure on price and the service provided, although the real detail is yet to come and all eyes will be on the regulators at the end of June when they will publish their action plans in response.

Yet, the direction of travel is clear and we believe that this will finally signal the death knell for hourly billing, with fixed, and widely-published, fees becoming standard for consumer-focused law firms within the next three years.

Making sense

It makes perfect business sense to us. It is well-known that fear of cost is established as a major – if not the – factor deterring people from going to lawyers. Notably though, it is the uncertainty, rather than the level of the fee itself, that is the main worry.

It is here that access to justice is at risk, especially as the cuts in legal aid and changes to how ‘no win, no fee’ cases work mean that more clients than ever before have to pay for legal advice if they need it.

The LSCP has been vocal in calling on regulators to force lawyers into publishing their average fees so as to empower consumers and drive competition.

The usual defence is that the complex and variable nature of legal work can make exact estimates impossible. And while the LSCP acknowledged this, it says: “There is an unjustifiable imbalance of risk tilted towards the consumer, who may start off with an estimate that has no bearing on the final cost paid. This lack of transparency is exacerbated when one considers that consumers often have little bargaining power, at a time when they may be most vulnerable.” Even if they cannot fix the fee, an experienced practitioner should be able to draw up a detailed estimate.

Further pressures

There are other pressures too. Lord Justice Jackson’s review of fixed recoverable costs is predicted to be far-reaching and will report back in July this year. Plus, the Government is currently consulting on introducing fixed fees in clinical negligence up to £25,000.

Plenty of law firms already work on fixed fees in non-contentious work and there is no evidence that clients have suffered as a result, despite the oft-voiced fear that lawyers will simply compromise and automate/depersonalise their service to deliver them.

If clients want an extra personal service, there is nothing to stop them from paying for it, but fixed fees could give people the confidence to enter the legal system in the first place. We work closely with many law firms and are actively looking at ways to introduce clearer pricing.

To put the law in the best light, we need to be open and transparent on fees. It will benefit everyone – both the consumers and small businesses finally able to seek legal help (the vast majority with legal problems do not, according to research) and the lawyers waiting to give it to them.

Andrew Cullwick is head of marketing at First4Lawyers