We are encouraging discussion within the legal profession and among consumers on the potential benefits and the challenges of increased price transparency for legal services. Our consultation Price Transparency – promoting consumer choice, follows a report by the Competition and Markets Authority (CMA), which says a lack of access to information is a “significant hurdle” for would-be clients.
The CMA report points to a lack of transparency leading to reduced competition between legal services providers and to those who might benefit from seeking legal advice to resolve a problem, choosing not to.
It has concluded that increasing price transparency, service and quality is essential to ensure a better deal for consumers and that legal services regulators, such as the Law Society of Scotland, should require price information to be published to stimulate competition in the market. So is change necessary?
Currently all Scottish solicitors must provide specific information to their clients before taking on any work. This includes an estimate of the total fee or the basis upon which the fee will be charged, such as an hourly rate, plus VAT and any foreseeable outlays. However, there is no requirement for solicitors or firms to publish pricing information in advance of any client requests, although firms can promote their firms’ services as they see fit, including on price.
We know from independent research (carried out by Ipsos Mori for the Law Society) that around a fifth of consumers consider price to be an important factor when choosing a Scottish solicitor. Other UK-wide research has shown the majority of consumers, (68 per cent) and around 83 per cent of small businesses think legal services are unaffordable, with even the perception of unaffordability potentially acting as a barrier to accessing justice.
Research also suggests 6 per cent of clients were dissatisfied with the service provided by their solicitors on the basis that charges were not explained and 13 per cent were dissatisfied on the basis that the charges were excessive. Increased price transparency could help manage consumer expectations about costs, helping clients to budget and avoid any stress related to cost escalation, and leading to fewer clients expressing dissatisfaction with their solicitor’s services because of issues relating to fees.
People often rely on recommendations from family, friends and peers when looking for legal advice, so increased price transparency may encourage them to shop around to compare costs and make an informed choice. Some law firms already publish prices for legal services such as conveyancing, wills or some family matters – areas of law relatively easy to commoditise – and they can be a useful marketing tool to increase a firm’s client base by helping define what makes them more attractive and what differentiates them from their competitors. In turn this could result in increased competition between providers and help boost consumer confidence.
However, not all legal work lends itself to this kind of pricing. The complexity of some legal cases means it is impossible to set a fixed fee in advance. Another challenge to publishing price lists could be the risk of ‘price baiting’ where advertised costs are artificially low to attract business but in reality have very limited availability for consumers looking for legal advice – leading to the need for additional controls if increased price transparency were to be introduced.
There are a number of advantages and disadvantages to explore in the debate on increasing price transparency before any change can be considered and we are keen to hear a wide range of views in response to the consultation (available at www.lawscot.org.uk). Take part and let us know what you think of the potential benefits and where there may be drawbacks to such a move.
Carole Ford is the non-solicitor convener of the Law Society of Scotland Regulatory Committee