Last month I highlighted how increased transparency is at the heart of most of the work currently being done to try and improve the landscape for consumers, and a report by the Competition and Markets Authority (CMA) shortly afterwards has driven this home.
The CMA first looked at competition in the legal market in 2016, when it called for a “step change in standards of transparency” so that lawyers’ clients could both understand the price and service they would receive, and compare providers. Last month, it published a report on the progress made towards achieving this.
The watchdog identified “clear signs of progress”, with many more law firms now providing information on price and service to help consumers shop around. It continued: “However, while the evidence suggests that some customers are taking advantage of the changes, there is still work to do as there only appears to have been a limited impact on the intensity of competition between providers and on sector outcomes.”
Research undertaken ahead of the 2016 report found that only 16% of solicitors and 22% of licensed conveyancers provided pricing information on their website. New rules were introduced by both the CLC and the Solicitors Regulation Authority in December 2018 to require greater transparency in certain common areas of legal practice, including conveyancing, and a Legal Services Board (LSB) study last year found that 73% of conveyancers were now providing pricing information.
Our own work shows that the vast majority of CLC-regulated firms are in full compliance with our requirements and we have been working with the few stragglers to bring them into line.
The CMA noted with approval that regulators have worked together to try to ensure that providers are generally covered by broadly equivalent rules or guidance.
“This means that where consumers purchase the equivalent services (eg conveyancing) from providers regulated by different bodies, there is a degree of consistency in the transparency requirements for those providers,” it said.
At the same time, the CMA suggested that this could go further to make the way information is presented more standardised and thus easier to compare. We will be looking at this issue closely. Despite more information being out there, surveys on the number of consumers who shop around for legal services before choosing a provider are still fairly low – around the 30% mark.
Given that the rules have only been in place for two years, we are encouraged by the progress made, and the CMA acknowledges that they are likely to have a greater impact over time.
The CMA report went on:
“However, to ensure they have the best chance of success, we also believe that it is important for the LSB and the regulatory bodies to continue to build on the reforms so far.”
This is already underway. Price information is, relatively speaking, the ‘easy’ bit. We have begun work with other regulators to identify quality markers that can guide consumer choice.
Back in 2016, the CMA hoped that the increased availability of price information and greater collation of information about lawyers in centralised databases would encourage ‘digital comparison tools’ (DCTs), such as price comparison or review sites, to become more prevalent within the legal market. “However, our high-level review suggests that the growth of DCTs in the legal services sector has been very limited,” it said last month.
This is in part because many lawyers can be unwilling to engage with them, particularly for price comparison, out of concern that it would lead to a race to the bottom. I can reassure conveyancers that we are not seeing that impact at all – firms have still been able to adjust their pricing to respond to increased costs and to reflect better the immense value of the service they provide.
The CMA identifies a host of other issues that have put off DCTs, such as the variability and quality of the information available, the one-off nature of most transactions, and the presence of offline intermediaries in high-volume legal services areas – especially in conveyancing, given the pivotal role of estate agents. Yet the CMA reckons that “successful DCT services should be possible in the more commoditised areas of law such as conveyancing”. Making the legal market more attractive for these providers will be an important consideration for regulators as we look to respond to the CMA.
The body was clear that conveyancing is at the heart of this push: “We believe it is now appropriate for the LSB and the regulatory bodies to focus their efforts to enhance transparency further on those legal services where there is scope for increased transparency to have the greatest impact on competition and sector outcomes.
“As an initial step, in considering the recommendations below, the LSB and regulatory bodies should identify the legal services for which further enhancements to transparency are best suited, and the practice areas with the largest consumer presence, in order to determine whether they would benefit from enhanced transparency requirements. We consider that possible areas would include conveyancing, family law, employment, wills and probate.”
The law is a multi-speed market. While there are providers who are pushing the boundaries of technology fuelled innovation, there is also a substantial rump resistant to change. Within that context, we are pleased with what has been achieved but know there is a considerable way yet to go. In another four years, transparency in conveyancing should look very different and forward-looking conveyancers will have reaped the benefit of that.
Please note: this article was first seen in The Mortgage Finance Gazette